OM- 2 ASSIGNMENT-2

TESLA QUALITY CHALLENGE

SUBMITTED TO:

Prof. Sumeet Kaur

Presented By, Group 9 -

Guncha Bhatia 173080
Harsh Sanwal 173082
Manan Mittal 173091
Pankhuri Mehndiratta 173096

Yash Lamba 173120

TESLA QUALITY CHALLENGE CASE STUDY 1|Page

Contents
QUESTION 1 ................................................................................................................................. 3
QUESTION 2 ................................................................................................................................. 4
QUESTION 3 ................................................................................................................................. 5
QUESTION 4 ................................................................................................................................. 5

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QUESTION 1
Consumer Reports recommends avoiding new cars of their first years of production,
specially those loaded with new technology. What can tesla do to refute this
recommendation?
Answer- Halting new car production for a year is not a viable solution, as Total Quality Management
techniques offer a more effective approach to resolving such issues. Implementing Six Sigma
strategies like DMAIC (Define, Measure, Analyze, Improve, and Control) can significantly address the
problem.

To begin, it's essential to define the problem by gathering customer feedback on mechanical and
software-related issues post-purchase. For example, Tesla customers who purchased Model 3 and
Model Y SUVs have encountered problems with the Falcon wing door and seat latch. Detailed
customer feedback can help identify and understand these issues.

Subsequently, measures should be taken to evaluate performance and the production process.
Analysis is then necessary to identify the root cause of defects, such as quality problems during the
ramp-up phase of car manufacturing. To enhance automobile production, it's crucial to eliminate the
underlying causes of defects and implement quality improvement strategies. Tesla must strive for
high efficiency in producing top-quality vehicles.

Finally, in the Control phase, it's essential to sustain these improvements throughout production,
ensuring the modified processes and quality standards are maintained. Additionally, addressing both
internal and external failures contributing to Tesla's quality issues is crucial. Managing the costs
associated with resolving these issues for both current and future vehicles is also important.

In conclusion, solving production problems proactively through the outlined approach is preferable
to suspending vehicle production for a year. By employing Total Quality Management techniques and
systematically addressing quality issues, Tesla can enhance production while ensuring the quality of
its vehicles.

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QUESTION 2
How should Tesla 8manage9 the delivery of model 3? Consider in particular the delivery of
the cars to European customers. Think about this relative to where cars should be
delivered geographically and how the service process should be designed?
Answer- As the distribution of the Model 3 becomes more widespread geographically, there's a
notable risk of increasing delivery and transportation costs from a single centralized delivery point.
To expedite delivery, especially to European customers, it's crucial to establish an ample number of
servicing and repair points on a regional basis. This means setting up a few makeshift repair points
regionally specifically tailored to address Model 3 repairs swiftly, minimizing external failure costs for
the company.

In terms of the service process design, simplicity and effectiveness are paramount to ensure
customers can easily navigate the repair service process.

The following Exhibit 1 outlines a service process that can effectively address customer complaints
and product defects. In the event of automobile defects, the faulty vehicles can be collected from the
respective customers' locations. It's equally important to gather feedback from customers regarding
the defect issues. All complaints are then carefully analysed to identify underlying problems, whether
software-related or manufacturing issues. Subsequently, repairs should be carried out accordingly.
Finally, the servicing and repair process concludes with the repaired automobiles being home-
delivered within the scheduled timeframe.

EXHIBIT 1

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QUESTION 3
Should Tesla deliver cars to consumers on a first-come-first-serve basis (i.e., in order of
when deposits were placed?
Answer- In Tesla's scenario, it's essential to adopt two types of delivery systems: "first-come-first-
serve basis" (based on the order of deposit placements) and "purchase-order-basis" (based on the
date of purchase by customers). Given the discovery of faults in 2,700 Model X vehicles, it's
imperative to recall all cars, even if customers haven't identified the faults themselves. Therefore, the
second delivery type is equally crucial to ensure customers receive the expected "white gloves"
treatment.

QUESTION 4
Tesla is building a new plant in Chaina that will produce the model 3 and model Y cars.
How should tesla handle quality issues that customers have with these cars as they are
sold into the Chinse market?
Answer- Tesla has encountered significant challenges related to Total Quality Management (TQM)
issues, particularly concerning the lower-priced Model 3 and Model X sport utility vehicles. As the
company establishes a new plant, it is crucial to invest adequately in the Cost of Quality (COQ).

On one hand, as Tesla ventures into producing new vehicles at the China plant, it must contend with
three types of costs. Firstly, there are appraisal costs, encompassing expenses associated with
conducting thorough inspections of raw materials and production processes, as well as testing, to
ensure that the output meets consumer needs. Secondly, preventive measures are essential to
minimize defects, requiring actions such as addressing the root causes of defects, providing
personnel training, redesigning products or systems, and investing in new equipment for system
modifications, all of which entail significant costs. Thirdly, Tesla must allocate capital to manage
internal failure costs resulting from defects within the system.

On the other hand, addressing faulty vehicles that have already been sold necessitates investment in
supporting external failure costs, which include handling customer complaints and facilitating car
repairs.

Therefore, investing in quality assurance is paramount for the success of the new plant in China, both
in terms of producing new automobiles and addressing issues with previously sold vehicles.

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