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Unveiling the Tesla Touch in Supply Chain Effectiveness

February 2024
International Journal of Research 11(2):71-90

Authors:

Widya Mandala Catholic University

Companies in every sector recognize the vital role that Supply Chain Management plays in maximizing efficiency, staying competitive, and achieving overall success. Supply chain management is an integral part of any business's operating structure since it includes the entire product lifecycle, from planning and sourcing to production, delivery, and return. An efficient supply chain management approach optimizes inventory levels, reduces costs, and increases customer satisfaction by ensuring the smooth flow of goods and services. It helps businesses adapt quickly to shifting market conditions, reduce risk, and strengthen ties with key partners and suppliers. Understanding the complexities of Tesla's unusual techniques that have catapulted the business to the top of the automotive industry, including its approach to supply chain management. With a production-to-order strategy, Tesla keeps stock levels under control and reacts quickly to market demands with just-in-time manufacturing. A new era of localized production is dawning with the worldwide integration of Gigafactories, which will enable Tesla to maximize efficiency while cutting transportation costs. By putting an emphasis on supply chain agility and flexibility, Tesla ensures continual improvement and customer satisfaction through innovative approaches like as over-the-air updates and software changes. In this publication, the dynamics of Tesla's supply chain effectiveness are examined in depth, illuminating the company's remarkable achievement in reshaping industry standards and establishing new benchmarks for sustainable and efficient supply chain operations.

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International Journal of Research

(IJR)

e-ISSN: 2348-6848

p-ISSN: 2348-795X

Vol. 11 Issue 02

February 2024

Received: 22 January 2024

Revised: 2 February 2024

Final Accepted 11 February 2024

Unveiling the Tesla Touch in Supply Chain Effectiveness

Marcelinus Susanto

ibm.marcelinus.s.21@ukwms.ac.id

Lena Ellitan

lena@ukwms.ac.id

Faculty of Business, Widya Mandala Catholic University Surabaya Indonesia

Abstract: Companies in every sector recognize the vital role that Supply Chain Management plays in

maximizing efficiency, staying competitive, and achieving overall success. Supply chain management is an

integral part of any business's operating structure since it includes the entire product lifecycle, from planning

and sourcing to production, delivery, and return. An efficient supply chain management approach optimizes

inventory levels, reduces costs, and increases customer satisfaction by ensuring the smooth flow of goods and

services. It helps businesses adapt quickly to shifting market conditions, reduce risk, and strengthen ties with

key partners and suppliers. Understanding the complexities of Tesla's unusual techniques that have

catapulted the business to the top of the automotive industry, including its approach to supply chain

management. With a production-to-order strategy, Tesla keeps stock levels under control and reacts quickly

to market demands with just-in-time manufacturing. A new era of localized production is dawning with the

worldwide integration of Gigafactories, which will enable Tesla to maximize efficiency while cutting

transportation costs. By putting an emphasis on supply chain agility and flexibility, Tesla ensures continual

improvement and customer satisfaction through innovative approaches like as over-the-air updates and

software changes. In this publication, the dynamics of Tesla's supply chain effectiveness are examined in

depth, illuminating the company's remarkable achievement in reshaping industry standards and establishing

new benchmarks for sustainable and efficient supply chain operations.

Keywords: SCM, SCM Effectiveness, Tesla

Introduction

As one of the most important methods to enhance the competitiveness of enterprises, supply chain model has

always been concerned in the business world (Ellram, 1991). Companies in every sector recognize the vital

role that Supply Chain Management plays in maximizing efficiency, staying competitive, and achieving

overall success. Supply chain management is an integral part of any business's operating structure since it

includes the entire product lifecycle, from planning and sourcing to production, delivery, and return. An

efficient supply chain management approach optimizes inventory levels, reduces costs, and increases customer

satisfaction by ensuring the smooth flow of goods and services. It helps businesses adapt quickly to shifting

market conditions, reduce risk, and strengthen ties with key partners and suppliers. A well-coordinated supply

chain management strategy is critical for firms to remain nimble, resilient, and competitive in today's fast-

paced business world, where sustainability concerns, technological progress, and globalization are of the

utmost importance. In 2018, Tesla aimed to produce 5,000 new Model 3 electric cars per week but fell short,

managing only around 2,000. Elon Musk, when questioned about the shortfall, admitted that their initial

reliance on heavy automation was a mistake. Emphasizing that "humans are underrated" in the production

process, Musk acknowledged that "excessive automation was a mistake" and highlighted the crucial role of

human involvement in manufacturing. The Tesla Roadster's release date has already been pushed back several

times from 2021-2023. The company has faced production delays for the Roadster and several other

models."2021 has been the year of super crazy supply chain shortages, so it wouldn't matter if we had 17 new

products, as none would ship," Musk tweeted in September 2021.

International Journal of Research

(IJR)

e-ISSN: 2348-6848

p-ISSN: 2348-795X

Vol. 11 Issue 02

February 2024

Received: 22 January 2024

Revised: 2 February 2024

Final Accepted 11 February 2024

Figure 1. Tesla Stock Going Down

The past week has seen shares of Tesla (TSLA) - Get Free Report slide hard in the wake of an earnings call

and report that left investors more than disappointed. The company's stock fell 16% last week, hitting a low

that Tesla hasn't been anywhere near since June.

Investors were cautious heading into Tesla's third-quarter earnings over a few specific points. The most

significant point of concern for most investors and analysts centered around the price cuts Tesla has been

conducting and the company's gross margins that have been falling as a result. The other main point of concern

centered around the Cybertruck, the brand-new Tesla model that has had investors and customers alike waiting

years for production and deliveries to start.

The purpose of this article is to investigate the significant function that supply chain management plays inside

a large organization, with a particular emphasis on Tesla. Acquiring a complete understanding of the ways in

which supply chain management affects the operations of a large-scale organization and, more particularly,

the ways in which Tesla strategically leverages supply chain management to meet difficulties that are peculiar

to its industry is the goal of this study. The purpose of this article is to investigate the complex methods in

which Tesla employs supply chain tactics in order to overcome challenges, adjust to the dynamics of the

market, and maximize its operational efficiency. By delving into Tesla's methodology, the purpose of this

paper is to reveal the particular strategies and approaches that the firm employs. The article also aims to throw

light on how these strategies contribute to the company's success in navigating hurdles within the highly

competitive automotive and renewable energy industries.

Literature Review

Understanding The Supply Chain

Supply Chain Management (SCM) is one of the most important fields of business today. It changes how

companies plan, make, distribute, and run their services and goods. The basic ideas of SCM with a focus

International Journal of Research

(IJR)

e-ISSN: 2348-6848

p-ISSN: 2348-795X

Vol. 11 Issue 02

February 2024

Received: 22 January 2024

Revised: 2 February 2024

Final Accepted 11 February 2024

on how it has changed companies and the world economy. In this chapter, the supply chain is described as a

network of organizations that work together to make, send, and service goods(Meindl & Chopra, 2000).

Some of the main reasons why companies use SCM are trying to stay ahead of the competition, making

customers happy, going global, making technology progress, and protecting the environment. SCM is seen

as a strategy tool that helps businesses become more efficient, cut costs, and respond to changing market

needs. Total Quality Management (TQM) and Just-in-Time (JIT) are seen as early examples of how SCM has

changed over time, from focusing on individual functions to taking a more comprehensive, all-encompassing

approach.

It is stressed that SCM plays a strategic role and shows how it affects competitiveness, profitability, and

resilience. The parts of the supply chain that are linked together are explained, focusing on how they depend

on each other. These parts include purchasing, production, distribution, and transportation. It is emphasized

how important information and technology are for making coordination easier along the supply chain. This

sets the stage for later parts.

Globalization is becoming an important part in SCM practices, causing problems with cultural differences,

following rules, and the need for flexible systems. Environmental sustainability is becoming more important,

and ideas like "reverse logistics" and "green supply chain practices" show how socially and environmentally

responsible businesses are.

