Tesla's current products include electric cars, battery energy storage from home togrid scale, solar panels and solar roof tiles, as well as other related products and services.. There a
Trang 1VIETNAM NATIONAL ƯNIVERSITY HO
CHI MINH CITY ƯNIVERSITY OF ECONOMICS AND
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SUPPLY CHAIN MANACEMENT OF TESLA
Group member:
1 NGƯYỀN VĂN TRƯỜNG
2 TRƯƠNG QUANG LONG
3 HƯỲNH KIM NGÂN
Trang 2TABLE OF CONTENT
Trang 3Problem statement
Esla, Inc is an American electric vehicle and clean energy company based in Palo Alto,California Tesla's current products include electric cars, battery energy storage from home togrid scale, solar panels and solar roof tiles, as well as other related products and services Tesla
is ranked as the world's best-selling plug-in and battery electric passenger car manufacturer,with a market share of 16% of the plug-in segment (which includes hybrids) and 23% of thebattery electric (purely electric) segment 2020 sales (Wikipedia) The success and growth oftesla have amazed the whole world There are many factors that lead Tesla to become themassive electric vehicle field, and its supply chain is one of them This paper would decodewhat's special about Tesla's supply chain which contributed to its spectacular success today
The objective of this report is to analyze Tesla supply chain analysis including analyzing the
supply chain strategy including strategy fit, supply chain logistic management, the supply
chain network, supply chain logistic operations, and integration At the same time, it also
highlights the direction of sustainable development for Tesla supply by using SWOT analysis
and giving some recommendations for Tesla to be a sustainable global leader in the electrical
transport íìeld.
3
Trang 4Theoretical Basis
Supply Chain management (SCM)
Supply Chain management is the management of the flow of goods and serviies and iniludesạll PIQiesses _ thát translorm „raw_- materials .into Jinal _produits_.Jt „inyolves the aitivestreamlining ofa Dusmess s supply-side aCflvmes to maXimize iustomer ValUe an' gaĩn aiompetitive advantage in the marketplaie (Supply Chain Management (SCM): What YouNeed to Know ,2021)
Supply Chain network
Typiially involved in long-term deiisions related to the number, type, loiation and iapaiity
of faiilities (for example, produition plants and distribution ientres); the flow of raw material,intermediate and finished produits throughout a supply ihain; and a set of suppliers to seleit.These deiisions are integrated beiause they impait upon eaih other
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demand Ultimately, an effeitive SCNet ireates effiiieniies, meets or exieeds iustomerdemand, and provides the lowest iosts via an effiiient network (Supply Chain Management(SCM): What You Need to Know ,2021)
Vertical integration
Vertiial integration is a strategy whereby a iompany owns or iontrols its suppliers,distributors, or retail loiations to iontrol its value or supply ihain Vertiial integrationbenefits iompanies by allowing them to iontrol proiesses, reduie iosts and improveeffiiieniies (Vertiial Integration ,2021)
Just-in-time
The just-in-time (JIT) inventory system is a management strategy that aligns raw-materialorders from suppliers direitly with produition sihedules Companies employ this inventorystrategy to inirease effiiieniy and deirease waste by reieiving goods only as they need themfor the produition proiess, whiih reduies inventory iosts This method requires produiers toforeiast demand aiiurately ( What Is Just in Time? ,2020)
Match Capacity Strategy
The matih iapaiity strategy (traiking strategy) is the middle way between the Lead and LagStrategies As opposed to signifiiantly boosting iapaiity aiiording to antiiipated or aitualinireases in demand, the Matih Strategy foiuses on little, iniremental adjustments to iapaiity
Trang 5determined by shifting ionditions in the market Although matcf demand strategỵ
(trackỉngcapacity strategy) requires much more effort and is difficult to achieve, it is far morerisk-
averse than other capacity planning alternatives (Match Capacity Strategy ,2021).
Lead Capacity Stratecy
A lead capacity strategy (lead demand strategy) is a proactive approach which adds orsubtracts capacity in expectation of future market demand Lead strategy is an aggressive
high inventory levels, however it can imply higher cycle stock costs Manufacturers like this
strategy as it minimizes risk (Lead Capacity Strategy ,2021).
