31 Responses to Tesla acquiring trucking capacity to complete deliveries by December 31

1. Sean Michael says:

   December 6, 2018 at 6:25 pm

   Looking at Little’s Law, we see that it will take Tesla approx. 6 days to process the inventory given 7,000 vehicles at a rate of 50 car per hour (1200 per day). So, to align the 6-day process with the production rate and delivery schedule, Tesla should cycle its inventory in sync with the delivery process to prevent bottlenecks. On the supply side, I would suggest that Tesla decouples its inventory in order to create a buffer in the production process. Decoupling on the manufacturing side will cushion Tesla’s inventory and help prevent potential issues due to the varying speeds of each portion of the manufacturing process. Tesla should not have any issues maintaining its profitability; suppliers would expect the seasonal delays.

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2. Michael Morad says:

   December 12, 2018 at 2:32 am

   In order to ensure that delivery capacity is synchronized with the production rate and customer delivery schedules Tesla should map out its actual flow time of each flow unit and determine its actual throughput or flow rate. This could be less or more than the 7000 units needed weekly. With this data in hand and the Bill of Materials for the models being built in that week Tesla can then determine what inventories need to be on hand in the factory in order to prevent supply-demand mismatches and stock outs. The purchasing and logistics teams at Tesla will need to work closely with parts and delivery suppliers to ensure a steady input of parts into the factory and a steady output of vehicles out for delivery. Basically a Just In Time (JIT) model needs to be maintained with the possibility for some small safety stock if the factory floor space can accommodate it. Tesla can also consider offering buyers an option to come onsite to a secured area of the factory to pick up their vehicles to lessen the burden of delivery. If buyers are local or within a few hundred miles drive of the factory the incentive of getting their vehicle sooner may be enough for them to utilize this option. It is possible that some of Tesla’s suppliers may require a deposit or prepayment for inventory deliveries due to past payment delays by Tesla. If this is the case Tesla should use cash reserves or a short-term loan to fulfill such requirements in order to maintain production output and re-establish their credit with suppliers. In addition to this, Tesla should consider keeping some safety stock of at-risk inventory on hand to further prevent stock outs and production interruptions. The most critical component of all of this is strong and clear communication to all internal and external stakeholders. High accuracy of forecasting of inputs and outputs will be important and both accurate forecasting and effective communication will determine Tesla’s success or failure.

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   • Jason Meridew says:

     December 13, 2018 at 7:46 pm

     Michael, I really like the idea of allowing customers the option to pick up the vehicles themselves. I wonder if it would benefit Telsa to offer a financial incentive for them to pick up vehicles. This incentive could be equal to shipping/delivery costs. This would allow a greater number of customers to take delivery quicker to collect the government tax credit. I agree that Tesla may need to take on short term debt and even prepay some suppliers that may not be happy. Telsa should consider increased incentives for suppliers for on time delivery of components. Short term notes may be needed to cover these costs but it will likely prevent some supplier issues.

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3. Tony Merlie says:

   December 12, 2018 at 1:22 pm

   Based on supplier payment issues in the past, I would not expect that suppliers will be jumping to cooperate with Tesla without receiving some serious incentives.

   If I were supplying Tesla, I would want reassurances that Tesla has the production capacity to meet customer demands, or I would want significant incentives or payment in advance. Given that the federal tax credit can only be taken by consumers if the vehicles are DELIVERED by 12-31, I would expect a very significant fall-off or cancellation of orders in early 2019, so much so that Tesla may not be able to pay suppliers…

   I agree with Sean’s comment that Tesla is going to have to build buffer inventory, especially within some of the slower manufacturing processes, which unfortunately will come at a significant cost.

   Tesla’s promise to deliver vehicles to customers that are greater than 160 miles from its customer service center poses a real problem to its delivery capacity. As Michael suggests, it may need to advise customers that it in this period of high demand it will only be delivering vehicles to customer service centers.