Decision Phases in a Supply Chain

Making choices about the structure of the supply chain involves making strategic decisions that affect how

the network is designed and how it works as a whole. These choices will have a big impact on how the supply

chain works and how its goals are met. Here's a description of the main points:

1. Supply chain strategy or design

Locations and Capacities of Facilities:

Businesses need to plan ahead to decide where to put facilities like factories, distribution centers, and storage

buildings. Making sure that these sites' capacities match up with expected demand and market growth is very

important.

Products to be Made or Stored at Various Location:

Choices are made about which goods will be made or kept at certain points in the supply chain. This means

taking things like product demand, production capacity, and the efficiency of shipping into account.

Modes of Transportation:

Choose the best means of transportation to move goods from one part of the supply chain to another. Transport

options may include air, sea, road, or train, depending on things like speed, cost, and the nature of the goods

being shipped.

Systems for information: Set up strong computer systems that make it easier for people in the supply chain

to talk to each other, work together, and share data. This includes technologies for predicting demand, keeping

track of supplies, and tracking in real time.

2. Supply chain planning

International Journal of Research

(IJR)

e-ISSN: 2348-6848

p-ISSN: 2348-795X

Vol. 11 Issue 02

February 2024

Received: 22 January 2024

Revised: 2 February 2024

Final Accepted 11 February 2024

As part of supply chain planning, a thorough set of policies is developed to direct the short-term activities. A

organised framework for managing immediate actions is provided by these policies, which are predetermined

by the supply configuration that was implemented in the prior phase. In order to lay the groundwork for

important decisions in many operational areas, the planning process begins with the expectation of demand for

the next year. Among these decisions are those concerning the timing and scope of market promotions, the

identification of subcontracting options and backup locations, the determination of which markets will be

serviced from specific locations, and the formulation of effective policies for inventory management. (Meindl

& Chopra, 2000).

Market allocation, inventory building, subcontracting techniques, backup location identification, inventory

management rules, and market promotion planning are all important decisions within the area of Supply Chain

Planning. The established time horizon, demand unpredictability, currency rate changes, and the competitive

landscape are all critical considerations for making these selections. By considering these factors, businesses

can improve the efficacy of their planning decisions, which in turn helps them optimise their supply chain

operations to better respond to market needs. (Meindl & Chopra, 2000).

3. Supply chain operation

Decisions in the field of supply chain operations are based on specific client orders and the time horizon is short,

usually weekly or daily. With an eye towards maximum efficiency, the operating procedures and supply chain

structure have already been set up. Important tasks include deciding whether orders should be processed in

production or inventory, setting due dates for orders, creating pick lists for warehouses, assigning orders to

shipments, creating delivery plans, and starting replenishment orders. With a shorter time frame, there is less

room for error in decision-making as compared to longer-term planning. This highlights the need of meeting

operational demands in the supply chain with speed and precision.

Process View of a Supply Chain

According to the cycle view, the steps in a supply chain are organised into a number of cycles. Each cycle

happens at the point where two stages of the chain meet. These cycles show how goods, data, and funds move

from one part of the supply chain to another.

In the cycle view of a supply chain, the sequential progression of processes is delineated at the interfaces

between consecutive stages. This cyclical framework includes essential cycles such as the customer order

cycle (occurring between customers and retailers), replenishment cycle (between retailers and distributors),

manufacturing cycle (connecting distributors and manufacturers), and procurement cycle (established

between manufacturers and suppliers), as illustrated in Figure. Each cycle is distinctly defined, outlining the

processes involved and designating the owners of each stage. This approach serves to clearly specify the roles

and responsibilities of each supply chain member, elucidating the desired outcomes of individual processes

within the broader supply chain context (Meindl & Chopra, 2000). The push/pull view classifies supply chain

operations according to whether they are carried out in response to a customer's request (pull) or in advance

of a customer's request (push).

Processes in the supply chain are classified as push or pull depending on how they relate to consumer demand

over time. Pull processes are reactive approaches to demand fulfilment since they are started in reaction to

individual consumer orders. Push procedures, on the other hand, are initiated proactively and speculatively

anticipate customer orders. Push operations, which start before client demand, and pull processes, which start

in response to customer orders, are divided by the push/pull boundary. This contrast emphasises how supply

chain operations should be strategically divided into speculative and reactive components.

International Journal of Research

(IJR)

e-ISSN: 2348-6848

p-ISSN: 2348-795X

Vol. 11 Issue 02

February 2024

Received: 22 January 2024

Revised: 2 February 2024

Final Accepted 11 February 2024

Achieving Strategic Fit and Scope

A company's competitive strategy acts as a guide for meeting client needs with its goods and services. This

includes the product development plan, which describes the range of new items that an organisation hopes to

produce. This is further refined by price, positioning, and promotional strategies, as well as market

segmentation and marketing and sales strategy. The supply chain strategy, which influences the sourcing of

raw materials, shipping, production, and product distribution, is essential to this strategic framework. These

functional strategies must be in perfect harmony with one another and with the overall competitive strategy

in order to ensure a coherent and successful organisational plan for satisfying customer needs and market

goals (Meindl & Chopra, 2000).

Figure 2. The Illustration of Strategic Fit

When supply chain and competitive strategies work together to achieve common objectives, strategic fit is

reached. A corporation may collapse as a result of this kind of alignment failing to occur or from having

insufficient processes and resources to carry out the intended strategy. A company's ability to successfully

integrate and align its supply chain and competitive strategies is essentially dependent on its ability to execute

these plans effectively and with coherence.

Understanding the Customer and Supply Chain Uncertainty

Within the framework of supply chain management, demand uncertainty pertains to the volatility of consumer

demand for a specific product. By considering the particular share of demand that the supply chain is

responsible for managing and the corresponding qualities that consumers look for in a product, implied demand

uncertainty helps to further define the uncertainty that the supply chain faces. Supply chain decision-making

depends on the efficient management of demand uncertainty, which calls for flexible techniques to adjust to

different degrees of demand volatility (Meindl & Chopra, 2000). This keeps supply chain operations in sync

with the ever-changing demands of the market.

Supply Chain Capabilities

There are expenses involved in getting a supply chain to respond quickly. The cost of producing and shipping

a product to a consumer is directly correlated with a supply chain's efficiency. The cost- responsiveness

efficient frontier curve, which shows the lowest possible cost associated with a

International Journal of Research

(IJR)

e-ISSN: 2348-6848

p-ISSN: 2348-795X

Vol. 11 Issue 02

February 2024

Received: 22 January 2024

Revised: 2 February 2024

Final Accepted 11 February 2024

particular degree of responsiveness, serves as a visual representation of the idea. Supply chain decision- makers

will find this curve to be a useful visual aid in navigating the trade-offs between responsiveness and efficiency

and determining the best balance that fits the organization's operational capabilities and strategic objectives.

(Meindl & Chopra, 2000).

Achieving Strategic Fit

It is critical to strike a balance between the supply chain's level of responsiveness and the associated

uncertainty. In order to keep up a suitable degree of responsiveness in the face of the current uncertainties, it

is necessary to allocate distinct responsibilities to different parts of the supply chain. To back up the

organization's overall competitive strategy, it's important to have consistent strategies across all functions.

(Meindl & Chopra, 2000). By working together, all links in the supply chain may achieve their full potential

and advance the company's strategic objectives and competitive standing.

Expanding Strategic Scope

In order to create a cohesive strategy with shared goals, strategic fit takes into account not only the company's

internal operations but also the different links in the supply chain. As part of this integration, there is an

intraoperation scope, in which each step of the supply chain works on its own to find ways to cut costs locally,

and an intrafunctional view, in which businesses coordinate all of their activities inside a function to cut costs

overall. In addition, there is an interfunctional scope that coordinates the development of functional strategies

so that they mesh well with the overall competitive strategy. (Meindl & Chopra, 2000). Intercompany scope

is another aspect that aims to maximize supply chain excess through supplier and customer collaboration,

information exchange to decrease total costs, and overall surplus enhancement. In addition, a company's

capacity to attain strategic fit while collaborating with stages of the supply chain that experience dynamic

changes over time is highlighted by an agile intercompany scope.