Ansoff 's matrix
The Ansoff Matrix, also called the Product/Market Expansion Grid, is a tool used by firms toanalyze and plan their strategies for growth The matrix shows four strategies which are marketpenetration, product development, market development, diversiíìcation that can be used tohelp a firm grow and also analyzes the risk associated with each strategy ( Ansoff Matrix -Overview, Strategies and Practical Examples ,2021)
Zorterrs Hvễíorces Framework is a method for analysing compe tition of a business It draws
from industrial organization (IO) economics to derive five forces that determine thecompetitive intensity and, therefore, the attractiveness (or lack thereoí) of an industry in terms
of its proíitability An "unattractive" industry is one in which the effect of these five forcesreduces overall proíitability The most unattractive industry would be one approaching "purecompetition", in which available proíĩts for all firms are driven to normal profit levels (Wikipedia ,2021)
Trang 6Chap 1: Company Overview
About Tesla
Tesla was íounded in 2003 by a group of engineers who wanted to prove that people didn’tneed to compromise to drive electric - that electric vehicles can be better, quicker and morefun to drive than gasoline cars Today, Tesla builds not only all-electric vehicles but alsoiníìnitely scalable clean energy generation and storage products Tesla believes the faster the
world stops relying on fossil fuels and moves towards a zero-emission future, the better
Launched in 2008, the Roadste r unveiled Tesla’s cutting-edge battery technology and electricpowertrain From there, Tesla designed the world’s first ever premium all-electric sedan fromthe ground up - Model s - which has become the best car in its class in every category.Combining safety, performance, and efficiency, Model s has reset the world’s expectationsfor the car of the 21st century with the longest range of any electric vehicle, over-the-airsoftware updates that make it better over time, and a record 0-60 mph acceleration time of2.28 seconds as measured by Motor Trend In 2015, Tesla expanded its product line withModel X, the safest, quickest and most capable sport utility vehicle in history that holds 5-starsafety ratings across every category from the National Highway Traffic Safety Administration.Completing CEO Elon Musk ”s ‘Secret Master Plan,” in 2016, Tesla introduced Model 3, a
lfiiwêílriaetỉiehi«fb-ẳtotaffls i:ỉ^ii^1fric'laMfii^^^iclf‘iJvd^'g‘1n.^'a^;l'setlifi"-iwí?iìh7rsSoangnf!ỉ[rtoTsisaowners at least $200,000 over a million miles based on fuel costs alone In 2019, Teslaunveiled Model Y, a mid-size suv, with seating for up to seven, and Cybertruck, which willhave better utility than a traditional truck and more performance than a sports car
Tesla vehicles are produced at its factory in Fremont, California, and Gigafactory Shanghai
To achieve our goal of having the safest factories in the world, Tesla is taking a proactiveapproach to safety, requiring production employees to participate in a multi-day trainingprogram before ever setting foot on the factory floor From there, Tesla continues to provideon-the-job training and track performance daily so that improvements can be made quickly.The result is that Tesla’s safety rate continues to improve while production ramps
Trang 7To create an entire sustainable energy ecosystem, Tesla also manufactures a unique set ofenergy solutions, Powerwall, Powerpack and Solar Roof, enabling homeowners, businesses,and utilities to manage renewable energy generation, storage, and consumption SupportingTesla’s automotive and energy products is Gigafactory 1 - a facility designed to signiíìcantlyreduce battery cell costs By bringing cell production in-house, Tesla manufactures batteries
at the volumes required to meet production goals, while creating thousands of jobs
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the advent of clean transport and clean energy production Electric cars, batteries, andrenewable energy generation and storage already exist independently, but when combined,they become even more powerful - that’s the future of Tesla
Trang 8Chap 2: Analyzing the supply Chain strategy
includỉng stratggy fit
1.1 Stratecy Fit and current Global Stratecy
Tesla's new approach builds on its core competencies while still being attentive to both theexternal and internal climate With the Model 3 appealing to the consumer market, Tesla ishoping to break into the mainstream, and rising environmental issues, government funding forrenewable transportation, and rising oil prices will all help it (Lynch, 2015)