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4. Nathan Pennington says:

   December 12, 2018 at 8:48 pm

   The future in automobiles is going electric. The article stated that there was also a delay in the delivery of the Tesla 3 model. The customers were actually commuting to the warehouses and picking their cars up themselves. Obviously, this is not the most conducive way to maintain a high customer service morale but one less glamorous way to ensure delivery is made. If the load to deliver becomes too great perhaps the company could provide some form of incentive or a discount on their vehicles if the customer picks the car up themselves. The suppliers, for sure, are going to be expecting this. I cannot see them being cooperative unless they are compensated for the higher demand and short deadlines. That being said, if they want to remain on board with the Tesla organization a compromise must be met by the suppliers and Tesla.

   I love the Tesla P100D. You could put a Bugatti or a Rolls Royce in front of me and if the P100D is there and especially the new Tesla Roadster (0 to 60MPH in 1.9 secs, 250+MPH top speed) it is a done deal, Tesla every time. I think Nikola Tesla would be proud of what Musk has done albeit if Nikola were alive today the cars and trucks would be even better than they are. The company’s management may need to consider some form of incentive to its workers i.e. overtime pay and/or bonuses to keep up with the work demand.

   Tesla is in a bind. The rush for the $7,500 credit will continue to keep high demand for the vehicles but will suppliers cooperate? What are they getting out of the deal? These are questions/concerns that Tesla is going to have to consider. As Tony, Michael and Sean all touched on and incentive plan has to be incorporated. Tesla’s suppliers may be on board in producing the product but was the rushed delivery and tax credit issue in the initial contracts between the two? These are pain points that, if they are not already in Tesla contracts, need to most certainly be in place leading into 2019 as Tesla continues to rise in popularity.

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5. triathlete365 says:

   December 14, 2018 at 10:52 am

   Forecasting is a crucial part of operations. One area that was clearly missed by Tesla is the bottleneck caused by trucking during times of max production. In planning, once the bottleneck has been identified, possible actions can be set in place. A few possible solutions is to outsource a portion of the shipping during times of extra high demand. Tesla could also give better incentives for customers to pick up their vehicles in designated areas during “peak” operation times.
   Some of the surprises could be mitigated by increasing Tesla’s inventory to better de-couple all of the manufacturing and supply chain processes. This would “smooth out” the processes and remove some of the major bottlenecks. Suppliers to Tesla are in a bind as the company has been under significant financial trouble and the future is unknown after the tax credit has elapsed. Tesla would need to provide extra incentives to suppliers to reduce those delays. It will be interesting to see what happens to Tesla going into 2019…

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6. Tyler Le Roy says:

   December 14, 2018 at 7:30 pm

   Forecasting is a crucial part of operations. One area that was clearly missed by Tesla is the bottleneck caused by trucking during times of max production. In planning, once the bottleneck has been identified, possible actions can be set in place. A few possible solutions is to outsource a portion of the shipping during times of extra high demand. Tesla could also give better incentives for customers to pick up their vehicles in designated areas during “peak” operation times.
   Some of the surprises could be mitigated by increasing Tesla’s inventory to better de-couple all of the manufacturing and supply chain processes. This would “smooth out” the processes and remove some of the major bottlenecks. Suppliers to Tesla are in a bind as the company has been under significant financial trouble and the future is unknown after the tax credit has elapsed. Tesla would need to provide extra incentives to suppliers to reduce those delays. It will be interesting to see what happens to Tesla going into 2019…

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   • David says:

     January 7, 2019 at 9:22 am

     When it comes to a younger company like Tesla it is common that they over promise and under deliver as they have not really built out their networks nor have they experienced this kind of demand along with a delivery deadline. It looks like they are working towards alleviating the delivery bottleneck by purchasing these trucking companies, hopefully it wasn’t “too little, too late” and they were able to deliver as many vehicles as they needed to reach their goals. As for their suppliers, Tesla is not going anywhere any time soon. So it feels that even with delays suppliers know that they will get paid, but they may require payments up front or larger deposits on orders. To keep this from having any negative effects on their production Tesla will need to manage these relationships throughout the coming months.