Supply Chain Drivers and Metrics

The importance of a company's supply chain striking a balance between efficiency and responsiveness in line

with its competitive strategy is highlighted in this discussion, which centers on the concept of strategic fit. To

understand and improve supply chain performance in terms of efficiency and responsiveness, it is necessary

to conduct a thorough investigation of logistical and cross-functional drivers, such as facilities, inventory,

transportation, information, supply, and price (Meindl & Chopra, 2000). The supply chain's performance in

these areas is defined by the complex interplay of various drivers. Innovations and digital technologies

influence the structure of the modern supply chain, increasing its complexity. The complex and multilevel

structure implies choosing integrated formats based on the economic conditions that allow mutually profitable

cooperation (Shcherbakov and Silkina, 2021).

Drivers of Supply Chain Performance

Facilities:Manufacturing and warehouse storage are two examples of the many interconnected supply chain

operations that determine an entity's function, or "where" in the chain. This job plays a crucial part in the

overall strategy for staying competitive. It involves making judgments about economies of scale, which

prioritize efficiency and often result in larger, consolidated facilities, or choosing a larger number of smaller

facilities that prioritize responsiveness. The approaches taken by industry heavyweights like

International Journal of Research

(IJR)

e-ISSN: 2348-6848

p-ISSN: 2348-795X

Vol. 11 Issue 02

February 2024

Received: 22 January 2024

Revised: 2 February 2024

Final Accepted 11 February 2024

Honda and Toyota illustrate this duality. To successfully navigate this strategic balance, it is essential to

consider the facility-related decision-making components, which have a significant impact on the

responsiveness and efficiency of the supply chain.

Inventory: Because supply and demand are inherently out of sync, inventory exists inside the supply

chain. The responsiveness of the supply chain is greatly affected by this inventory, which is a cost

source. Its effects are most clearly seen in the material flow time, which is the amount of time it takes

for materials to go from the supply chain's entrance to its exit. (Meindl & Chopra, 2000). Because this

mismatch impacts the supply chain's overall flow and responsiveness, effective inventory

management is critical for limiting it.

Transportation: In order to move products from one step of the supply chain to another, the

transportation function is crucial. Efficiency and reactivity are both profoundly affected by this crucial

function. One important way that transportation can improve responsiveness is by cutting down on

lead times. This means that customer requests can be met faster. On the other hand, efficiency suffers

as a result of this increased reactivity. (Meindl & Chopra, 2000). Transportation, inventory levels, and

facility use are all interdependent, thus striking a balance between them is crucial for supply chain

optimization.

Information: Collaboration in day-to-day operations is made possible through the interconnection of

various phases of the supply chain, which creates an essential channel for coordination. Optimal

inventory management and production scheduling rely heavily on this interdependence. (Meindl &

Chopra, 2000). By working in tandem, the many links in the supply chain are able to better coordinate

the movement of goods and data, increasing the efficiency and effectiveness of the whole.

Sourcing: The equilibrium between supply chain responsiveness and efficiency is heavily influenced

by sourcing selections. The capacity of the supply chain to improve responsiveness and efficiency is

greatly affected by decisions concerning in-house production vs. outsourcing. Strategic sourcing

decisions have played a key role in improving Cisco's supply chain performance, demonstrating the

importance of these decisions in striking a balance between efficiency and responsiveness.

Pricing: A major factor in the final price that consumers pay is the pricing structure of the supply chain.

Strategic pricing strategies allow organizations to maximize efficiency and responsiveness by efficiently

aligning with supply and demand dynamics. One good example is Amazon.com, which has a pricing

strategy that modifies costs depending on response times and also makes sure they're competitive. This

approach exemplifies the power of price as a tool for striking a balance between product availability

and pricing, drawing attention to the role it plays in reaching the sweet spot where supply chain

efficiency and responsiveness meet.

Designing Distribution Networks and Applications to Online Sales

As a product moves from the producer to the consumer, it goes through a number of storage and transportation

steps that make up distribution in the supply chain. A key factor in determining profitability, this process has

a substantial impact on supply chain expenses as well as the total client experience. Among the many supply

chain goals that could be pursued—from minimising costs to

International Journal of Research

(IJR)

e-ISSN: 2348-6848

p-ISSN: 2348-795X

Vol. 11 Issue 02

February 2024

Received: 22 January 2024

Revised: 2 February 2024

Final Accepted 11 February 2024

maximising responsiveness—the strategic selection of a distribution network takes centre stage (Meindl &

Chopra, 2000). Decisions taken in the distribution domain significantly affect supply chain efficiency and

effectiveness, which in turn affects profitability and customer happiness. In the automotive sector, for

example, Rolls-Royce decided to pay a fee for the use and availability of engines instead of buying them, and

by implementing an Internet of Things (IoT) system, they could monitor engine data in real time to provide

maintenance (Baines and Lightfoot, 2014; Kohtamaki et al., 2019).

Impact of Online Sales on Customer Service

Crucial to supply chain performance is the reaction time to consumers, which differs between products. In

comparison to in-store options, the fulfillment time for physical goods is usually longer. On the other hand,

information goods are instantaneous and help with response times. In the digital environment, offering a vast

assortment of products is more easier, providing for a broader choices. By consolidating stock and learning

more about consumer tastes, we can make more products available when they need them, which improves

service and delights customers. In the manufacturing sector, several cases can be observed (e.g. Rolls-Royce,

General Electric, Volvo Studio), whereby firms introduced digital technologies to increase the value of the

offerd products and services (Candell et al., 2009; Lerch and Gotsch, 2015; Kohtamaki et al., 2019)

Faster time to market, more order visibility, and enhanced returnability are all benefits of the modern supply

chain landscape, albeit the latter can be difficult to implement, particularly for internet sales. Strong tactics

are required to deal with this component because the proportion of returns is often larger. Companies may now

advertise their wares and specials to consumers in a more personal and intimate setting thanks to the

proliferation of social media platforms that facilitate direct sales. More adaptable pricing, better product

portfolio management, and faster, cheaper promotion information conveyance are all possible thanks to this

change.

In addition, the digital setting makes it easy to transfer money quickly, which simplifies financial operations

all throughout the supply chain. Improved access, personalization, and convenience for customers are just a

few ways in which this multi-faceted supply chain transformation is influencing operational elements like

response time and product variety. Thus, a new age in supply chain dynamics has begun with the emergence

of digital technologies, presenting corporations with opportunities and threats as they try to adapt to the

dynamic market.

Impact of Online Sales on Cost

Meeting customer expectations and minimizing supply chain costs both depend on efficient inventory

management. When buyers are patient and don't mind waiting for their orders, keeping inventory levels low

becomes a practical option. In order to streamline inventory control and make it more demand- driven, this

method entails waiting to introduce product variation until after the client order is received. Making smart

choices about inventory management is crucial for cutting costs and meeting consumer demand quickly.

A large portion of supply chain expenses are related to facilities, which include both the quantity and

placement of facilities within a network. When making decisions on facilities, it's important to weigh the pros

and cons of both expense and timeliness. The overall efficiency is also heavily influenced by the operational

costs of these facilities. In order to achieve a balance that is in line with their overall strategic objectives,

organizations must thoroughly assess and enhance their facility network (Meindl

International Journal of Research

(IJR)

e-ISSN: 2348-6848

p-ISSN: 2348-795X

Vol. 11 Issue 02

February 2024

Received: 22 January 2024

Revised: 2 February 2024

Final Accepted 11 February 2024

& Chopra, 2000). If facilities are well-managed, resources may be distributed wisely to achieve efficiency

and responsiveness goals, which in turn helps the supply chain fit strategically.

Coordination in The Supply Chain

This section dives into the idea of supply chain coordination and its impacts, exploring the complexities of

supply chain dynamics. It specifically examines the bullwhip effect and how it affects overall performance.

