Identification of WST, SCM

and LEAN principles in

supply chain of Tesla
Contents
´ Introduction

´ Wholeness System Thinking (WST) Approach

´ Wholeness System Thinking in Tesla

´ Supply Chain Management (SCM) Principles

´ SCM principle in Tesla

´ Lean Principles

´ Lean Principles in Tesla

´ Conclusion

´ References
Introduction

´ Supply Chain is a global network used to deliver products & Services from
raw material to end customers through an engineered flow of information
and physical distribution
 WHY TESLA ?

´ Rather than use dealerships as a

route to market, Tesla decided to
go direct to consumers and cut
out the middlemen, essentially
decoupling part of the supply
chain
Objective of the Paper

´ The Objective of this presentation is to explains and analyze the concepts of supply chain
in Tesla Motors in a detailed way

Wholeness system thinking (WST) Wholeness system thinking (WST) in

Tesla Motors.

Supply Chain Management Supply Chain Management

Principles. Principles in Tesla Motors

Lean Principles. Lean Principles in Tesla Motors

 Wholeness System Thinking (WST) Approach
´ System Thinking (ST) - an approach to the system as whole.
´ System Elements - Purpose, parts and interactions.
Purpose – Properties of the system as a whole
Parts – Segments or sections which helps in attaining the purpose
Interactions – Cooperation of parts rather than individual performance

´ Wholeness System Thinking (WST) =

 Wholeness System Thinking (WST) Approach

Wholeness Synthesis(WS) – Wholeness Analysis (WA) –Describing

Deriving system purpose from the parts and its interactions from
superior system/environment system purpose perspective

Steps in WS Steps in WA
1.Identify superior system
1.Take system elements apart
2.Understand superior
2.Understand each part taken
system
separately
3.Identifying purpose of
3.Accumulative understanding
studied system from
of parts and interactions to
superior system
understand whole system
Wholeness System Thinking (WST) Approach
Steps in WST
1. Identify the studied and superior system.
2. WS of system purpose in superior system
3. WA of system purpose into parts and
interaction
 Wholeness System Thinking in Tesla
Mission and Goal:
Addressing factors in Tesla Ecosystem
Tesla’s purpose is to accelerate the world’s transition to
sustainable energy. • Climate change due to GHG
emissions
• Energy generation
• Energy consumption
• Reducing emissions in the
transportation and energy
sector
• Technology
• Sustainability
 Wholeness System Thinking in Tesla
Step 1: Identify the studied and superior system

Superior System Studied System

Purpose Interactions Parts

Sun, front motor,
Cabling, solar
rear motor, heat
panel or roof,
Production of pump assembly,
energy storage
Electrical Vehicle battery cell,
(Powerwall), charg
charge port,
ing cable.
busbar.
Electrical wiring, Solar assembly,
Installation of software, control battery assembly,
rechargeable system, Wi-Fi, solar inverter,
battery for energy ethernet, gateway, utility
storage (Powerwall) electricity, Tesla meter, main panel
app. and backup switch
Wholeness System
Thinking in Tesla
´Step 2: WS of system purpose in
superior system
Superior system: Sustainable environment
Studied system purpose: Production of Electrical
Vehicle and Installation of rechargeable battery for
energy storage (Powerwall)

Understanding:
1. Reduce GHG emissions in Transportation sector by
production of EV’s.
2. Reduce GHG emissions in Electricity & Heat
production sector by installation of Powerwall.
 Wholeness System Thinking in Tesla
Step 3: WA of system purpose into parts and interaction

• Tesla is still unable to implement the superior

system perspective in its parts and interaction.

• Production of EV- Out of 100% of raw materials

used to make the battery cell, 92% are recycled and
the remaining are waste.