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7. Allan McNear says:

   December 15, 2018 at 12:58 am

   Securing confidence with their suppliers that they will receive payments for their services is key to the success of what Tesla is aiming to pull off before year end. Whether that is buy offering incentives or supporting those supplies in other ventures. Second tier companies tend to operate on low margins and are continuously being squeezed by larger firms for cost improvements. The little guy always keeps the wheels turning, so continuation of building strong ties with suppliers will allow Tesla to push the envelope. Tesla will need to continue their search for alternatives outside of their facility to meet the demands and needs of the company. In short, suppliers will cooperate based on the idea of being apart of something that is ground breaking.

   Tesla does have cool vehicles, I’m with Nathan. Tesla has just missed how to manage high demand for their vehicle in a competitive market. The sharks are in the design studios picking a part their technology and seeing how it fits into their fleet. As touched on earlier, 2019 is going to interesting!

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8. Jennie Killian says:

   December 15, 2018 at 6:30 am

   I agree with Tyler that there was a significant deficiency in forecasting for demand of these vehicles at the end of 2018-which is leaving them with a unique bottleneck-delivery. Not being from the manufacturing or operations sector, I lack knowledge on these topics, but I would’ve thought it more likely that the lag would be in production and not in delivery. Producing 50 vehicles an hour, around the clock seems like a tall order!
   What I find interesting is the risk they are taking in building up inventory ahead of the bottleneck. From what I understood in The Goal-you want to produce enough to keep the bottleneck functioning all of the time. If Tesla is producing the vehicles in surplus of what can be shipped, what will happen to all of the inventory if it can’t be delivered by Dec 31? Have they secured enough for delivery of 7000 vehicles a week (1200 a day as Michael pointed out)? If they fail to meet demand-not only will there be angry customers, but they may have a pile of vehicles that they are not able to sell.

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9. Brian long says:

   December 15, 2018 at 11:52 am

   I have enjoyed reading the comments posted and agree that it sound like Tesla did not do a very good job of forecasting. Sense Tesla understands that this is a seasonal rush and more than likely just a spike at the end of the year, maybe they could eliminate the vehicle suppliers all together. To add to what Michael said about customers picking up their cars at the factory, up the effort. It may be more cost effective to build a temporary “dealership” onsite and contract a busing company to pick people up at different locations and bring them to the factory. Delivery would be final as soon as the customer drove off the lot.
   Supply chain coordination and communication is critical. If any one supplier cannot fill the order it could jeopardize production. Not only incentives have to be expected but backups have to be in place to insure parts come form more than one supplier, for any given part.

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10. Vinutha Ram says:

    December 15, 2018 at 12:13 pm

    As mentioned in other posts, a key factor in eliminating surprises in delivery or manufacturing would be accurate forecasting and planning. While there are many ways to optimize production or delivery in isolation, these teams need to work together to determine an optimal schedule taking all of these into consideration. For instance: Most production schedules are based on manufacturing a certain type of product, could it be possible to tweak this schedule to produce based on location? This is then ensuring that delivery is met even if it is not the most optimal production schedule.

    Having a reputation of being late on payments to suppliers could present an issue in getting enthusiastic cooperation from suppliers. I think Tesla needs to remedy that and demonstrate its commitment to the partnership by offering additional incentives for prompt delivery.

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11. Andrew Tigulis says:

    December 15, 2018 at 4:09 pm

    They should prioritize car orders from oldest to newest and schedule trucking support to meet that requirement for that date. For example, if Tesla is able to ship 200 cars max a day, then they should ship to max capacity each day, or order as many trucks as they can to meet their production capacity.
    Tesla should have the total number of trucks scheduled for delivery that are able to handle the demand of 50 cars per hour. For example, if each truck is able to carry 10 cars per delivery, 5 trucks should be docked at all times so that deliveries could be made each hour.
    With delayed payments I don’t see suppliers cooperating to deliver the desired volumes by year end while enabling Tesla to maintain profitability. This could damage supplier relationships unless corrected immediately.