1.2 Tesla Strategic Analysis
Tesla’s Intensive Strategies (Ansoff's matrix)
Market Penetration (Primary Strategy): Tesla, Inc.'s new key intensive growth approach ismarket expansion By increasing advertising revenues in existing markets, this intenseapproach allows for business expansion For example, the company intends to roll out and sellmore of its electric vehicles in the United States by aggressive promotions The companymaximizes its proíìts from the sectors in which it aĩready works in this manner Thisaggressive expansion campaign ties in with Tesla's overall strategy of gaining a strategic edge
by expanded market share The company's sales proíìts can be increased by vigorouscampaigns, according to a corporate goal focused on this intense approach
Product Development (Secondary Strategy): Tesla Inc.'s secondary intensive growthapproach is product production The corporation expands through this intense approach bydesigning innovative goods that produce new revenue This approach is implemented by thecorporation ,by : designing innovative eoods with emerging technology that haye arlowenvưonmentar impact The group, Iort’ẹxamp’lẹ, SỔĨĨS soĩar ^ne^ ana createa the Te^h!Roadster, the world's first fully electric sports car By concentrating on exclusive high-techvehicles and associated goods that lure target buyers, this intense approach supports TeslaInc.'s differentiation genẹric competitive strategy In this regard, one of the strategic goals ofthis aggressive growth policy is to ensure signiíicant investments in research and dẹvelopment(R&D)
Trang 9Market Development: Business expansion is a tertiary intensive growth technique used byTesla, Inc This policy entails expanding into new countries in order to increase revenue andexpand the global industry For example, by opening new offices and facilities around theglobe, the organization steadily extends its market presence The business currently sells injust a few nations, but further international growth is planned in the future Tesla's missionand vision statements, which emphasize market leadership in the automobile industry and
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market growth by making innovative goods that draw buyers Ẩ strategic goal of Tesla
Inc.'smarket growth intensive approach is to expand the company's global business byforming
partnerships with other businesses that make it easier to penetrate new markets
Diversiíication: Diversiíìcation is used by Tesla, but only as a minor part of its intensivegrowth plan This intense approach aids the company's growth by alloWing it to start newbusinesses The company, for example, wants to develop new battery products for a range ofnon-automotive uses However, the company's íìnancial result is cuirently unaffected by thisaggressive expansion policy To expand its automotive and energy solutions businesses, Teslafocuses much of its resources on market penetration and product growth To maximize the
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market markets, which is a corporate goal related to diversiíìcation Another strategic goal ofthis intense approach is to buy other companies or form joint ventures to produce completelynew goods
Tesln’s Ceneric strntegy (Porter’s Model)
Wide separation is Tesla's general strategic approach This generic approach for gaining astrategic edge is focused on the invention of goods that set the business apart from thecompetition Tesla Inc.'s offerings, for exampleỴ are competitive because they use modernenvironmentally friendly technologies, despite the fact that internal combustion engines arestill used in the vast majority of vehicles today Using this generic competitive approach, thefirm is able to appeal to a wide range of prospective buyers, including those who are
particularly interested in environmentalỊ.y friendly soods Initially, Tejla's • generic approachtor sirategrc aavantage was aisiínction orientear TheíorganiZaTion lisea the distinction orienteaapproach to highlight the individuality of its products while focusing mostly on early adopters
in the high-end electric car industry These early adopters are well-heeled consumers and have
a strong desire to buy new goods Tesla's generic competitive approach has moved to strongdifferentiation now that the brand is well-known and manufacturmg costs are falling Because
