Strategic Operations Decisions Applied in Tesla

Strategic Operations Decisions applied in Tesla
The tesla company uses all the 10 strategic OM (operation management) decision to
make effective decisions, achieve the company’s strategy and mission of response,
low cost and differentiation of its products from competitors. Below, are the strategic
OM decisions that are applied effectively and efficiently at Tesla:
1. Design of Goods and Services. This strategic decision entails what is required
of a company’s operations in each of the other OM decisions[ CITATION Jay17 \l
7177 ]. The objective in this strategic decision area is that operations managers
must successfully address how the companies’ products determine or influence
the quality, human resource and cost[ CITATION Jay17 \l 7177 ]. In other words,
match the company’s organisational capabilities with customers’ requirements
and demand. Tesla tackles the design of goods and services with the use of
concurrent engineering (implies speedier product development through
simultaneous performance of the various stages of product development)
[ CITATION THO17 \l 7177 ]. The approach allows the company to be innovative
and constantly introduce new features of a car to the market in order to meet and
exceed the changing customer’s expectations[ CITATION THO17 \l 7177 ]. For
example, Tesla has made model 3 cars, an affordable unique electric car that
allows one to control the car using smartphone. Via a Bluetooth the car knows
you are coming, this allow you to open and lock the car from short
distance[ CITATION JOH18 \l 7177 ].
2. Managing Quality. The priority in managing quality is to identify the customer’s

quality expectations and develop procedures and policies to meet the expected
quality[ CITATION Jay17 \l 7177 ]. Tesla motors satisfy this objective by constantly
researching customers wants on the automotive market. Managing quality
successfully will make Tesla to strongly compete with the leading companies like
BMW and Mercedes-Benz. Also, the firm addresses this strategic operation
decision area through the firm improving cars and supply chain annually. For
example, the company introduced the model 3 car in the marketplace which has
better features than previous models[ CITATION Tes18 \l 7177 ].
3. Process and Capacity Design. This strategic operation decisions is concern

with determining how Tesla produces cars along with the organisational
resources, costs and capabilities in achieving the production goals. Tesla Motors,
Inc. integrates automation for this concern. For example, the company has
automated production and assembly machines along with physical human labour
( Manufacturing Process of Model S in TESLA Factory ). This method of
combining human and technology helps Tesla achieve high ratio of productivity
through operational efficiency in the automotive business.
4. Location Strategy. Tesla motor company’s aim in this strategic decision area of
operations management is to locate its business effectively to suppliers,
customers and workers while bearing in mind the government, costs, logistics
and infrastructure. Tesla uses leading suppliers around world to provide essential
resources for manufacturing products. For example, tesla get automated-graded
battery cells from Panasonic, these will be used to produce an estimate of more
than 80 000 cars in the coming 4 years[ CITATION Tes18 \l 7177 ]. In addition,
these battery are under the Gigafactory 1 ( a facility built to reduce the battery
cost and to manufacture more annually lithium-ion batteries than in 2013
worldwide) which will increases productivity while reducing costs.
5. Layout Strategy. In this

decision area, the objective is
to maximize the efficient flow
of information, people and
materials. The tesla’s factory
located in California, provide
employees with natural light
and has 5.3 million square
feet of manufacturing which
maximise capacity utilisation.
The layout is designed to
increase productivity of the
firm[ CITATION Tes18 \l
7177 ].
Figure 1: facilities at the Tesla factory in California
6. Job Design and Human Resources. Tesla has the goal to recruit, retain and
motivate human resources with the necessary skills and knowldge. Tesla’s
mission in terms of human labour is to “hire the world's best and brightest people
to help make this future a reality.” The firm attracts high qualified candidates
through offering different job titles and satisfactory compensation package
consisting of both non-monetary and monetary incentives. Also, the company
offer internships to university students who are highly likely to be competitive and
diverse individuals.
7. Supply Chain Management. this strategic decision area of operations

management focuses on decisions that determine what is to be purchased , from
whom, and under what conditions. Tesla has a different supply chain compared
to most of the automobiles companies. Its supply chain does not include a
dealership who sell the companies products on behalf of the firm but rather sell
their products directly to the customer[ CITATION Ruo14 \l 7177 ].
8. Inventory Management. To address this concern, teslar has taken the approach
of holding little inventory and customer have to be placed on waiting list for
several months since it has cut the dealership and sells its products directly to
the customer[ CITATION Ruo14 \l 7177 ]. Keeping inventory low means that tesla
minimise the risk tied up to holding excessive stock. Such inventory management
method lead reduced logistic costs and more than $30 million in cash
[ CITATION Tes13 \l 7177 ]. Placing customers on waiting list for several month
allow for more customization. Tesla utilise these approaches as a way to achieve
organisational goals and customer satisfaction.
9. Scheduling. This area focuses on short-term and intermediate schedules that

effectively and efficiently utilise both personnel and facilities while meeting
customer demands. Operations managers at Tesla Motors, Inc. address these
concerns through market-based scheduling, combined with automated processes
for maximum efficiency. In market-based scheduling, the company monitors
actual market demand and uses the resulting data as basis for scheduling
automobile production. On the other hand, Tesla’s operations management
supports scheduling activities with automation to minimize errors and delays,
thereby enhancing productivity.
10. Maintenance. Adequacy of resources and production capacity are the objectives
in this strategic decision area of operations management. Tesla ensures resource
adequacy through regular inventory monitoring that readily responds to shifts in
market demand. The company addresses the objective of adequate production
capacity through a small but significant degree of redundant processes and
production resources. For example, Tesla maintains excess production capacity
in some of its facilities. Such redundancy allows the company to rapidly increase
its production in response to spikes in market demand for electric vehicles. These
operations management approaches create resilience and responsiveness in
Tesla’s productivity.
Tesla motor manufacturing
Finance/accounting Marketing
Operations
o Distursements/ Sales promotion
o Facilities
credits Advertising
Construction; maintenance
Accounts receivables Sales
o Production and inventory
Accounts payable Market research
control
General ledger
Scheduling; material control
o Funds management
o Quality assurance and
Money market
control
International exchange
o Supply-chain management
o Capital
o Manufacturing
requirements
Tooling; fabrication; assembly
Stock issue
o Design Bond issue and recall
Product development and
design
Detailed product specifications
o Industrial engineering
Efficient use of machines.
space, and personnel
o Process analysis
Development and installation of
production tools and equipment

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Strategic Operations Decisions applied in Tesla

2. Managing Quality. The priority in managing quality is to identify the customer’s

3. Process and Capacity Design. This strategic operation decisions is concern

5. Layout Strategy. In this

7. Supply Chain Management. this strategic decision area of operations

9. Scheduling. This area focuses on short-term and intermediate schedules that

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