We hope to decipher the intricacies that impede smooth cooperation by investigating the sources of the

bullwhip effect and identifying obstacles to supply chain coordination. Furthermore, this talk delves into the

managerial tools that are essential for good coordination, illuminating practical ways to lessen interruptions and

improve efficiency. In addition, the story goes on to talk about how important it is to develop trust in the supply

chain and strategically collaborate with other organizations, and it lays out specific steps that can help you do

that. Our goal in conducting this research is to gain a better understanding of the complex nature of supply

chain coordination so that those involved can better meet the challenges it presents.

Result & Discussion

Company Profile

Since its inception in 2003, Tesla Motors, now known as Tesla, Inc., has evolved from a concept focused on

electric sports cars to a multifaceted operation producing solar panels, electric vehicles, and batteries for both

residential and automotive applications. Martin Eberhard and Marc Tarpenning, the initial entrepreneurs

behind Tesla, aimed to create electric sports automobiles. In 2004, Elon Musk, co-founder of PayPal, joined the

venture, injecting over $30 million and assuming the role of chairman.

Under Elon Musk's leadership, Tesla experienced significant growth and became a leader in electric

automobiles, technology, and energy innovation. The introduction of the Roadster in 2008 marked a

groundbreaking moment, as it could travel an impressive 245 miles on a single charge. Tesla's headquarters

in Palo Alto, California, serve as a hub for technological advancements, while the Tesla Factory in Fremont,

CA, handles the production and assembly of all Tesla vehicles. Additionally, the Gigafactory near Reno, NV,

in collaboration with Panasonic, manufactures lithium-ion battery cells for Tesla vehicles. Tesla's lineup

comprises three models: the high-end Model S, the spacious SUV Model X, and the more affordable Model 3.

The company's strategy includes reducing electric vehicle prices to attract new customers and expand its

market share. Supercharging stations enable Tesla customers to charge their vehicles at an accelerated rate.

Elon Musk, not only the face of Tesla but also a key figure in the tech and automotive industries, contributes to

Tesla's success with his diverse expertise in physics, economics, and business.

Tesla Supply Chain Overview

As an industry leader in electric vehicles, Tesla owes a great deal of its success to its supply chain

management. The global supply chain presents opportunities for companies to increase revenue and reduce

costs by relocating production to countries with lower expenses. However, the opportunities arising from this

global supply chain are often accompanied by additional significant risks. Companies can conduct evaluations

of cultural and language differences, varying business processes within the same company, as well as different

rules or practices to manage supply and demand before engaging in a global supply chain. Through these

assessments, companies can minimize the likelihood of failures in the implementation of a global supply

chain (Meindl & Chopra, 2000). Vertical integration is fundamental to Tesla's supply chain strategy; the

company is highly involved in the production of electric vehicle batteries and other critical components.

Locations such as California, Shanghai, Berlin, and Texas are home to the company's Gigafactories, which

International Journal of Research

(IJR)

e-ISSN: 2348-6848

p-ISSN: 2348-795X

Vol. 11 Issue 02

February 2024

Received: 22 January 2024

Revised: 2 February 2024

Final Accepted 11 February 2024

allow them to efficiently manufacture automobiles for local markets throughout the world. Not only do

batteries fall under Tesla's purview of in-house production, but so do motors and electronic components. As a

result of its vertical integration, Tesla is able to keep a tight rein on its production processes, which in turn

encourages new developments in electric car technology. The company's ability to increase production, launch

new models, and respond successfully to market demands is largely due to its agile and adaptable supply

chain. To be a frontrunner in the electric vehicle sector, Tesla needs effective supply chain management,

which it has achieved. As we develop our global operations, Tesla continue to map their complicated supply

chains in order to understand their sources. Disclosure of supply chain facts by new suppliers is necessary for

source verification and risk identification through third-party audits.

Engaging Suppliers

Once we mapped our supply chains, we engage in local contexts to identify risks and develop measures to

respond to those risks. This includes visits to countries at the source of our supply chains, audits, collecting

GHG emissions data and external stakeholder engagement.

Priority Materials

We focus our efforts on the following materials due to the identified risks and the leverage we have:

lithium, nickel, cobalt, aluminum, silica, tin, tantalum, tungsten and gold (3TG).

Less Material Extraction Needed

While the total land use, capital investment and resource requirements are high, a sustainable energy economy

actually requires less investment and less material extraction than continuing today’s unsustainable path. In

the long run, the transition to sustainable energy will reduce global mining and extraction needs. (Supply

Chain. (n.d.). https://www.tesla.com/impact/supply-chain.)

Battery Chemistry Diversity

Lithium only accounts for roughly 1.5% of the full battery pack weight. Additionally, iron phosphate battery

packs contain no cobalt or nickel. In addition to our own cell manufacturing operations, we're currently using

cells from four different suppliers with three different battery chemistries.

Human rights and environmental preservation are Tesla's top priorities when sourcing parts for their vehicles.

Tesla buys from some of the companies and materials that are directly involved in the construction of their

autos. These days, Tesla gets more than 3,000 parts from 350 different vendors spread around the globe. Raw

materials are sourced from sub-suppliers by many of their direct suppliers, creating a convoluted supply chain.

(Tesla 2, 2021)

As a company, Tesla considers it their job to aid in the global shift toward renewable energy. (Tesla, 2014).

In order to achieve this goal, Tesla is making sure that all of its suppliers are protecting human rights and the

environment. We achieve this by anticipating and addressing any problems that may arise in the supply chain.

Three documents—the Responsible Materials Policy, the Supplier Code of Conduct, and the Human Rights

Policy—describe Tesla's requirements for suppliers. (Tesla 3, 2021) Tesla sources its essential parts from

vendors all over the globe, particularly in Asia, Europe, and the United States. (Maverick 2022),

The goal is to establish a system where the supply chain of Tesla has a beneficial impact on the local

conditions of stakeholders, raising their living standards as a consequence of the company's operations.

Responsible mineral supply chain strategies were designed by the corporation in accordance with the OECD

Due Diligence Guidelines. Increasing the quantity of goods purchased directly from suppliers, particularly

those situated closer to their manufacturing facilities, is the first step. Second, by keeping on buying resources

from all over the globe, which has an effect on local communities' living situations. (Tesla 2, 2021)

From a purely economic perspective, they are crucial, since they are the primary building blocks for cathode

production, which in turn increases vehicle range and safety and accounts for over a third of the total cost of

a battery cell. Also, think about it from the perspectives of the environment and society. This is because,

International Journal of Research

(IJR)

e-ISSN: 2348-6848

p-ISSN: 2348-795X

Vol. 11 Issue 02

February 2024

Received: 22 January 2024

Revised: 2 February 2024

Final Accepted 11 February 2024

although these minerals are mined in different ways all over the globe, they are generally extracted from areas

that are experiencing some kind of social, economic, or environmental crisis. (Tesla 2, 2021) Companies are

seeking resources in more distant and challenging areas to meet global demand, and when known supplies are

exhausted, these minerals are becoming more scarce. And these minerals are considered the most crucial by

US, EU, and Canadian authorities since they are essential to transitioning from fossil fuels to a low-carbon

economy. Consequently, governments, investors, and civil society are increasingly looking into how mining

operations affect the environment and local communities.

Analysis of Tesla's Supply Chain Planning

In an effort to further establish itself in the luxury automobile industry, Tesla joined the market with the

intention of producing electric vehicles (EVs) as well as an upscale brand. Continuous development and

extension of production capacity was part of its strategy, as was an endeavor to lower prices by taking

advantage of decreasing average manufacturing costs. A model of disruption from the top, the changing

consumer profile of Tesla is a result of the company's increasingly cheap vehicles. As a result of its steady price

cuts, Tesla has been able to broaden its customer base beyond the wealthy to middle- class families, after

having initially catered to those with higher incomes who were looking for unique luxury vehicles. While

preserving its reputation for innovation and excellence in the luxury automotive business, Tesla is committed

to making electric vehicles accessible to a broader audience. This commitment is reflected in their strategic

strategy.

