Question

1) Describe how Tesla either does or does not apply the following concepts and give examples. (add the references)

a) How does Tesla use Prevention Costs?

b) How can they their improve quality and production? Explain

c) Discuss the concept of Theory of Constraints in terms of Tesla.

Answer 1

Ans a.

Tesla uses Prevention cost as follows:

“Prevention cost or costs incurred to prevent defects or potential failures in the first instance by improving systems and processes, for example TQM, improvement in manufacturing processes, workers training, statistical process control etc.’

• Tesla uses best practices to maximize productivity while minimizing costs, it focuses on following prevention costs:

1. Design of goods: They follow a method of concurrent innovation. For example, to increase productivity in manufacturing the advanced electric vehicle, they continuously innovate in their supply chain management. They also maintain a focused approach to manufacture of electric automobiles. The focus maximizes the organizations capacity for automobile innovation.
2. Quality management system: The main objective of the organization is to satisfy customer’s expectation. They achieve this objective by continuous research in the automotive market. They also enhance products and processes to satisfy high-quality standards. For Example Tesla’s managers continuously review product quality and enhance manufacturing processes accordingly.
3. Process capacity and design: The operation management focuses on processes and invests resources, standards to achieve it. Tesla follows automation to achieve it and they have systems of automation with human intervention where required.
4. Layout and Design strategy: The manufacturing of electric vehicle layout is designed to maximize resource utilization. They use advanced computing and network technologies to maximize productivity in Tesla’s operations.
5. Supply chain and inventory management: They follow a just in time method of inventory management, the suppliers are sourced according to logistics benefits’. They have a global supply to chain to make it more effective and efficient. They have systems to maximize the supply chain and minimize inventory costs.
6. Maintenance: They follow method of excess capacity so that in case of sudden spike in demand they can supply without any hiccups. They believe in resilience and responsiveness by keeping excess resources to ensure market serviceability immediately.

Ans b.

They can improve quality and production as follows:

• They need to continuously review the manufacturing system and identify the weakness in the following:

1. Raw material and component sourcing should be quality checked at manufacturer/ supplier point
2. The standard of components should be rechecked at the manufacturing base, the product in quality should be shared with the manufacturer, supplier immediately.
3. The production process should have checkpoints for quality verification and necessary stops should be done if some failure is noticed.
4. Continuous innovation and automation of systems will improve quality parameters.
5. The market feedback and reviews should be implemented and absorbed to improve the product and process quality.

Ans C.

The theory of constraints is defined as the methodology for defining the most limiting factor, identifying the constraint, and finding methods of elimination the constraints.

Tesla can start by reviewing its objectives, which is maximizing electric automobile manufacturing and achieving excellence in the processes.   They can implement in manufacturing, supply chain, management, marketing, accounting and inventory management as follows:

• Introduce made to order and make to availability concept in manufacturing
• Use critical chain project management to address the weakness in supply chain and inventory management systems.
• Introduce companywide system improvement plans
• Use TQM more effectively
• Encourage innovation and continuous research
• Take market feedback and evaluate your weakness and strengths and address them with corrective actions.

To sum it Tesla needs to have a multi level and multi pronged strategy to address its weak points and improve systems and quality of the product.