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Running Head: TESLA, INC. OPERATIONS MANAGEMENT PAPER 0
Tesla, Inc. Operations Management Paper
Introduction
Operations management is a vital aspect of running organizations. The term operations management refers to a broad range of actions that are employed in managing an organization's operations. Usually, an organization has numerous functions that have to be performed. The primary ones include providing a good or service and selling the product. Operations management encompasses all the steps necessary to the provision of the product specifically planning and controlling all the actions necessary to make the provision of the product a reality (Fitzsimmons, 2006). The present paper highlights the significant forces involved in the operations management and their impact on business operations of Tesla, Inc. Additionally, an account of key obstacles and changes to operations management philosophies and organizational structures during evolution of operations management have been included in this write up. Furthermore, analysis of business operations of Tesla, its key trends and their impact have also been discussed below.
Significant Forces That Have Shaped Operations Management
Operations management concentrates on the capacity of giving the product or service. It is related with the preparation and organizing of all exercises essential for the arrangement of the company's product or service. Characteristics of operations management, then, incorporate items or administrations to underline; office size and area regarding clients and providers; advertising systems to attract customers; strategies and tools to utilize for making the goods or to or to give the administrations; work compel management and preparing; and estimations of value confirmation. Operations managers implement ideas and technologies to build efficiency and decrease costs, enhance adaptability to meet quickly changing client needs, upgrade item quality, and enhance client benefit.
In the face of evolving economies, operations management has also been affected significantly. There are various forces that have helped shape the face of operations management as we know it now. These include the need for flexibility. In the face of a more integrated global economy, the pace of doing things has rapidly increased in recent times. As such, an organization needs to be flexible enough to adapt to changes in demand volumes and product mix as well as in product design and delivery schedules. This has resulted in the need for operations management that can allow agile manufacturing. Another force is the desire to stay ahead of the competition by ensuring maximum customer satisfaction. This has led to the growing popularity of total quality management (changes to operations management philosophies and organizational structures (TQM). This approach makes a firm improve the quality of the product it offers continually (Fitzsimmons, 2006).
For most organization operations, price, quality, item execution and elements, item assortment, and accessibility of the item are basic. Every one of these components is considerably affected by moves made in operations. For instance, when efficiency builds, item costs decrease and item cost can be lessened. Also, as better production techniques are created, quality and assortment may increment.
By connecting operations and working techniques with the general procedure of the association (counting building, monetary, promoting, and data framework methodology) collaboration can come about. Operations turn into a positive element when offices, gear, and worker preparing are seen as a way to accomplish hierarchical goals, instead of as barely engaged departmental targets. In acknowledgment of this advancing perspective, the criteria for judging operations is changing from cost control (a barely characterized working target) to worldwide execution estimations in such zones as item execution and assortment, item quality, conveyance time, client benefit, and operational adaptability.
In at present business condition, a key part of operational adaptability in numerous ventures is mechanical information. Propels in innovation improve it conceivable to manufacture items utilizing less assets. As innovation essentially changes an item, its execution and quality regularly increments drastically, making it an all the more exceedingly esteemed ware in the commercial center. However, the development in innovative business applications has made new competitors also, making it vital for organizations to attempt to enlist favorable circumstances in any territories of operations management.
Impact of These Forces on the Business Operations of Tesla, Inc
Tesla Inc. has been on its toes regarding these forces among others in the quest to improve operations management aspect of the firm. Tesla aims at economizing not only on material resources but also on time. Minimizing the time that it takes to put a product on the market gives the firm a competitive edge over other firms in the market. At the same time, the need to have a wealthier pool of human capital has called for increasing worker involvement in decision-making as well as in problem-solving. Employee engagement leads to increased empowerment of the workers that increases rates of successful teamwork as well as optimizing personal productivity. At the same time, firms such as Tesla eye markets from a global perspective. Producing products for the global market implies competing with firms that may have a comparative advantage regarding having lower costs in labor and other inputs. This may require moving the operations of a firm to the areas where the firm will have an economic advantage to allow for effective competing with other firms (Slack, 2010).