of the company's lower manufacturing costs and growing name recognition, it will reach awider range of buyers in the automotive industry
To maintain a sustainable edge, Tesla, Inc.'s general approach necessitates the alignment ofstrategic goals One of the company's strategic goals, for example, is to accelerate spending inresearch and development (R&D) in order to produce new technologies to meet consumerdemand for improved clean energy solutions, such as batteries for different applications
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Trang 10Chap 3 2 Analyzing the supply Chain logistic
management
3.1 Warehouse
Tesla also signed a leasing agreement for three warehouses measuring 1.3 million square feet
in the Oaks Logistics Center in Livermore, California, which is just 20 miles northeast of theFremont plant Elon Musk, the company's CEO, has voiced worries about running out of space
at the company's Fremont plant on many occasions Tesla will increase manufacturing and
Shuactháte ai5buu§B%tthf hishov<ìte,p<laMíodel 3 demand by having a modern TeslaThe Oaks Logistic Center is a modern facility built between 2014 and 2015 that consists ofthree different warehouses ranging in scale from 295,000 to 634,000 square feet The site isconveniently situated just 20 miles northeast of the Fremont factory and in the generaldirection of Tesla's Gigafactory As a result, it could conveniently serve as a staging point forGigafactory 1 battery packs and other components arriving in Fremont
The new Tesla Warehouse plant is conveniently located between Highway 84 and Interstate
580, as well as the Port of Oakland and the Livermore Municipal Airport The site is also next
to the Lawrence Livermore National Laboratory, which focuses on energy as a core field ofTesla's research and development
Tesla has a vast number of warehouses in the United States (including one in Taiwan), themajority of which are rented Tesla's main production plant, which is also owned by thecorporation, is based in Fremont, California This location is used for both warehousing andprocessing Apart from this building, which is about 5.5 million square feet in area, thecompany's other facilities for storage and distribution are situated at the following locations:
Livermore California
Lathrop, California
Sparks Nevada
Taipei City, Taiwan
Elkridge, Maryland, and
Bethlenem, Pennsylvania
Trang 11The warehouse is used for transportation, administration, and operation in Taipei City,Taiwan In addition to North America, Asia, and Europe, the organization has rented a range
of other factories and warehouses around the globe
3.2 Distribution
The delivery channel level is zero since Tesla uses its own network In a zero-level channel,the retailer sells directly to the final customer (Kotler & Keller, 2012) With the use ofShowrooms, Galleries, Pop-up markets, the Website, and retail stores, the internal revenuechannel collects proíìts through direct marketing campaigns and trade shows (Bilbeisi &Kesse, 2012, p 2017) Attempting to buy a Tesla vehicle in any other manner would result in
a failure In one case from 2014, a San Diego man purchased a 2012 Model S at an auctionfor around half the price, only to discover that Tesla will not unlock the vehicle, sell him parts,
or 'CQvn tỉeo stìlK iWé tS,tof'ĩ-stri b4 ti oCe.sla has full leverage of their branded goods and theyown
Tesla will extend sales activities as they see fit and they have complete leverage of thedistribution plan Tesla's service centers are also expanding their delivery and sales Includingall key company practices in this endeavor helps Tesla to boost revenue Tesla has alsodiscovered that establishing a service center in a new geographical region will boost demand
As a result, they've combined their supermarket approach with sales facilities staff in servicecenters to broaden their retail presence more quickly (Tesla, 2016, p 7) Tesla currently has
438 Tesla Motors Stores and almost 100 service centers around the world as of September 1,2019
3.3 Technology
Tesla's emphasis on technology advancement is one of the key reasons behind the company'srapid rise in popularity and revenue Tesla has achieved the opportunity to use technicalmethods to promote process change through creativity (Mangram, 2012) Tesla, for example,has customized the Model S for some countries, such as China and Japan, using technologies.Since most of the focused clients do not drive and instead hire drivers, the company haschanged the back seat to be more comfortable in China Tesla, on the other hand, has begunselling right-hand drive vehicles in Japan Apart from onboard self-driving systems and a widedashboard that helps the car owner to better monitor his driving experience, Tesla also offers