Supply Chain Strategy or Design

The success of Tesla can be attributed in large part to the company's supply chain strategy. The world's most

valuable carmaker rose to prominence because to the company's innovative and effective supply chain

management. To maintain a competitive and cost-effective supply chain, Tesla has employed multiple tactics.

With its network of Gigafactories, Tesla controls its own production sites globally. All of the cars and

batteries are made at once in the Gigafactories. Because of this, Tesla can swiftly adjust production in

response to external circumstances that allow it to do so. Being able to design, develop, and manufacture its own

goods in-house at its Gigafactories gives Tesla a great deal of expertise in its own products.

One major perk of the Gigafactories is that they allow Tesla to manufacture everything locally at all times.

Because of our global reach, we can cut out expensive and time-consuming shipping. Plus, it's easier for the

business to adjust to the regional market.

The ability to produce in massive quantities is yet another benefit that Tesla enjoys as a result of the

Gigafactories. Many constraints in the supply chain make this impossible for the competition. For instance,

Tesla has figured out how to keep costs down and keep them from going up by building its own batteries.

The other companies have to source the batteries from other companies. There will be a dramatic increase in

the need for batteries due to the increasing demand for electric vehicles and the fact that all of Tesla's

competitors are required to accomplish this. Because of this, the cost of batteries will rise. Because of this,

Tesla now has an additional long-term edge over its rivals that they will not be able to overcome anytime

soon. (Pressman, M., 2017)

Supply Chain Planning

Products to be Made or Stored at Various Location, In Europe and Germany, for instance, SUVs sell

better than in the United States. Due to this reason, the Model Y is only manufactured in Germany

by Tesla. Both the availability and suitability of pickup trucks for use on European highways are

limited. Having said that, they are rather popular in the US. For that reason, the Cybertruck will not

leave the United States for any production.

International Journal of Research

(IJR)

e-ISSN: 2348-6848

p-ISSN: 2348-795X

Vol. 11 Issue 02

February 2024

Received: 22 January 2024

Revised: 2 February 2024

Final Accepted 11 February 2024

Supply Chain Operation

Tesla's supply chain operations work to efficiently fulfil specific customer orders according to the set up

supply chain. Efficiency in meeting urgent demands is achieved through the effective implementation of

predefined operating policies. Decisions made at the operational level include placing replenishment orders

quickly, assigning orders to specific shipments, creating pick lists at Tesla's warehouses, setting exact order

due dates, establishing delivery timetables, and allocating orders to current inventories or production. Given

the limited time frame, Tesla's Supply Chain Operations prioritise rapid decision-making to keep supply chain

efficiency high and guarantee accurate and fast client order fulfilment.

Tesla’s Process View of Supply Chain

Customer Order Cycle:

In terms of the overall client experience, Tesla's order cycle is a major differentiator. Many people, even those

who weren't planning on buying a car at all, end up buying one of the company's vehicles because of the

innovative software and other amenities it offers. The ordering process is so well-integrated with Tesla's tech-

oriented approach that it feels more like buying a tech product than a regular vehicle.

One further thing that makes driving a Tesla a better experience for customers is how simple the design is.

Tesla gets rid of unnecessary buttons and clutter in favor of an intuitive center display, which allows for

centralized control, in contrast to the competition's historical designs. This approach to design is in line with

what today's customers want and makes products easier to use.

Another important part of the client purchase cycle is maintenance, and Tesla really shines at it. The cars are

famously cheap to maintain, therefore there aren't many expenses related to them. Over-the-air upgrades and a

doorstep maintenance service are just two examples of how Tesla is revolutionizing the maintenance industry

and making life easier for customers. With a focus on the customer that goes beyond the typical dealership

model, Tesla stands apart from the competition (Daniel, 2022).

Replenishment Cycle

Tesla's supply chain strategy is distinguished by its nimble approach to inventory management, leveraging

the company's agility to swiftly adjust inventory levels. This dynamic responsiveness enables Tesla to

promptly adapt to fluctuations in customer demand, ensuring a seamless alignment between supply and

demand. Particularly advantageous for Tesla, given their concise production and delivery cycles, this ability

to quickly fine-tune inventory levels facilitates the availability of the precise components needed for their

rapidly evolving automotive production. By prioritizing flexibility in inventory management, Tesla reinforces

its capacity to meet customer expectations in a timely manner, underscoring the strategic advantage of

adaptability within the automotive industry's competitive landscape.

Manufacturing Cycle

International Journal of Research

(IJR)

e-ISSN: 2348-6848

p-ISSN: 2348-795X

Vol. 11 Issue 02

February 2024

Received: 22 January 2024

Revised: 2 February 2024

Final Accepted 11 February 2024

When it comes to manufacturing cars, Tesla has completely changed the game. Starting with raw materials,

the manufacturer crafts each vehicle, ensuring that their production is as easy as pie. Not to mention, the

producer constructs the automobiles practically single-handedly, resulting in on his own, unencumbered by

the intricate supply networks in the automobile economic sector. The manufacturer's remaining supply chains

are in a manner distinct from that of more traditional automakers. Similar to a When it comes to technology,

Tesla is meticulous about maintaining a multi-layered supply chain in order to prevent obstacles.

Procurement Cycle

Tesla’s example shows just how much supplier relations matters in supply chain management, as procurement

and production guarantees are more likely to face hiccups when a partnership is new. In Tesla’s case, suppliers

needed demonstrations of reliability and good faith before becoming willing to allocate resources, but once

that was accomplished, once reticent suppliers were even willing to relocate nearby. Now, the company has a

logistics park near Fremont, CA, and at least 10 suppliers in the area

Push / Pull Strategy

By utilizing a variety of tactics, Tesla has successfully generated demand for its electric automobiles through

the use of a pull strategy. A community-driven narrative surrounding the brand is nurtured by passionate

Tesla owners who enthusiastically share their good experiences, allowing the company to use the power of

word-of-mouth marketing (Brandtastic, 2021). Satisfied Tesla customers actively interact on social media to

exhibit their automobiles and the innovative features of the brand, greatly amplifying Tesla's visibility and

influence. To expand its customer base and draw attention to the exceptional features, safety features, and

environmental friendliness of its electric vehicles, Tesla uses both organic and targeted advertising strategies.

Tesla exemplifies a pull approach in the cutthroat automobile industry by raising brand recognition and

fostering positive associations through these channels, which in turn encourages consumers to seek out and

select Tesla vehicles.

Achieving Strategic Fit and Scope

Supply Chain Performance Achieving Strategic Fit is a strategy that Tesla as a corporation must put into practice

since it requires supply chain and competitive strategy alignment. This emphasizes how crucial it is to maintain

alignment between the supply chain capabilities developed by the supply chain strategy itself and the

anticipated customer priorities that Tesla seeks to achieve through its competitive strategy. Tesla must also

understand the uncertainties in the supply chain and the demands of its customers. The business also needs to

be aware of its supply chain's capabilities on a constant basis. Tesla must make sure that its supply chain's

capabilities and its competitive strategy are in sync for the company to attain strategic fit. As soon as Tesla

completes these steps with success, the Supply Chain Performance Achieving Strategic Fit methodology is

put into practice. Fundamental to Tesla's competitive advantage in the automotive sector are the company's

strategic fit and brand image. The distinctive brand image of Tesla, which positions the company as a market

leader in innovation and transformation, has become an effective selling pitch, generating unprecedented

excitement similar to that of tech sector behemoths like Apple. Rising popularity, a loyal consumer base, and

high demand are all results of this unique brand identity, which is defined by innovative product design and

unconventional methods of production (Light, L. 2020). It is worth mentioning that Tesla has built its great

reputation without a conventional marketing staff. Instead, they depend on innovative products like the

Cybertruck, which generate buzz through word of mouth. With a whopping 75% of the US market in 2022,

it's clear that this strategy is helping Tesla maintain its competitive edge and cement its position as a market

leader (Emir, C., 2022). The strategic advantage of Tesla goes beyond just its market dominance. The firm has

been at the forefront of electric vehicle mass production, which has given it a leg up in important areas

including battery technology, powertrain innovation, driver safety, and mass manufacturing capacities.