Key Obstacles
At the moment, operations management is geared towards satisfying customers who expect high-quality products at low costs and delivered efficiently. Operations management has evolved for quite a while since the modern economies began taking shape. The industrial revolution began in the late 18th century in England and soon spread to other parts of the world. The revolution saw the use of human labor being substituted with machine power. This led to production processes that were faster and less costly. At the same time, the producing entities enjoyed economies of scale as they employed more people. Operations management began taking a more definite shape with the development of scientific management by Frederick Winslow Taylor. This management was based on identifying the best method to do a job after careful observation, measurement, analysis and improvement of the methods employed as well as economic incentives. This helped solve the obstacle of great costs as well as the long time needed to produce a product.
Henry Ford employed Taylor's concepts and came up with the assembly line that revolutionized mass production. He also employed the concept of division of labor that greatly increased the output per worker. Another obstacle was the development of incentives for workers. Henry Gantt came up with Gantt charts that were a system of offering non-monetary rewards to workers which increased their motivation. There was also the need for the development of quantitative techniques. Such techniques could be used in forecasting, project management, and inventory management as well as in other sections of operations management (Slack, 2010).
Tesla Inc. was not present at the time operations management was going through a dynamic evolution. However, given the future-oriented nature of Tesla Inc, the firm would have contributed immensely towards creating a system of operations management that optimizes firm performance.
Changes to Operations Management Philosophies and Organizational Structures
As business operations become more and more complex, it becomes necessary to employ management techniques that take care of this complexity. Such techniques will need to be highly effective such that they drive the firm towards attaining its strategic objectives despite wider and deeper roles of each player or scope of tasks. The management philosophies, as well as organizational structures that are keen on simplifying complexities, are likely to be successful (Carter, 2011). The first task of reducing complexity is addressing nonlinearity. Various critical aspects of a business are nonlinear. As such they reduce the accuracy of forecasting models. At the same time, small changes can result in massive changes in other factors involved.
Operation managers also need to deal with emergent complexity. This is a more complex form of complexity. Rather than dealing with rates of change, it has to do with comprehending how interactions between various entities can give rise to a completely different thing. This may include understanding how the relationship between elements such as neurons gives rise to intelligence. Management philosophies need to come up with strategies for managing complexity (Stevenson, 2005). Tesla Inc. is keen on developing technologies that solve problems that are complex. As such, rather than just managing complexity, the firm embraces it and sees it as a challenge for achieving the inconceivable to others.
The management of complexity has called for a simpler approach to management. Simplicity is vital but nevertheless should not be trusted absolutely. At the same time, managers are driving towards becoming less wrong over time. As such, they use data to analyze performance and gauge the effectiveness of various complexity management approaches. They then attempt to minimize future mistakes and thereby simplify operations (Mangram, 2012).
Business Operations of Tesla, Inc
Tesla produces and sells electric cars. The firm’s strategies include selling directly to consumers. The conventional method of selling cars involved using car dealerships that act as the middle man. Tesla, in contrast, owns its showrooms and customers can order via its website. Another strategy involves having charge stations placed strategically in support for the growing demand off the electric motors. This has been effective at removing the barrier to buying electric cars that is the lack of charge stations readily available. Vertical integration allows the firm too increases quality and customer satisfaction by making most of the components for the cars. Customers can get the cars tailor made to suit their preferences. Tesla is also looking to construct a battery factory that will reduce battery costs that are quite significant in the making of electric cars. Productivity and profit are affected by costs as well as by demand for the cars. Building charge station networks increase demand which will increase productivity. Focusing on technology increases the profit made by Tesla. Technology improves efficiency by having high levels of automation during production. At the same time, customer satisfaction is increased by the computing model in the car that is highly advanced as it can detect problems and also be remotely updated. These operations guide the firm as it seeks to get to its vision off becoming the leader in car industry in the 21st century by providing electric vehicles. At the same time, the mission statement of the firm emphasizes on customer safety which is a vital selling point for any firm (Nykvist, 2015).