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12. Paul Mukherjee says:

    December 15, 2018 at 6:31 pm

    Tesla should work on their throughput and inventory for delivering 7000 cars in a week. Reading at the blog I find Tesla is not doing a good job in producing the vehicles . Already Model 3 in delay and focusing on truck manufacturing the company will go into the bottleneck. If I remember correctly lot of my friends have applied for the model 3 car because of its cheap price comparing Model X and Model C and they are still waiting for the delivery. Tax benefits of $7500 another important factor for the people. I totally agree with Tyler about the future of Tesla once the tax benefits is over.
    Again one of the biggest issues I can see is the turbo charging stations for Tesla. Its not very common in suburb areas. Thinking of the profitability Tesla should improve its supply chain model to produce more cars to meet the customer demands.
    Mentioning all this above statement the current scenario of Tesla is way better. They delivered 55k model cars on their third quarter comparing 28k from second quarter. Looking on this data, I can say they able to optimize their supply chain model to become profitable.
    I will still want to see how Tesla handle the other possible hurdles like turbo stations creation and higher demands of cars and removal of tax benefits.

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13. Dan Halverstadt says:

    December 16, 2018 at 1:26 pm

    Tesla has always been an aggressive company, and that is part of what makes them exciting. Elon Musk is famous for the risk he is willing to take. Tesla has their back against the wall in this situation. To achieve the results they are hoping for, paired with the issues they have with suppliers, will cause them to have to increase inventory. The three key measures Throughput, Inventory, and Operational expense will be impacted as they surge for the end of the year. It is widely known that Tesla has been burning through cash since coming online; they may have to sacrifice present money for future money to keep what is considered one of their biggest asset; their brand and customer satisfaction. Customers are the sales that drive their throughput, letting down customers by the end of the year can impact their throughput. The supplier issue can affect the future money if not addressed. If inventories fall below what is required, this is a significant impact not just to inventories but will also drive operational expense. The effect of suppliers potentially not supplying parts on time will require Tesla to hold higher inventories to ensure no line interruptions. This could be mitigated by identifying bottlenecks and focusing on those critical suppliers and ensure those assemblies are available on time. The additional cost falls into the operational expense.

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14. Jason Jackson says:

    December 16, 2018 at 4:57 pm

    I agree with Michael’s idea of allowing customers to pick up their vehicles if they are in the local area. Without that option unavailable, then coordination between customer/sales, production, and logistics is vital. Suppliers should be skeptical. If Tesla doesn’t put much into their Supplier Relationship Management model (SRM), then they should expect to receive negative feedback in return. I agree with other points made by my classmates. Decoupling the supply chain before production and having an MTO strategy, with decoupling inventory internal to production should be the strategy that is implemented.
    On a personal note, Musk really needs to re-evaluate his approach to building a car. His snobbish attitude to how other car manufacturers makes vehicles is insulting. Concepts that have been proven by the Japanese and Toyota are the same principles that should be applied internally to Tesla. I know the other day on 60 Minutes, Musk was also open to the idea of acquiring some of the GM facilities that will be closing down across the north. I think this would be a great strategy to open up an additional production facility, with many of the equipment needed to produce a vehicle in an efficient manner.

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15. Amy Phillip says:

    December 16, 2018 at 5:17 pm

    Tesla should work with the smaller purchased trucking companies to stagger the shipments of completed cars. Tesla should also work through the back log of cars that need to be completed at and partner with their supply chain to ensure that they are shipping the cars and meeting the demands of the market. Negotiating with the suppliers on payments terms is the key to making this a success.