a Tesla app that allows drivers to navigate their vehicles from the outside
Trang 12Tesla has invested in solar energy production, which is also known as Tesla solar paneledroofs or Powerball batteries As a result, the use of green energies is picking up speed TheCorporation purchased SolarCity to demonstrate its commitment to embracing the technology(Cox, 2017) Tesla has also improved the convenience and versatility of driving by technicalprocesses When a driver drives off and on the highway, the organization has increased thespeed limit for Traffic-Aware Cruise Control and Autosteer Side Collision Warning improvesthe Model X's protection capability Side Collision Warning improves the Model X's
prng^ntÌ(ìn(caipa0?illi)ty5Ttìpìic(Cobỉili^1i7):?nly available when the Model X is powered atspeeds
Tesla has also made research and development investments in robots, the Internet of Things,and artiíìcial intelligence In 2019, the corporation invested $1.34 billion on research anddevelopment Given their vertical integration, it makes sense to invest in robotics and artiíìcialintelligence to improve processes Autonomous vehicles that connect with one another via theInternet of Things are the future of transportation Tesla has now completed stage 3 of the fivestages of autonomous vehicles (graded from 0 to 5), and is working to achieve level 5 (Reese,2016) There are possible enablers to take advantage of
Tesla electric cars have two self-driving modes: Autopilot and Full Self-Driving, each with itshWMleOfálaoWÁlgtifêr(gSDi)lsTaeìsaaivnhifleAUìíiiltlổftgofíicaobeat2th1;6 timll ta^u|pgrwelospurchased; the FSD will be the more sophisticated self-driving device, which will be moreexpensive The below are the functions of these two self-driving systems:
The following are the components of the Autopilot function at its most simple level:
• Enable the car to drive at the same pace as the nearby cars while keeping a close eye
on traffic density
• Self-turning: using the control scheme described above, assists the driver in cornering
in a clearly deíìned lane
The FSD update will have the following features:
• When in Autopilot mode (Beta), auto-find your way: automatically brings your car intoand out oi tne expressway lãne, including rané shiit tips/ auto-navigation atintersections, automatic turn signals, and exiting the highway in the correct place
• When the car is in Self-Turn mode, automatic lane shift aids the task of shifting lanes
on the highway
• In just one button, assist the car in parallel or perpendicular parking
3.4 Production
Trang 13Tesla uses a vertically integrated supply
Chain to produce, produce, deliver, and
repair their vehicles, avoiding conventional
manufacturing moves Tesla's advanced
supply chain is working to reconfigure their
Fremont Factory to incorporate high degrees
of robotics automation into different
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interconnected supply chain is the
company's primary source of value generation
automation method to bring smaller, often outsourced subsystems into their own productionnetwork, allowing for faster turnover and shorter product improvement cycles It also providesfor greater production stability, process management, and supply chain alignment Tesla isalso constructing a massive battery factory in neighboring Nevada, taking integratedproduction even further This plant would take in raw materials such as copper to aluminumand transform them into assembled battery packs to fuel the automobile industry
Due to a secured partnership with a Ganfeng lithium provider, Tesla now has a marginalcomparative cdgeover other fiĩms-_Throughout 2020 and likely for years to come, Tesla willhavèTaccess to z0% oi theĩr necessary Litmum supply
Trang 14Chap 02 Analyzing the supply Chain network
Cost, ỉocatỉon, quaỉỉty, aed vaỉue are typỉcaỉỉy coesỉdered when seỉectỉng suppỉỉers, party ỉogỉstỉcs (3PL) fỉrms, dỉstrỉbutỉon centers, and retaỉỉ stores; however, Tesỉa has done busỉness a ỉỉttỉe dỉfferentỉy wỉthout compỉete success Tesỉa desỉgns, manufactures, seỉỉs, and servỉces theỉr vehỉcỉes through a vertỉcaỉỉy ỉntegrated suppỉy chaỉn, skỉppỉng tradỉtỉonaỉ manufacturỉng steps.