Key Trends in Tesla, Inc
Tesla Motors is extraordinary in light of the fact that it is not only offering autos but rather likewise offering new innovations. Basically, betting on Tesla Motors engages making a bet on a innovative technology. It’s simply found that Tesla has made, and now overwhelms, the market for extravagance, long-extend electric cars, a market that is particular from both the market for more affordable electric vehicles and the market for extravagance gas-fueled vehicles. Furthermore, as the sole player, the organization needs to offer autos as well as work out the foundation important to bolster the operation of those autos. For Tesla's situation, this includes working out a system of superchargers, battery swap stations, and administration stations.
On the substance of it, this ought to make developing the business harder yet Tesla's one of a kind position in the auto market can help it accomplish that objective. Basically, there is one of a kind thing about Tesla: Its autos work in a Long Range EV auto showcase which comprises of only one auto as of now the Tesla Display S. Given its valuing, the auto falls into the value scope of extravagance autos which shape almost 50% of the automobile business' benefits, in spite of making up only 10% of its unit deals. This makes it harder for other auto organizations to contend as they can't bear to chance missing out on their most beneficial section by building up an extravagance auto that comes up short.
Trends in Tesla’s business operations range from the design of goods and services to supply chain management. Regarding design, Tesla relies on concurrent innovation to optimize organizational capacity. Tesla conducts regular research on the auto market to ensure the firm has a grip on the quality that consumers want. Another trend is integrating automation in various production processes which combine with human support to optimize production. It is also necessary to locate the firms, various operations strategically. The company’s marketing mix focuses on having galleries and stores in key locations to maximize sales by effectively reaching the target market. Tesla Inc. has a competitive compensation strategy that is essential to attracting and maintaining a pool of skilled human resource. Tesla has a global supply chain that supports production activities. This ensures that each part is where it is needed at the right time such that manufacturing processes go on always (Nykvist, 2015).
Impact of Key Trends on the Business Operations of Tesla, Inc
Presently, economies are significantly changing, activated by advancement in developing markets, the quickened ascent of new innovations, supportability arrangements, and changing purchaser inclinations around possession. Digitization, expanding robotization, and new plans of action have reformed different ventures, and car will be no special case. These powers are offering ascend to four problematic innovation driven trends in the car part: assorted versatility, self-ruling driving, charge, and network.
These trends have impacted the business operations of Tesla in several ways. Production of quality cars has made the firm grow at a fast rate. The firm was incorporated in 2003 and is currently producing thousands of cars a year. The personnel at Tesla also work to achieve the strategic objectives of the business as they are well compensated and motivated. Automation has made the production process more efficient. The operations management at Tesla has been effective at creating a firm that is unique but is nevertheless able to compete with veterans in the automotive industry (Mangram, 2012). Innovation and focus on consumer satisfaction lead to continuous improvement which is necessary for streamlining operations and ensuring profitability and sustainable production activities (Stevenson, 2005).
References
Fitzsimmons, J. A., Fitzsimmons, M. J., & Bordoloi, S. (2006). Service management: Operations, strategy, and information technology. New York: McGraw-Hill.
Stevenson, W. J. (2005). Operations management. McGraw-Hill.
Slack, N., Chambers, S., & Johnston, R. (2010). Operations management. Pearson education.
Carter, C. R., & Liane Easton, P. (2011). Sustainable supply chain management: evolution and future directions. International journal of physical distribution & logistics management, 41(1), 46-62.
Mangram, M. E. (2012). The globalization of Tesla Motors: a strategic marketing plan analysis. Journal of Strategic Marketing, 20(4), 289-312.
Nykvist, B., & Nilsson, M. (2015). Rapidly falling costs of battery packs for electric vehicles. Nature Climate Change, 5(4), 329-332.