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16. Vish Thottingal says:

    December 16, 2018 at 8:32 pm

    During Quarter 3, Tesla had problems with deliveries due to the truck capacity. To ensure that the customers are not disappointed to the Dec 31st expiry of Federal Tax Credit of USD 7500 its vital that the products are shipped to customers by year end. It’s a tactical decision to acquire truck capacity so that the last mile hurdle of the delivery is not impacted. The logistic team should have a plan for round the clock delivery until Dec 31st so that no finished good is held on Tesla’s factory. Regarding manufacturing goal of 7000 units per week I wouldn’t be surprised if they achieve the target because Tesla in the past had ramped up the production for Model 3 when had they all sorts problems around battery manufacturing, parts construction and assemble lines. (though they took 2 years to fix the problems)
    Constantly identifying capacity constraints and removing the bottle necks would be the text book suggestion to ensure there are no surprises in the manufacturing. On the supply front Tesla should not risk any delay in the delivery of parts as it would impact the through-put of finished goods, so I would suggest that Tesla sorts out all their problems with their suppliers. Tesla can leverage their order books to have long term contract with their suppliers and force them to ramp up their volumes
    Elon Musk once tweeted that Tesla has excessive automation so I would safely presume once the capacity constraints are cleared it should not be a problem to operate the plant at full capacity.

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17. Jennifer Cline says:

    December 16, 2018 at 11:57 pm

    Assuming Tesla has indeed purchased smaller trucking companies, truck capacity (how many cars/truck) needs to be confirmed. Using this input, Tesla can align the truck requirements to production output. For assurance of deliveries, Tesla could plan for more trucks to be available than exact amount required based on average production shift output; this would in effect enable a buffer, or safety stock, strategy to cover volatility in production output. This should be balanced against cost to operate the trucks, in order to manage profitability. Securing supplier materials is needed to ensure output will meet the minimum 7000 cars per week. Given the payment delays by Tesla, I would not expect suppliers to over-extend themselves without resolution; if not already in place, Tesla should negotiate with suppliers for resolution of remaining outstanding debt (when and amount for when payments will be made as well as providing summary of customer orders showing expected revenues upon car shipments. Additionally, supply chain strategies should be in place to manage safety stock & inventory levels for key components.

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18. Neha Purohit says:

    December 17, 2018 at 12:59 am

    Suppliers will cooperate if Tesla gives them incentives or confirm the payment terms. The deferred payments of 30 days, 60 days or 90 days.
    In Tesla, we can follow Configure to Order (CTO) and Built to Stock(BTS) for some orders. In CTO, we can get the components from the seller ahead of time assembled the order near to the delivery time. There will be no surprises in delivery or manufacturing if the Supply Chain is stable. BTS systems allow to build-ahead production approach in which production plans based upon sales forecasts and historical demand. If the cars are customized, we have to use Build to Order systems. We can order more parts, get more resources in the building and shipping department.
    The bottleneck can be managed if Tesla adds the resources to the delivery, examine the production schedule, minimize the downtime. Tesla can break the delivery process down into smaller activities and reassign some to other resources which will result into shorter cycle time and increased capacity.

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19. nehapurohit13 says:

    December 17, 2018 at 1:00 am

    Suppliers will cooperate if Tesla gives them incentives or confirm the payment terms. The deferred payments of 30 days, 60 days or 90 days.
    In Tesla, we can follow Configure to Order (CTO) and Built to Stock(BTS) for some orders. In CTO, we can get the components from the seller ahead of time assembled the order near to the delivery time. There will be no surprises in delivery or manufacturing if the Supply Chain is stable. BTS systems allow to build-ahead production approach in which production plans based upon sales forecasts and historical demand. If the cars are customized, we have to use Build to Order systems. We can order more parts, get more resources in the building and shipping department.
    The bottleneck can be managed if Tesla adds the resources to the delivery, examine the production schedule, minimize the downtime. Tesla can break the delivery process down into smaller activities and reassign some to other resources which will result into shorter cycle time and increased capacity.