International Journal of Research

(IJR)

e-ISSN: 2348-6848

p-ISSN: 2348-795X

Vol. 11 Issue 02

February 2024

Received: 22 January 2024

Revised: 2 February 2024

Final Accepted 11 February 2024

The combination of growing interest in electric vehicles and Tesla's meteoric rise to fame bodes well for the

future of the firm, as it will likely be able to hold on to its dominant market position.

Understanding the Customers and Supply Chain Uncertainty

Since the demand of customers are very variative and most likely uncertainty Factors including as technical

developments, environmental concerns, and changing market tastes impact the ever-changing demands of

electric vehicle customers. If Tesla can't foresee and adapt to these trends led by its customers, it will fail

miserably. Tesla is able to adapt its manufacturing and supply chain plans to meet the changing tastes of its

customers by using sophisticated data analytics and feedback mechanisms. In addition, the ever-changing

governmental environment, the quick speed of technological innovation, and geopolitical issues all contribute

to a degree of supply chain instability in the electric car market. In light of these difficulties, Tesla has taken

measures to lessen the impact of unknowns. One distinctive feature of the Tesla supply chain is vertical

integration, which gives the business more say over critical components while decreasing its reliance on third

parties and making the company more resilient to interruptions. By strategically placing Gigafactories across

the globe, we can meet demand in different regions and protect ourselves from logistical and geopolitical risks.

Tesla also using a proactive approach to navigate supply chain uncertainties by: Focus on the Customer:

Tesla uses data analytics and feedback methods to understand how customers' preferences change over time.

This helps the company adjust its manufacturing and supply chain strategies appropriately.

Understanding Supply Chain Capabilities

Tesla, a leader in the automotive industry, has established a supply chain strategy built around two essential

components: flexible inventory management and real-time visibility. In a market where technology advances

at a dizzying pace and consumer tastes are always shifting, Tesla's dedication to being nimble and flexible is

highlighted by this strategic approach. Tesla is able to quickly detect and resolve possible issues, like as

component shortages or delivery delays, by utilising real-time visibility into all aspects of its supply chain

processes. By being proactive, Tesla is able to quickly address issues and streamline production while

components flow smoothly. Another indicator of Tesla's ability to respond to fluctuating consumer demand

is the company's adaptable inventory management system. With the electric vehicle industry's notoriously

short production and delivery cycles, Tesla's capacity to swiftly modify inventory levels puts them in a prime

position to efficiently satisfy customer needs. When it comes to managing the intricacies of modern

manufacturing and guaranteeing customer satisfaction, Tesla's supply chain approach is a model for other

industry leaders. It highlights the significance of real-time analytics and inventory flexibility.

Driver of Supply Chain Performance

When it comes to electric vehicles, Tesla is at the forefront of innovation. The company's supply chain

performance is driven by a complex web of factors that work together to give them exceptional success. Tesla,

a leader in environmentally friendly transportation, has changed the game in more ways than one. The business

has shaken up the car industry and the way traditional supply chains work. The innovative manufacturing

processes and vertical integration at Tesla impact their supply chain performance. Their market positioning

and customer engagement strategies are forward-thinking, and their strategy covers everything from sourcing

raw materials to delivering state-of-the-art electric vehicles to customers all over the world. This analysis

dives into what makes Tesla stand apart in the dynamic automotive and technology industries, as well as what

propels the company's supply chain success.

International Journal of Research

(IJR)

e-ISSN: 2348-6848

p-ISSN: 2348-795X

Vol. 11 Issue 02

February 2024

Received: 22 January 2024

Revised: 2 February 2024

Final Accepted 11 February 2024

Facilities: The manufacturing and warehouse storage strategies that an organization employs greatly

influence its place in the supply chain, which in turn determines its function and competitive advantage. In this

regard, the Gigafactories and Tesla's production methodology are prime examples of the dynamic interaction

between efficiency and reactivity. Tesla, in contrast to its competitors, owns and maintains its production

locations worldwide, allowing it to centralize the manufacture of both automobiles and batteries. By making

this strategic shift, Tesla is able to respond quickly to changes in the market and take advantage of economies

of scale, which boost production efficiency. In addition to being centers for design, research, and innovation,

Tesla's Gigafactories provide employees with extensive product knowledge and help them reach a high degree

of technical proficiency. Furthermore, Tesla is able to minimize delivery times and transportation costs by

producing locally because to the global dispersion of Gigafactories. Showcasing its dedication to strategic

decision-making, which greatly impacts its supply chain performance in a dynamic market, Tesla has adopted

a decentralized approach that is in line with the necessity to balance responsiveness and efficiency.

Inventory: To better meet consumer demand, Tesla uses a production-to-order approach and keeps fewer

vehicles in stock than conventional automakers. The organization maximizes production efficiency and

minimizes extra stockpiling by adhering to the principles of just-in-time manufacturing. Localized production

and effective inventory management are two outcomes of Tesla's Gigafactories, which prioritize vertical

integration and in-house manufacturing. The supply chain agility of the organization enables it to swiftly

adapt to changes in the market and strike a strategic balance between efficiency and responsiveness. Ongoing

customer happiness and reduced need for large-scale inventory corrections are both contributed to by Tesla's

dedication to software updates and over-the-air enhancements. While exact figures regarding stock on hand

could change, Tesla's method places an emphasis on efficiency, adaptability, and customer-centric approaches

to inventory management.

Transportation: All along its supply chain, Tesla uses a wide variety of transportation options to get parts

and finished goods to customers. Part of this process involves the use of trucks to move automobiles and parts

between assembly plants, warehouses, and customers' doorsteps. Because it is both economical and efficient,

rail transport is a popular choice for long-distance shipments. Tesla is considering using cargo ships for

international shipments. When time is of the essence, like when components required for production must be

transported quickly, air freight is used. The Tesla Semi, an electric semi-truck, is a new addition to Tesla's

transportation fleet that brings innovation and sustainability to the freight hauling industry. To round out the

delivery process, Tesla uses a mix of local delivery trucks, traditional car carriers, and even electric vehicles

for the last mile. With this all- encompassing method, Tesla is able to optimize the mobility of its supply chain

by taking into account aspects like cost-effectiveness, environmental impact, and the unique needs of each

shipment.

Information: The management of Tesla's inventory is also optimized through the use of big data. It is possible

for Tesla to determine which components are in great demand by evaluating the data collected from its vehicles

and then adjusting its inventory accordingly. As a result, Tesla is able to reduce the likelihood of experiencing

delays or shortages by ensuring that it has the appropriate components in stock at the appropriate moment.

Sourcing: Some of the materials and companies needed for production of Tesla’s cars are purchased from

their direct suppliers. Nowadays, Tesla has over 350 suppliers from all over the world providing the company

with more than 3000 parts. Many of their direct suppliers receive those raw materials from their sub-suppliers:

This leads to a complex supply chain. (Tesla 2, 2021)The three most crucial minerals for battery production—

nickel, cobalt, and lithium—were also part of Tesla's responsible sourcing program. (Tesla 4, 2021) First and

foremost, from a business perspective, they are significant because they are the primary ingredients used to

make cathodes, which are responsible for almost one third of a battery cell's total cost and are essential for

improving the range and safety of electric vehicles.

International Journal of Research

(IJR)

e-ISSN: 2348-6848

p-ISSN: 2348-795X

Vol. 11 Issue 02

February 2024

Received: 22 January 2024

Revised: 2 February 2024

Final Accepted 11 February 2024

Also, think about it from the perspectives of the environment and society. This is because, although these

minerals are mined in different ways all over the globe, they are generally extracted from areas that are

experiencing some kind of social, economic, or environmental crisis. (Tesla 2, 2021)

Pricing:

When it comes to automobiles, Tesla's value-based pricing strategy is spot on. The business markets its EVs as

life-altering adventures rather than just transportation options. Tesla recognizes the distinctive and premium

qualities of their products by basing prices on the perceived worth of their innovative and eco-friendly

automobiles.

