Tesla Company’s Supply Chain, Value Chain and Distribution

Tesla’s Supply Chain Analysis

Tesla Motors is one of the companies that operate in the automotive industry in America. The company has been performing relatively well in the recent years, having registered profits in the year 2013 (Hall 2013). One of the reasons why its performance has been increasing is the supply chain it has been using. First, the company owns its entire supply chain, including production, design, and product development (Strauss & Armony 2012).

The importance of this is that the company has a direct control of its supply chain activities. Tesla’s supply chain is credited to its ability to make innovative vehicle designs by embracing innovation. Hall (2013) reports that Tesla Motors’ Model S sedan is an electric vehicle that was feted with the Motor Trend car 2013 award. The company is in agreement with manufacturers of ordinary car parts like Toyota, who help it obtain the parts easily and at a lower cost. It can influence decisions in the supply chains directly. One of the significant challenges that have faced supply chain management in the past is outsourcing the supply chain because an organisation loses direct control of the same (Jodlbauer, Olhager & Schonberger 2012). Outsourcing the supply chain leads to some decisions being made by the third party, and such decisions may not favour the business (Fisk 2010).

In the case of Tesla, owning the entire supply chain ensures that all the decisions made favour the company. Tesla is also able to get direct feedback from the supply chain, for instance, the customers and improve on areas that are necessary.

Tesla has also been able to establish an efficient supply chain that ensures its products are at the right place at the right time. This gives satisfaction to the clients because they can get the motor vehicles when they need (Klier & Rubenstein 2010). In addition, the supply chain has been able to improve the design of the products continually and keep up with the changing world, thereby giving the company a competitive edge.

Value Chain

Maintaining the value of products and services in any organisation is critical in the current competitive business world, especially in the automotive industry that is highly competitive (Schmitz 2005). Value in the car industry is paramount and should be maintained all the time. The best way to do this is to have a value chain management that is highly effective (Sabri & Shaikh 2010). Tesla Motors has been able to maintain excellent value of its products in a consistent manner. Tesla owns the value chain directly. Therefore, anything that has to do with the value of the products is a direct decision of the organisation. It means that the company has an extremely reliable value chain. Reliability is very essential to the value chain maintenance (Sand 2010). Customers expect consistency in quality, which is achieved through a consistent value chain management. It is the reason Tesla Motors has been successful in the industry.

Consistency in quality production enables Tesla to create a real image to the customers, thereby gaining their loyalty. It further gives the company a competitive advantage and increases its performance, in the long run. Tesla has been able to improve its performance in the recent years through an efficient value chain management. It has started recording profits lately, noting that it has operated for about ten years without profits. It is also worth noting that the rate at which the company has been able to raise to the top of the performance is relatively impressive and can partially be attributed to its outstanding value chain.


Distribution is a crucial component when it comes to marketing the goods of a product. A good distribution strategy is one that ensures that the products are at the right place and the right time (Rushton, Croucher & Baker 2010). Distribution plays an essential role in the success of a company because it has a direct influence on the sales and profitability that the business achieves (Hugos 2011). Tesla Motors has a distribution channel that has worked for it over the years. The distribution channel has been able to ensure that the company delivers the product at the right place and in a timely manner, which gives satisfaction to the customers because of convenience (Garg & Gupta 2012). When a customer makes an order, for instance, the company can deliver the product without delays. Therefore, the client is satisfied because they can be able to plan the movement of their ordered goods and be at the delivery point at the agreed time.

Tesla ensures that its products are always available at its designated stores across the United States. It implies that the customers always find the product anytime they walk in the stores and plan their shopping conveniently. The display that the company gives to its products is also appealing, as all the parts of the vehicle are displayed well. Consequently, the clients understand the parts of the vehicle, the quality, and the various functions of the vehicle or its parts with ease. It helps the customers in making buying decisions because they have all the features displayed to them. In short, Tesla has been able to achieve significant success through its distribution.

Reference List

Fisk, P 2010, People, planet, profit: How to embrace sustainability for innovation and business growth, Kogan Page, London. Web.

Garg, M & Gupta, S 2012, Cases on supply chain and distribution management: Issues and principles, Business Science Reference, Hershey, PA. Web.

Hall, B 2013, Tesla builds supply chain in own image. Web.

Hugos, MH 2011, Essentials of supply chain management, Wiley, Hoboken, NJ. Web.

Jodlbauer, H, Olhager, J & Schonberger, R 2012, Modelling value: Selected papers of the 1st International Conference on Value Chain Management, May 4th-5th, 2011, University of Applied Sciences in Upper Austria, School of Management, Steyr, Austria. Heidelberg: Physica-Verlag. Web.

Klier, TH & Rubenstein, JM 2008, Who really made your car?: Restructuring and geographic change in the auto industry, W.E. Upjohn Institute for Employment Research, Kalamazoo, MI. Web.

Rushton, A, Croucher, P, & Baker, P 2010, The handbook of logistics and distribution management, Kogan Page, London. Web.

Sabri, EH & Shaikh, SN 2010, Lean and agile value chain management: A guide to the next level of improvement, J. Ross Pub, Ft. Lauderdale, FL. Web.

Sand, C 2010, The packaging value chain, DEStech, Lancaster, PA. Web.

Schmitz, H 2005, Value chain analysis for policy-makers and practitioners, International Labour Office, Geneva. Web.

Strauss, JC & Armony, AC 2012, From the Great Wall to the New World: China and Latin America in the 21st century, Cambridge University Press, Cambridge, UK. Web.