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Question:

Discuss about the Operation Management of Tesla.
 
 

Answer:

Introduction:

Tesla was seen to be founded in the year 2003 by a group of engineers, with main motive to manufacture cars based on electric technology. The company’s vision further includes proving that their technology has been seen to be better that the gasoline cars. In the recent time, Tesla is involved is involved in manufacturing not only the all-electric vehicles but is also able to build storage products for scalable clean energy generation. The fist launch of the product has been seen in terms of launching of Roadster in 2008. Post launch of this vehicle the company has been able to be the first in manufacturing the premium all-electric sedan from Model S. The main production unit of the company has been further seen to be based on Fremont factory in California .in this particular location the company also manufactures majority of the vehicle’s components (Tesla.com, 2017).

On March 31, 2016, the new lower priced model 3 of Tesla electric car has been seen with total customer order of 276,000 over the weekend. However, previous Model X has struggled with due to the various types of the associated issue related to the production in terms complex combination of mechanical and computer software problems. The consumer reports have further recommended that they should avoid new cars in their first year of production. The report aims to show the various aspects to refute such recommendations. This has been further able to recommend the various types of the considerations which have been seen to be based on designing of service process new Model 3. The report has been further able to suggest the various types the considerations for Tesla relative to ensuring the quality of their new Model 3 car.

 

Recommendations to refute avoiding new cars in their first year of production

The consumer reports have been seen to test the reliability of the services provided by a particular model of the based on series of questionnaire. The questionnaires asked to the consumer are sent to the associated subscribers. The main consideration made in the questionnaire has been further seen to be based on the incidences which have taken place in the last 12 months.  These subscribers have been asked to identify the problems relating to issue such as cost, failure, safety, or downtime. The total number of the surveys has been further seen to be ranging from a total number of 200 to 400 samples for each model year (Consumerreports.org, 2017).

Based on the consideration made in the previous consumer survey reports tit has been seen to be discerned that it is recommended that the consumers should avoid buying of the new cars in their first year of production. Some of the main recommendations to refute this have been seen with the following considerations:

Improving the RMA or RGA services- The recent issues with Model X including mechanical fault such with falcon wing doors and latch on the third-row seat cannot be overlooked and Tesla needs to take appropriate actions to address the same.  “Return merchandise authorization (RMA)” or “Return goods authorization (RGA)”, it that part of the operations management which ensures that the product ordered is eligible to receive a replacement, refund, or repair during the product's warranty period. Tesla should allow the consumers to contact the manufacturer or distributor to receive the authorization to return any part which has been identified to be faulty. The company can seek to improve the existing RMA and RGA services by ensuring that the consumers are able to get these services receive free  of cost for the assigned warranty period of Model 3. Some of the other considerations need to be made in terms of the various types of the services which are seen to be associated to the manufacturing process itself. This will be able to ensure that the products will be replaced even before the reaching the consumers. This can be done during the final testing of the products and ensure that the new cars are not equipped with any faulty equipments (Calvi et al., 2015).

Improving the Return to vendor (RTV) services - The company needs to further ensure that specific steps needs to be taken in terms of the various types of the considerations which are seen to be related to the process of returning the goods to the original vendor of the products rather than sending the same to the associated distributor of the products.  Tesla needs to particularly reduce the various types of the process which are related to the returning of the original goods to the original vendor rather distributor. The end consumers should be allowed to book the various types of the service which are seen to be related to the booking of RTV services.  The company needs to ensure that in incidence of any failure  of parts of the car a service deliver agent is able to pick the car from the  destination of the user and it needs to en further ensured that the associated faults due to the manufactured process needs to be resolved free of cost (Heizer, 2016).

Effective warranty services –In order to refute the recommendation based on the Model X of the company it needs to ensure that the warranty services are best on compare to the competitors. It has been further discerned that the various types of the cost incurred to provide the after sales service will result in increasing customer loyalty and more consumer will look forward to invest in the new model of Tesla.

 


Treat the Situation with Urgency- The Company needs to solve the various types to the previous issues which are seen to be associated the faults of the production in the previous Model X. It needs to further ensure that the different types the service provided by Tesla is delivered with utmost testing and reliability. The company needs to focus on the improvement of the quality of the consumer survey and be able to deliver the most reliable product with efficient design (Slack, 2015).

Have a Positive Attitude- Tesla should look forward to regain the trust of the consumers not only by the process of the adding exclusive features to the new model but to ensure that Model 3, will be one of the best in its class. It needs to regain the faith of consumers, by ensuring that the new model of the car will be completely different in terms of reliability than its predecessors (Dow & Dow, 2016).