• Powerwall - technical problems and integration or

interconnection problem of different parts through
Wi-Fi.
Tesla have successfully implemented WS by studying the superior system(environment). But WA
still needs improvement to have a complete WST approach to attain the mission of transition
to sustainable energy.
Six Fundamental
Supply Chain Principles
 Integration: Integration in supply chain is a larger
business strategy which bring in as many links of SCM as
possible in a closed working relations with other member of
the supply chain

Vertical

A Z Y X

B A B C

C Horizontal

T
Product (P) = A+B+C
Integration in Tesla

´ Works on Vertical Integration

´ Firm grip on Industry

´ Capture upstream or downstream profit margins
´ Increase entry level barriers to increasing market competitors.
´ Quality assurance can be built into the system
´ Increases Agility of proccess
Functional
View
´ Department

1. Health & Safety

2. Environment
3. R & D
4. Technology
5. SCM
And so,
Added Value

•Production VA Processes: Tangible or nontangible production resources

´ AI for automation,
´ Machine making machine,
´ Large scale die casting,
´ Additive manufacturing, and bold use of new and innovative ideas.
•Logistics VA processes: Optimum availability of tangible or resources in the
whole supply chain.
´ Direct sales and service, not franchised dealerships
´ Rolling out charging stations: obstacle to the mass adoption of EV
´ encompass energy storage systems
Push vs Pull

´ Pull system commence production as response to demand

´ Push System it start off production forecasting future demand.

Push in Tesla
´ Society to make substantial changes in infrastructure
´ Tade Shows like CES or Auto show
´ Word of Mouth
Bullwhip Effect

Small fluctuations in demand at retail level can give rise to increasingly larger
fluctuations in demand at the wholesale, distributor, manufacturer and raw
material supplier levels

Bullwhip Effect at Tesla

The construction of giga factories mitigates bullwhip effect risks associated with
an interruption in the supply chain for the mining of battery raw materials due to
economic and political instabilities.
 Decoupling Point
´Boundary between make-to-order (MTO) and
make-to-stock (MTS).

Decoupling Point in Tesla

4 Lean Principles

1. Pull
2. One piece flow
3. Tact
4. Zero defects
PULL
Factory manufactures when there is a requirement.
One Piece Flow
Efficient production of a single item
 Takt

Proper scheduling of how the production

or delivery is to be done
 Zero Defects

• Identifying root cause of defects

• Elimination of the problems

Error free approach

Tesla Through
Lean Lens

´ Tesla approach towards

Lean

´ Current lean approaches in

Tesla
 PULL
• Innovative strategy
PULL

• Website
 One Piece Flow
Efficient production of a single item

Automatic Paint Shop

Doors, Trunk lid detached

Interior finishing

Doors reattached

Motor, Transaxle, Inverter, Suspension system

attached

Battery Pack installed

Takt
'Building the machine that builds machines'
´ The scarcity in battery deliveries, at Fremont
Factory caused it to be Idle
´ Complex Automated processes consumed
lot of time
´ Replacement with manual operations
Zero Defect

Pros
´ Software controlled features
´ Fast and reliable updates

Cons
´ Problems regarding interior
´ Mechanical related problems
´ Roof liners, Sunroof, Brakes
 Conclusion
• Based on WST approach, Tesla has incorporated WS in the company. But still need
improvements in implementation of WA.
• Tesla aspires to do the right things but must focus on how to do those right things in
the next years.
• Vertical Integration at Tesla gives it great pace and firm grip in the industry
furthermore, the agile management structure helps in fast and reliable changes in the
organization.
• The implementation of Lean principles are omnipresent. However, when closely looking
to certain aspects of Lean, we encountered narrow gaps.
• Continuous Improvement approach by Tesla promises significant changes over the years.
 References
1. HOLMAN, David & Pavel WICHER & Radim LENORT & Venuše DOLEJŠOVÁ & David STAŠ & Ioana
KOCUROVÁ-GIURGIU. Sustainable Logistics Management in the 21st Century Requires Wholeness
Systems Thinking. Sustainability. 2018, 10(12), 4392.

2. Tesla [online]. California, U.S: TESLA, a.s., 2022 [2022-06-17]. Available from:
https://www.tesla.com/en_eu.

3. Prof. Dr. Holman, David(Hochschule Hof). Supply Chain Management module. 2022.

4. Lean manufacturing (lean production) [online]. Diann Daniel,2020. Available from:

https://www.techtarget.com

5. WHAT IS LEAN MANUFACTURING? HOW DO NORDELL USE IT? [online]. Nordell HQ, 2021. Available
from: https://www.nordell.co.uk

6. Four Principles Lean Management [online] Available from: https://www.fourprinciples.com

Tesla
Models
Feedbacks