Project Risk and Procurement Management Assignment Brief Leading companies have recognised that strategic procurement can play a key role in driving profitable growth and become a source of value –...

Strategic Procurement at TESLA
Abstract
The report takes a look into the procurement strategy of Tesla and helps understanding the reader about the various aspects that the company has been able to address and challenges they have been facing with the supply chain. Tesla has kept their focus on speed production and innovation but this alone is not helping their cause when ramping up of production comes into scenario. As the company plan to expand further, the challenge for Tesla will only increase with the procurement strategy they have been going ahead. To address the challenged, strategic sourcing has been recommended for the company which can address various issues related to procurement and supply chain. The report is concluded by providing recommendations which can help Tesla to counter the challenged they have been facing in the cu
ent scenario.
Introduction
The discussion on electric vehicle segment whenever comes into being, the name of Tesla has always stayed at the top. The
and Tesla has kept surprising everyone with their innovative products and maintained a competitive stance which has happened even after the automobile giants like Ford and Toyota have entered in the segment. Tesla has earned its name by capturing public imagination in a true manner. Various factors can be attributed to the company short term growth like superhero type founded Elon Musk leading the way but this could not have been possible without sophisticated supply chain system that Tesla follows also reflecting its values. The company was founded with a vision of not only providing electric vehicles to its customers but also let them drive faster and have more fun than they have with the gasoline cars. The organization focusses on moving towards a zero-emission future by leaving behind the usage of fossil fuels in the automobiles.
Though the company didn’t invent the electric car they were the first one who popularized it and promoted it since the company was founded in 2003. They ensured the announcement of the first luxury electric car happens in the most stylish manner which attracts everyone attention. Providing their customers a vision that electric cars is the new future has been one of the major role that has caused disruption in the automobile industry. In 2008, Tesla was able to design its first ever all electric sedan Model S, which set up an example in the electric car industry that can offer not only best in class design but also has combined features of safety, performance and efficiency. Various models have been introduced since then which has been able to get the customers attention from around the world. The company focusses on ramping up the production by moving to more efficient supply chain methods and make their products more accessible and affordable to more people to support their motto of clean transport and clean energy production.
The company has tasted early success after producing its initial models by taking ownership from all aspects of supply chain, from technological aspect of the organization to handling the consumer experience. The company has
ought innovation at the doorstep of customers by letting them choose their new model of Tesla by simply accessing their website and customize according to their need. Payment via WeChat is just another flexible options that they have offered to their customers. (Brandenburger, 2017) Efforts to engage them has been made by the company which has lead to increase in fan following of the
and in small period of time.
Tesla has left no stone unturned in gra
ing the attention of customers and create the image of company that focusses on speed and innovation. They have been one of the starting players to introduce the auto pilot feature in their vehicles. (Dikmen and Burns, 2016) But they are also a good example which can help in understanding that becoming successful in automobile industry is not possible without achieving a stable supply chain. There have been various setbacks which led to production delays and various supply chain problems for the company. The report takes a look into the procurement strategies adopted by Tesla and analyses it. Further a framework is recommended which can help them in making improvements and achieve long term sustainable advantage for the company.
Procurement at TESLA
The company had faced several supplier side issues which led to missing deadline for their Model 3 production resulting in redesigning of key part in the model. Tesla CEO has termed procurement and supply chain problems as production bottlenecks for which improvement measures are being taken every day.
The main challenge that the company has been facing is to ramp up production which is comparatively easier for bigger automobile companies like Ford or General Motors. Tesla supply chain is yet to mature completely as they lack in huge capital and reliable supplier relationship which other automobile makers have. The company procurement leader has tried to apply similar innovative methods and energy in the supply chain management of Tesla which has been used in other part of organization. Some of the parts of the electric car manufacturer are manufactured by themselves to avoid dependency on outside suppliers like batteries. This also reduce the possibility of production going down due to problems in battery production as they are commoditized heavily which will not cause much of problem in operations in supply chain. To counter procurement problems with basic car parts Tesla has relied on their partnership with companies like Daimler and Toyota. (Mangram, 2012) The Tesla car has unique infotainment system which calls for specific procurement needs as it is completely designed by them. In order to cater to these needs they follow a process of procuring the parts by themselves. Instead of following the traditional car maker approach of sourcing the electronics and infotainment system from suppliers like Johnson Controls, Tesla has relied on its own hardware and software engineering capability to design and build their own system. The company projects like building up a giant battery factory has also been helping their cause by providing finished battery packs to feed their car production. (Fo
es, 2018) For raw materials like graphite, cobalt etc. company has planned to source them from the nea
y suppliers without going outside...