Managing the delivery of the new Model 3 during the initial production ramp up

It has been seen that Tesla has been able to share the various types of information which are seen to be related to the delivery of the new Model 3 during the initial production ramp up. Tesla should set a target of 20,000 consumers in December. Tesla should take reviews from the customers for its first 30 orders of Model 3. It needs to further aim to produce 100 and further increase this to 1,500 in September. As the company has been seen to launch a total of 25,051 vehicles in the first quarter, it should double up the distribution process in the second quarter (Hull, 2017). 

The main geographic locations selected to deliver the products in Europe and North America. For the delivery of the efficient service the company needs to consider the partners which are seen in terms of the position of the new cars in the market. Tesla is having more than 30000 of them including long working in the factory located at Fremont. The models of the car have been shown off with 5,000 cars per week and the company should further consider 10000 cars in 2018 (Greentechmedia.com, 2017).

The company needs to further select the various types of the value chain partners which are seen to be based on the component, partners and the various types of the other regulators. The enabling process of the company has been also seen to be based on the vehicle testing process, using of big data and testing of the testing of the battery in the Nevada plant. The core process of the company has been further seen to be based on the various types of the process like using the appropriate manufacturing and the assembling software, electric car and the precise technological knowledge. The customer service has been based on the customer brand evangelists, direct sales from the customer. The delivery service of Tesla can further take into consideration free charging stations. Some of the distribution channel of the company may include both online and retail store. The various types of the promotion done on the online sites and retail stores are considered as per the promotional strategies. The customer segment of the company has been further seen to be distributed based on the high end retail stores. The service process for the cost structure of the company needs to further consider the various types of the factors such as manufacturing, engineering, technology, real estate, maintenance and engineering salaries. The various channels of the revenue streams of the company have been further seen in from of sales of cars and partnerships.

 


The position of the stores of the company in the designated geographical areas should be further based on the stores which are located in the high foot traffic with high visibility such as malls and shopping streets where the people are seen to visit on regular basis. This particular aspect will further allow the company to interact with the various types of potential consumers and it will be further able to learn about customer buying behavior. Tesla needs to further take various initiatives to train product specialists so that the consumers will be able to buy the relevant sub model under Model 3.

Some of the main features which Tesla needs to ensure during the launch of the product has been seen in terms of ensuring the facilitation of the features such as auto steer, auto parallel parking, sun roof, superfast charging, Level 3 fast charging and facilities such as vehicle to grid capability. Some of the main consideration during the delivery process needs to further consider based on the facilities such as free car rental for 3 weeks every year, preheating/ pre-cooling app.

Figure: Service process model for Model 3

(Source: Slack, 2015)

Other suggestions for Tesla relative to ensuring the quality of their new Model 3 car

The company should consider the various types of flaws in the Model X as a hard lesson in the manufacturing process of Model 3. The Model 3 should build procedure should follow simpler specification that it was present in the Model X of the ultra-luxury offerings. Tesla should consider releasing of the details associated to technical specifications, financing options and interior design options. The company should ensure that the company is able to publish sufficient details about the product so that the customer loyalty has been ensured. Some of the main form of the other consideration taken by Tesla needs to be implemented based on the refundable deposits. The company has been already seen to considering total refundable deposits of 400000; however it needs to ensure that the people are placed in the first line to buy the vehicles. Hence due to the immensely high number of the orders, Tesla should consider deliver cars to customers on a first-come-first-served basis (i.e., in the order of when deposits were placed) (USA TODAY, 2017). 

The company needs to further take into consideration that the first-come-first-served basis of scheduling. This type of service is seen to be based on attending the orders based on the arrivals without the individual preferences. By following a first-come-first-served basis of scheduling the company will be further able to ensure that the customers are able to get an equal opportunity in the delivery of the desired services. The company will be able to ensure that the various types of the delivery of the service also seen with utmost fairness. This particular strategy needs to further employ in the sales orders, in determining restaurant seating and of course the vehicle orders.  It has been further considered that the scheduling of the services has been further seen to be based on the different types services associated to the pre-booking of the products. The various types of the considerations made in terms of the after sales service of the adoption of the RMA services should be similarly considered on First cum first serve basis. The important aspect of the services has been further seen to be base on the various types the factors which has been take into consideration made with insurance of the vehicles. The company should take the initiative of to inform the customers of the insurance option from the time of purchasing (Krajewski et al., 2013). 