Due of the commodity nature of many automobile products, Tesla is able to stand apart by using value- based

pricing. The approach takes into account the fact that consumers are investing in state-of-the-art technology,

exceptional performance, and a dedication to sustainability when they purchase a vehicle. This strategy gives

consumers a strong argument for choosing Tesla over conventional gas-powered automobiles, which is in

line with the increasing desire for environmentally beneficial options.

the value-based pricing model is in line with Tesla's emphasis on establishing good connections with

suppliers. The corporation places a premium on its supply chain, which it uses to acquire high-quality parts

that boost the vehicles' performance and value. By doing things this way, Tesla is able to improve the quality

of its products and fortify its alliances, which guarantees a steady supply of essential components.

The value-based pricing approach is essential for Tesla to preserve its premium brand image and cultivate

customer loyalty while the company innovates and advances electric car technology. Tesla can maintain its

dominance in the electric vehicle market and increase product longevity by learning about and catering to the

needs of customers who are ready to spend more for an exceptional driving experience.

Tesla also adjust they strategy depends on the location, Using a skimming pricing approach, Tesla entered

the Chinese market from November 2018 to October 2019. The demand price elasticity was low when Tesla

first entered the Chinese new energy vehicle market, and the company aimed its products toward celebrities

and the well-off, who were both concerned about the environment but couldn't care less about the price.

Consequently, Tesla initially entered the Chinese market with the brand positioning of "high-tech vehicle +

new energy" to enhance its product identity and generate high prices. Impressions of a well-known and high-

quality brand. (Yi Zhou, 2022)

Designing Distribution Networks and Application to Online Sales

Unlike other car manufacturers who sell through franchised dealerships, Tesla uses direct sales. It has created

an international network of company-owned showrooms and galleries, mostly in prominent urban centers

around the world. By owning the sales channel, Tesla believes it can gain an advantage in the speed of its

product development. But more importantly, it also creates a better customer buying experience. Unlike car

dealerships, Tesla showrooms have no conflict of interest. Also, customers only deal with Tesla-employed

sales and service staff. Including the showrooms, Service Plus centers (a combination of retail and service

center), and service facilities, Tesla has 225 locations around the world as of July 06, 2017. Tesla has also made

use of the Internet sales where consumers can customize and purchase a Tesla online.(Mohit & Neeraj)

A key component of Tesla's success, especially in the context of online sales within the car sector, is the unique

way it designs distribution networks. Tesla, in contrast to more conventional car companies, sells its vehicles

directly to consumers using an extensive online platform that lets them personalize, order, and pay for their

vehicles. This change in thinking calls for a rethinking of distribution networks and is also in line with shifting

customer tastes.

International Journal of Research

(IJR)

e-ISSN: 2348-6848

p-ISSN: 2348-795X

Vol. 11 Issue 02

February 2024

Received: 22 January 2024

Revised: 2 February 2024

Final Accepted 11 February 2024

Strategically placed delivery centers and service hubs define Tesla's distribution network design. In order to

ensure that cars reach clients quickly and efficiently, these centers are crucial to the last-mile delivery process.

Delivery times are minimized and the client experience is made more smooth thanks to the planned location

of these hubs. In addition, Tesla's distribution strategy is heavily focused on vertical integration. Customers

can visit company-owned showrooms to get a feel for the brand and get individualized support.

By incorporating real delivery hubs into the online platform, Tesla has successfully applied its distribution

network design to online sales. Efficient order fulfillment is made possible by real-time visibility into

inventory levels and order status, allowing Tesla to meet the demands of its continuously expanding customer

base. The company's commitment to sustainability is evident in its distribution approach. Electric trucks are

used to bring electric automobiles to delivery hubs, reducing the environmental impact of transportation.

Impact of Online Sales on Customers Service

Online sales have revolutionized customer service at Tesla, breaking away from the mold of conventional

car dealerships. In addition to revolutionizing the buying process, Tesla has reimagined customer service by

allowing customers to browse, configure, and purchase vehicles online.

Customers are empowered by self-service capabilities, which is a noteworthy impact. Customers may learn a

lot about Tesla's products, features, and prices on the website, which has a wealth of information. Customers are

more informed because to this self-sufficiency, which means less handholding is required throughout the

traditional sales process. When it comes to customer service, though, Tesla backs up their autonomy with

strong channels like online chat, email, and phone support, so you can reach out to them whenever you need.

Online sales' direct-to-consumer strategy has also made customer assistance more efficient and individualized.

Throughout the ownership journey, Tesla's customer care professionals are available to assist customers

directly, answer questions, and provide real-time updates on orders. Reinforcing Tesla's dedication to customer

happiness, this direct contact route strengthens the customer-brand relationship.

The way Tesla handles repair and maintenance reflects the influence of internet sales on customer support.

The business uses over-the-air (OTA) software updates, which enable remote diagnostics, proactive problem

solutions, and ongoing performance enhancement of vehicles. In addition to improving the ownership

experience as a whole, this makes the service model more convenient and efficient by reducing the frequency

with which consumers need to visit service centers for normal upgrades.

Impact of Online Sales on Cost

Online sales have contributed to Tesla's operational efficiency and had a revolutionary effect on the

company's cost structure, shaking up the automotive retail industry. Cutting out the middleman—the

conventional dealership—is one of the main ways to save money. By moving away from a network of

dealerships and instead selling directly to consumers through internet channels, Tesla has been able to cut

costs in areas like showroom upkeep, inventory storage, and dealership staff pay.

Online sales have simplified the sales process for Tesla, which has reduced costs in different areas of the

transaction. Automated order processing, less administrative burden, and less paperwork are all benefits of

digitizing the sales journey. Because consumers can design and buy cars directly on the website, cutting out

middlemen, the platform also allows for more efficient use of resources.

Online shopping has also helped Tesla streamline its inventory management and cut down on carrying

expenses. The elimination of needless vehicle hoarding in response to dealer demands is made possible

International Journal of Research

(IJR)

e-ISSN: 2348-6848

p-ISSN: 2348-795X

Vol. 11 Issue 02

February 2024

Received: 22 January 2024

Revised: 2 February 2024

Final Accepted 11 February 2024

by the direct connection between online orders and production, enabling a more demand-driven

manufacturing approach. The just-in-time production strategy helps reduce the costs of storing inventory and

lessens the financial strain of having too much stock on hand. (Holland, M. (2019, March 3))

It is clear from Tesla's cutting-edge service and maintenance approach that internet sales have an effect on

costs. By allowing remote diagnostics and issue resolution through over-the-air (OTA) software upgrades,

the need for actual visits to service centers is significantly reduced. In addition to saving money compared to

more conventional service methods, this improves the client experience.

Tesla Challenge

There has been a long history of delivery delays for Tesla cars. It's one of the numerous things that most Tesla

buyers have griped about while placing their orders. There have been clients who have waited months, and

some who have waited over a year, with no clue as to why or when their automobile would come.

1. Supply Chain Issues

Problems with the supply chain have been one of the main reasons Tesla deliveries have been late. Every

major automaker has been feeling the effects of the worldwide chip shortage, which has been slowing output

for some time. Despite ongoing issues with delivery deadlines, Tesla was the only company to triple output

during this time (the previous two years). It seems, though, that even it can't be immune indefinitely, since it

began to encounter these problems in the first quarter of 2022.

So far, manufacturing has been significantly cut and Tesla delivery has been further delayed due to supply

chain concerns stemming from a chip shortage. Tesla was forced to postpone the shipment of certain long-

range models until 2023 as of June 2022. Consider the Model X, for example; it won't be available for

purchase until sometime between February and May of 2023.

Some buyers have also complained that they did not receive all of the components for their vehicles because

of problems in the supply chain. The Electronic Control Unit (ECU) with the charging port is one such

component. Some clients have complained that their cars are complete but won't be delivered due to missing

components. So far, no one knows when the part will be ready, and some have waited months for it.