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20. Ken Kibler says:

    December 17, 2018 at 7:31 pm

    Tesla is experiencing what many young companies deal with in the early stages of growing pains. They now are experiencing what I would say is the backlash of not taking care of business. This is a great opportunity to take advantage of a difficult situation. They should look at new avenues of sales in this window of opportunity to pass long such great tax incentives. I would encourage them to look at new partnerships find existing dealers of traditional vehicle’s that might consider some stock up orders. They probably run the risk of not being able to solve this bottle neck issue with purchasing trucking companies, if anything could create more challenges and run the risk of impacting customer satisfaction. I would think it would be a difficult time to take on more logistics instead of keeping focus on what they are striving to accomplish with car production.

    I really like the idea Michael suggested with marketing the idea of encouraging buyers to pick up their vehicle on site. The saying that a picture is worth a thousand words always rings true. Anytime you have a opportunity to showcase your company to your customer it rarely is a bad idea. When customers see who they are doing business with firsthand it changes the relationship. This is a model John Deere adopted many years ago they encourage customers to come watch their tractor or combine come off the assembly line at world head quarters in Moline Illinois. Only difference they don’t drive them home!

    I believe they have to get ahead of production and have a limited surplus supply on hand to absorb some of these “surprises in delivery or manufacturing”. I agree with Neha in regards to over coming strained relationships. They need to incentivize suppliers to be able to help mend and grow relationship.

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21. Bryan M Corbin says:

    December 17, 2018 at 8:01 pm

    This is Tesla’s chance to build long-lasting relationships with the market, and avoid being a fad while established players catch another disruptor. If the delivery/trucking is the primary bottleneck they’re fortunate since it is at the end of their supply chain. Knowing this, it would be wise to work back through the value streams and understand timing of each stage and model the cadence of new orders. We know that they attempted to maximize returns by only making the higher-priced Model As until getting in a rhythm yet they continued to overpromise on production and deliveries. I’d recommend clearly articulating delivery times with conservative estimates to customers to build relationships as well as using the information internally/with suppliers to ensure working capital is managed with all parties.

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22. Maya Devakiamma says:

    December 17, 2018 at 10:06 pm

    Market demand for Model-3 was significant compared to Tesla’s production capacity, which was Tesla’s bottleneck in the first half of 2018. Though Tesla initially struggled, the company managed to produce about 53,000 vehicles including over 34,700 Model 3 vehicles in Q3/2018. Though slightly shorter than the 7K per week, looks like Tesla is on track to meet their market demand. The increased numbers indicate that Tesla is managing its manufacturing throughput efficiently compared to the first half of the year. With increased production volume Tesla has identified the second bottleneck, which is the delivery of vehicles produced on time.

    Though acquiring trucking companies help Tesla to secure and manage shipment priorities, that alone will not solve Tesla’s problems. Streamlining the delivery and shipment workflow to align with the manufacturing throughput is essential. Cars coming out of the manufacturing plant should be shipped within no delays and possibly in small batches to reduce the setup and lead time on shipments. Tesla shall plan shipments, optimize routes and introduce small batches of shipments to match with its production of cars from manufacturing, and that will reduce idle time and increase the throughput on shipments. Prioritizing shipments based on the orders in the queue and exploring options for outsourcing some of the shipments through shared freight carriers are options for Tesla to meet the demand. Safety and quality on the delivery of shipped cars should be prioritized and incentivized to avoid throwaways.

    Tesla also shall introduce incentives to its suppliers to cooperate and deliver the desired volumes safely which will motivate the suppliers. An incentive and partnership better than today will help Tesla to overcome this problem.

