Inventory Management

Inventory Management

Find a current article (something within the last 3 months) on Inventory Management or Aggregate Planning.

DeBord, M. (2019, April 29). Tesla needs to hire someone to build the Model 3 so it can focus on the Model Y. The Business Insider. https://www.businessinsider.com/tesla-needs-to-hire-contractor-to-build-model-3-so-it-can-focus-on-model-y-2019-4?IR=T

Summarize the article and compare it to readings in the book and to your company

Tesla, Inc. is currently the leading electric car manufacturer in the United States. The company has had issues with its supply chain management, with the production demand being significantly higher than the production capacity of the company. DeBord (2019) reports for The Business Insider, arguing that Tesla should outsource production for its Model 3 vehicle so that it can focus on the production of the new Model Y. When Model 3 was launched, Tesla received more than 500,000 preorders. The company initially promised the customers that it would produce 5,000 cars per week to meet this high demand. However, their inventory management techniques were not successful enough to meet this inventory demand initially (Bhulyan, 2017). This led to the cancellation of over half of these preorders. One of the main reasons the company was unable to meet the inventory targets was its limited production resources. For instance, while many automotive companies choose offshore production, Tesla produces its cars in its one plant in California. As a result, the company has a challenge meeting high demands at a time. Therefore, DeBord (2019) suggests that outsourcing production would help the company to avoid inventory issues in Model Y production.

Does your company have similar processes in place? If so, how are they similar? How are they different?

Zara and Tesla’s inventory management techniques are similar in the way that they are done based on market forecasts. Tesla plans its production based on the market demand for the new model, while Zara also uses market demand to determine the inventory capacity to produce. Efficient inventory management is done by determining the minimum inventory requirements in the market. A business can calculate the inventory supply based on the market data, such as the percentage of orders to be shipped (Reid & Sanders, 2016). Zara and Tesla both try to enhance their inventory management efficiency by using demand data to determine production efforts. These two businesses are also similar in the way that they do not outsource their production. Both Tesla and Zara have their own production plants to manage their inventory.

However, Zara differs from Tesla in the cost-efficiency of its production techniques. According to Reid and Sanders (2016), one of the three objectives of inventory management is to achieve cost-efficient operations. Zara achieves this by locating its production plants in low-cost areas to minimize labor costs. On the other hand, Tesla chooses to maintain production in America, which has a significantly high cost of production. This could be one of the reasons why the company is unable to increase its production excessively to meet the inventory demand. Zara can learn from Tesla on the importance of diversifying production. Tesla’s reluctance to diversify its production is one of the main reasons why it is unable to create enough inventory to meet market demand. Zara can learn from this to maintain its many production plants always to meet the market demand.

References

Bhulyan, J. (2017). Tesla saw about 63,000 cancellation of Model 3 preorders. Retrieved from: https://www.cnbc.com/2017/08/03/tesla-saw-about-63000-cancellations-of-model-3-pre-orders.html

DeBord, M. (2019, April 29). Tesla needs to hire someone to build the Model 3 so it can focus on the Model Y. The Business Insider. Retrieved from: https://www.businessinsider.com/tesla-needs-to-hire-contractor-to-build-model-3-so-it-can-focus-on-model-y-2019-4?IR=T

Reid, R. D., & Sanders, N. R. (2016). Operations Management, Binder Ready Version: An Integrated Approach. John Wiley & Sons.

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[u08d1] Unit 8 Discussion 1 Current Events

Find a current article (something within the last 3 months) on Inventory Management or Aggregate Planning. Summarize the article and compare it to readings in the book and to your company. Does your company have similar processes in place? If so, how are they similar? How are they different? What could your company incorporate from the article that would help them improve their inventory management?

Inventory Management

Your initial posting should be approximately 300 to 400 words. Please revisit the Courseroom after your initial posting and respond to at least two other learners’ postings.

Resources

UNDERGRADUATE DISCUSSION PARTICIPATION SCORING GUIDE

• Due Date:weekly
  Percentage of Course Grade: 24%.