There has been no proof of an ECU shortage, yet rumors persist. In addition to the ECU problem, some buyers

have mentioned that problems with the drive unit have caused their orders to be delayed. According to the

findings, Tesla staff have stated that the drive unit repair is currently unavailable, which is the root reason of

the ongoing delay. It is clear that multiple parts are involved, even if you might assume that Tesla is only

experiencing problems with the supply of one element. Therefore, there may be additional delays, even though

some customers may receive their cars early. The rates of missing part supply are crucial.

2. Inaccurate Delivery Estimation

The company's inaccurate delivery estimate is another reason Teslas don't arrive early. Although Tesla did

not give them a specific date, they are able to anticipate when their car will be ready by looking at past

customer experiences and other variables that impact production. But this is not how Tesla sees things. Rather,

they provide delivery date estimates that are often inaccurate.

Having this error arrive later than anticipated would have been preferable, but alas, it has arrived the opposite

way around. After the initial date estimate, Tesla consumers are need to wait an additional month. Any

customer, no matter how patient, will find this annoying, and it may even cause them to lose interest in

purchasing the car.

International Journal of Research

(IJR)

e-ISSN: 2348-6848

p-ISSN: 2348-795X

Vol. 11 Issue 02

February 2024

Received: 22 January 2024

Revised: 2 February 2024

Final Accepted 11 February 2024

There is a lot of room for improvement in Tesla's delivery date accuracy if the company takes production and

delivery risks into account. Early rather than late deliveries are possible outcomes of a well-thought- out risk

plan. The majority of buyers will find this more satisfactory.

3. Order Location

How early customers can obtain their electric vehicles depends on their area when they place an order with

Tesla. The likelihood of delivery being early for locations closer to Fremont, California is higher than for

states farther away. For the sake of meeting its quarterly delivery objective, Tesla prioritizes making

deliveries closer to Fremont than other locations. Now, under these conditions, it's possible that delivering to

further places won't work.

It may take more time for Tesla to make resources available to sites that are farther away. In some cases, there

can be a holdup in obtaining these resources because of shortages. A lack of transportation options is one such

example. Tesla has announced that it is facing a scarcity of these resources, making it difficult to fulfill client

orders in certain regions due to a lack of available vehicles and ships. Customers in certain areas may encounter

longer delivery delays than average due to Tesla's limited transportation options.

Conclusion

This Paper examines Tesla's supply chain management in detail, looking at its planning procedures,

operational aspects, and important strategies. Topics covered include Tesla's efforts to find a strategic match,

problems to solve, factors to discover, and supply chain performance evaluation in general. The article

highlights the ways in which Tesla's innovative practices—including a vertically integrated strategy, flexible

inventory management, and real-time visibility—contribute to an efficient and responsive supply chain.

Sustainability and social concerns are given due attention as the investigation into Tesla's dedication to

responsible mineral sourcing continues. In the future, supply chain effectiveness and efficiency could be

improved by Tesla's relentless innovation, just like its groundbreaking use of over-the-air software updates.

Improving supply chain performance is one of Tesla's goals, and one way the company plans to do this is by

broadening its network of suppliers and business partners. Customers will have a smooth experience dealing

with Tesla's unique products thanks to this strategic approach, which is in line with Tesla's dedication to

customer happiness.

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International Journal of Research

(IJR)

e-ISSN: 2348-6848

p-ISSN: 2348-795X

Vol. 11 Issue 02

February 2024

Received: 22 January 2024

Revised: 2 February 2024

Final Accepted 11 February 2024

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model-3-sales-were-online-musk-email-sheds-light-on-new-sales-strategy/

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ResearchGate has not been able to resolve any citations for this publication.

The role of digital knowledge servitization in supply chain management

Article

Apr 2023
Int J Phys Distrib Logist Manag

Purpose This paper aims to contribute to overcoming the gap existing in the supply chain literature related to digital servitization by bridging digital servitization with knowledge management and identifying the rise of digital knowledge servitization as a driver for changes in the supply chain business model towards open innovation. Design/methodology/approach The study follows an inductive grounded theory approach for theory building. To analyse the impact of digital knowledge servitization, in-depth interviews of managers in the main business units of the Volvo Group supply chain ecosystem were carried out. Findings The results show how the digital servitization process affects the supply chain business model, highlighting the central role of knowledge in the service ecosystem and the rise of the theoretical concept of digital knowledge servitization. In particular, through the Innovation Lab (Volvo Group) study, the paper contributes to bringing together the theoretical knowledge-based view of servitization with the digital servitization concept, which demonstrates the role of this combined perspective in the transformation of the supply chain; this is carried out by introducing a new business model based on open innovation in inbound and outbound processes. Practical implications The research offers interesting insights from a managerial perspective, as increasingly advanced and complex digital solutions require shorter times in supply chain management (SCM). Companies need to be able to quickly manage information and knowledge flows deriving from internal and external interactions and involvement with external actors upstream and downstream of the supply chain ecosystem. Therefore, the digital knowledge servitization of the supply chain also highlights implications for managers in terms of human resources management. Originality/value The novel research goal is to contribute to the supply chain literature by integrating the digital servitization with the knowledge view and analysing the impact on the inbound and outbound supply chain through the introduction of an open innovation business model.

Supply Chain Management. Strategy, Planning & Operation

Article

Jan 2002

78% Of Tesla’s 2018 Model 3 Sales Were Online -Musk Email Sheds Light On New Sales Strategy

Mar 2019

M Holland

Holland, M. (2019, March 3). 78% Of Tesla’s 2018 Model 3 Sales Were Online -Musk Email Sheds Light On New Sales Strategy. CleanTechnica. https://cleantechnica.com/2019/03/03/78-of-teslas-2018-model-3-sales-were-online-musk-email-sheds-light-on-new-sales-strategy/

Why Are Teslas Always Delayed? (6 Main Reasons). Motor & Wheels

Oct 2023

P Jones

Jones, P. (2023, October 19). Why Are Teslas Always Delayed? (6 Main Reasons). Motor & Wheels. https://motorandwheels.com/why-are-teslas-always-delayed/

Tesla Roadster production has been delayed for years. What we know about its price, specs, and release date

Jul 2023

G R T L G Kay

Kay, G. R. T. L. G. (2023, July 22). Tesla Roadster production has been delayed for years. What we know about its price, specs, and release date. Business Insider. https://www.businessinsider.com/tesla-roadster#:~:text=Issues%20with%20production&text=The%20company%20has%20faced%20produc tion,Musk%20tweeted%20in%20September%202021.

Why Tesla stock is crumbling -and where it could go next

Oct 2023

I Krietzberg

Krietzberg, I. (2023, October 23). Why Tesla stock is crumbling -and where it could go next. TheStreet. https://www.thestreet.com/electric-vehicles/why-tesla-stock-is-crumbling-and-where-it-could-go-next

How Tesla Worked With Suppliers to Scale Production From Hundreds to 50K

Jan 2017

Edwin Lopez

Lopez, Edwin. "How Tesla Worked With Suppliers to Scale Production From Hundreds to 50K." Supply Chain Dive, 18 Jan. 2017, www.supplychaindive.com/news/Tesla-supply-chain-supplier-relationshipproduction/434152.

An Insight into Tesla Supply Chain Strategy : A Comprehensive Guide

Sep 2023

P Maleki

Maleki, P. (2023, September 18). An Insight into Tesla Supply Chain Strategy : A Comprehensive Guide. DFreight. https://dfreight.org/blog/an-insight-into-tesla-supply-chain-strategy/

Chain Models---A Case Study of Tesla Motors

Jan 2022

Scm Pma Supply

SCM PMA Supply Chain Models---A Case Study of Tesla Motors. (2022). International Journal of Frontiers in Engineering Technology, 4(4). https://doi.org/10.25236/ijfet.2022.040405

Time-Based Competition in Tesla´s Supply Chain in the Era of Industry 4

Jan 2022

Sypko

Sypko. (2022). Time-Based Competition in Tesla´s Supply Chain in the Era of Industry 4.0. Tesla. Tesla Shop. (n.d.). Tesla. https://shop.tesla.com/

Unveiling the Tesla Touch in Supply Chain Effectiveness

Abstract

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