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23. Gaurav Kumar says:

    December 18, 2018 at 12:57 am

    Tesla is an innovative company with the characteristic of futurism. Their research and implementation in the electric vehicle give the world and new edge but their supply chain model is still in a limbo. Their approach to acquiring small trucking companies may give them a boost but meeting the aggressive customer needs for the new car is a hard target to accomplish. Tesla’s biggest advantage is the tax benefits and their technology and drawback lie with their marketing strategy and supply chain.
    Tesla can introduce different incentive schemes to the dealerships and adopt the most sophisticated supply chain model like the other big automobile companies.
    Tesla has become bit complacent because of their recent success and that deviate their innovation to monotonous approach. I believe Tesla should concentrate more on meeting the demand and be truthful to their deliveries.

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24. Brett Damisch says:

    December 20, 2018 at 8:48 am

    Tesla needs to create a shipping buffer with the smaller trucking companies that they have purchased. As they are a newer company, they need to over perform/deliver to their new customers. As most customers are purchasing their tesla for the first time via “the apple store” retail/pricing environment, the delivery must be on time. Customers are beginning to expect OTD as internet retail is driving this factor. In regard to suppliers not being able to keep up, they must be held accountable. In the aviation industry, if a Boeing 737 sits on ground without an engine, the engine manufacture will be fined massively per day the plane is grounded. Tesla needs to be proactive and create this type of negotiation with their suppliers. This will drive suppliers to hold inventory.

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25. bernardinm says:

    December 23, 2018 at 8:42 pm

    What supplier don’t want is not to be paid at all, but if they receive down payments or similar guarantees, like partial payments (40% at the beginning (when placing the order), 30% at delivery and 30% after 1 month for example, since Tesla would probably want to cover the costs from the operational activities, aka sales of their cars. As already mentioned a coordination between the throughput and delivery capacity is of essence. A major assumption seems to be that 7000 vehicles a week implies 1000 (+/-) vehicles delivered a day. In case it is possible to deliver more than that in certain days, then you could be faster closer to the number to be delivered by the end of the week few days in advance. I am here assuming too that you can produce finished cars in higher quantity than the average needed (1000) per day to reach the weekly goal. 50 cars an hour require 20 hours to produce 1000. Having worked in the car industry in Germany I remember a concept called continual shift (3 teams relaying each other 24 hours long), which would indicate a possibility to produce more in the remaining 4 hours if it is the used system.

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26. Paresh Sharma says:

    December 30, 2018 at 11:31 am

    As per theory of constraints, Tesla first needs to identify what is the current bottleneck in the process – is it a. suppliers providing parts, b. manufacturing 50 cars/hour a rate too slow or c. transportation to the dealer locations, especially because tesla travels from California to all over the US and then build inventories around the bottleneck to speed up the process.

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27. Paresh Sharma says:

    December 30, 2018 at 11:31 am

    Assuming that the transportation piece is the number one bottleneck, firstly Tesla would have to cut down all its export orders and focus on delivering to US market. Secondly, given a rate of 50 cars per hour, if they can work out 1 truck per hour, they can come close to a JIT process. This means atleast 24 trucks in a day (assuming capacity of 30 cars per truck) with more trucks in the evening to clear out any pending inventory. The above proposal would be the quickest way to move finished goods. The movement of trucks would also be of key importance, should they start delivery on shorter routes first or target longer routes first, In case of longer routes the turn around time would be significantly larger and therefore they would need more number of trucks in operation. They could also decide to focus on number of outstanding orders, if there are more orders pending in the east cost, they may target that area to give benefit to those customers first

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28. Paresh Sharma says:

    December 30, 2018 at 11:32 am

    I believe issues of payment to suppliers would be of low significance because if sale volume is increasing many folds then we would expect suppliers to quickly fall in line and expect faster clearance of their dues

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29. Paresh Sharma says:

    January 3, 2019 at 9:01 am

    https://www.autoblog.com/2019/01/02/tesla-2018-production-numbers/
    Production Numbers released by Tesla for 2018
    Interesting to note that the Strategy to counter reduction in Tax Credit is to reduce price

    Reply

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