 


In order to ensure the more reliability in the manufactured products, the company needs to ensure the adoption of six sigma technique. The maturity of the manufacturing process based on six-sigma approach will be able to ensure that the manufacturing process is seen with 99.99966% in terms of the al the opportunities of the produce to be defect free in nature. The continuous integration of the six sigma will be able to ensure the continuous effort to achieve a predictable and stable measure in reduce the variation in the manufacturing method. Hence, the company will be able to deliver highest quality to the customers (Pyzdek & Keller, 2014). 

Conclusion

The study has been able to focus on the feedbacks of previous consumer survey reports of Model X and suggest the various types the considerations for Tesla relative to ensuring the quality of their new Model 3 car. The main form of the recommendation to refute avoiding new cars in their first year of production of the cars has been seen to be based on the Improving the RMA or RGA services. This has been identified as the recent issues with Model X including mechanical fault such with falcon wing doors and latch on the third-row seat cannot be overlooked and Tesla needs to take appropriate actions to address the same.  “Return merchandise authorization (RMA)” or “Return goods authorization (RGA). Tesla needs to further ensure that specific steps need to be taken in terms of the various types of the considerations which are seen to be related to the process of returning the goods to the original vendor of the products rather than sending the same to the associated distributor of the products.  For managing the delivery of the Model 3, the company needs to take reviews from the customers for its first 30 orders of Model 3. It needs to further aim to produce 100 and further increase this to 1,500 in September. As the company has been seen to launch a total of 25,051 vehicles in the first quarter, it should double up the distribution process in the second quarter. It has been further seen that the company should adopt first cum first serve service for the order and maintain quality aspect with the adoption of Six Sigma.

 

References

About Tesla | Tesla. (2017). Tesla.com. Retrieved 10 August 2017, from https://www.tesla.com/about

Calvi, K., Chung, S. H., Havens, R., Srihari, K., Economou, M., & Kulkarni, R. (2015, January). A Simulation-based Optimization Study in Return Merchandise Authorization Processes. In IIE Annual Conference. Proceedings (p. 2011). Institute of Industrial and Systems Engineers (IISE).

Chiefinnovator.com. (2017). Retrieved 10 August 2017, from https://www.chiefinnovator.com/sites/chiefinnovator.com/files/tesla-bma.jpg

Dow, J., & Dow, J. (2016). Tesla Model S re-earns Consumer Reports’ recommendation on improved reliability. Electrek. Retrieved 10 August 2017, from https://electrek.co/2016/10/24/tesla-model-s-re-earns-consumer-reports-recommendation-on-improved-reliability/

Greentechmedia.com. (2017). Tesla’s Highly Anticipated Model 3 Just Entered ‘Production Hell’. [online] Available at: https://www.greentechmedia.com/articles/read/tesla-model-3-production-hell-elon-musk-ev [Accessed 10 Aug. 2017].

Heizer, J. (2016). Operations Management, 11/e. Pearson Education India.

Hull, M. (2017). Elon Musk's 15-Year Quest Gets the Green Light. Bloomberg.com. Retrieved 10 August 2017, from https://www.bloomberg.com/news/articles/2017-07-03/tesla-ceo-musk-says-model-3-passes-all-regulatory-requirements

Krajewski, L. J., Ritzman, L. P., & Malhotra, M. K. (2013). Operations management: processes and supply chains (Vol. 1). New York, NY: Pearson.

Pyzdek, T., & Keller, P. A. (2014). The six sigma handbook (p. 25). New York: McGraw-Hill Education.

Slack, N. (2015). Operations strategy. John Wiley & Sons, Ltd.

Tesla Model 3 Reliability - Consumer Reports. (2017). Consumerreports.org. Retrieved 10 August 2017, from https://www.consumerreports.org/cars/tesla/model-3/2017/reliability

Tesla Model 3: Should you buy Elon Musk's first mass-market electric car?. (2017). USA TODAY. Retrieved 10 August 2017, from https://www.usatoday.com/story/money/cars/2017/07/17/tesla-model-3/471938001/

Tesla’s Highly Anticipated Model 3 Just Entered ‘Production Hell’. (2017). Greentechmedia.com. Retrieved 10 August 2017, from https://www.greentechmedia.com/articles/read/tesla-model-3-production-hell-elon-musk-ev

USA TODAY. (2017). Tesla Model 3: Should you buy Elon Musk's first mass-market electric car?. [online] Available at: https://www.usatoday.com/story/money/cars/2017/07/17/tesla-model-3/471938001/ [Accessed 10 Aug. 2017].

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