thỉrd-0.1 Tesla’s facilities
Electric vehicles and energy storage products are designed, developed, manufactured, and sold
by the company These electric cars are designed on the technology of the lithium-ion battery(LIB) Tesla Motors delivers and sells its products through an international network thatincludes over 350 suppliers and various facilities worldwide Tesla's supply chain networkconsists of ten facilities located around the world that house all processes related to design,engineering development, production, warehousing, assembling, administration, marketforecasting, and sales and customer management services
Trang 15'1’aHle 1 Tcíia íacĩlitics (factOFÌcs, warcteoiiscs, scrxii.cs CCŨƯCSÌ
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Tesla’s factory in Fremont, California is one of the world’s most advanced automotive plants,with 5.3 million square feet of manufacturing and office space on 370 acres of land Followingthe City of Fremont’s approval of Tesla’s expansion plans in 2016, the company will nearly
'othe-€£thaisig<3/oarhe facility to almost 10 million square feet, creating thousands of new jobs
Map af the /acilities at the Tesla Lactary ỉn Lremant, Calỉfarnỉa
Trang 16The Gigafactory plays an important role in the future strategy of Tesla The Gigafactory is anew Tesla factory located in Reno, Nevada In 2020, the factory should reach full operativecapíícity .(Sloomb,erg,,,2016) Mt eraMes ,the,prqductíon of 500,000 vẹMdes ,per year(AssoElettrica, 2014) The primary goal of the Gỉgaỉactory is to consolidate the prodUction ofallLIBs for both electric vehicles and energy storage devices in a single facility in order tocapitalize on scale effect advantages According to Musk and Tesla Motors executives(WIRED, 2016), the construction of the Gigafactory will result in a 30% -50% reduction inLIB costs by 2020.
Leaving nothing to chance, Tesla is also continuing to invest in a network of superchargerstations across the country Customers should have a viable alternative to the ubiquitous gas
ataắionsuhatítthìy take for granted when driving ordinary internal combustion engine vehicles
4.2 Robots in Tesln’s plnnts
The robots enlisted within Tesla's plants aren ”t humanoids that roll around making quips inmonotone voices Rather, they are robotic arms and small drive units designed to assist theassociates, keeping cost at a price the customer wants to see
Tesla is providing a glimpse of the future within many of its fulfilment centres, where humansand robots work harmoniously to get packages to customers on time Tesla plants have over5,000 engineers and more than 160 specialist robots, including 10 of the largest robots in the
tho rpỉa S hRg áb’fe trug=rofegi4ỗuĩoisfltthBiha»wJflkeppèveorffirtiìifts1sfifsa sk?snFSf itetaaboshrobot that installs the seats is also able to change tools to grab the windshield, put some gluearound it, and install it in the car or else install the rear window
In centres equipped with robotics, robots still struggle to deal with inconsistencies in assemblytasks — and that human worker ílexibility remains a critical step in manufacturing
Trang 17Chap 5: Supply Chain logistics operation
5.1 Sourcinc
Concemed about competitors obtaining inside information or purchasing necessary parts,Tesla is rather secretive about the more than two dozen Model s parts suppliers, but many ofthem have been uncovered by diligent researchers Tesla manufactures the car's basicelectronic components - the electric motor, battery pack, and charger - but other parts aresourced from suppliers in the United States, Europe, and Asia
Trang 18Moreover, Tesla Motors has formed various alliances with various suppliers in order to ensure
a steady flow of key inputs required for LIB production (i.e., lithium, cobalt, etc.) Tesla hasannounced a supply agreement with Pure Energy Minerals in Nevada's Claytone Valley(Lehrenbacher, 2015) Simultaneously, in the last deca'e, the reuse of LIB has grown jnimportance and attention The LIB lifetime can be extended by reusing it for a second or thirdtime
Tesla demonstrates the importance of supplier relations in supply chain management, asprocurement and production guarantees are more likely to encounter hiccups when apartnership is new Suppliers needed proof of dependability and good faith before they werewilling to allocate resources, but once that was done, hesitant suppliers were even willing torelocate nearby Lurthermore, suppliers calculate a "cost-to-serve" based on the complexity ofthe procurement process, the value of the business, and the strength of the relationship — andwould prefer to be treated as production partners rather than just suppliers
Unless the country authorizes the company to adhere to the set minimum local componentnorm of sourcing, Tesla does not source their components or raw materials locally from wherethey are operating This means that if there are no guidelines, Tesla will source such materialswherever they see fit Quality assurance is a technique for preventing defects or errors inmanufactured products and mitigating risks during the delivery of services or solutions toclients (Tesla Laboratories, 2010) Tesla's quality control strategy ensures that all clientsreceive high-quality products and services The Senior Program Manager has been authorizedwith the task to ensure that all quality assurance issues are handled Examples of such factorsare; the Quality Control Plan’s oversight, daily direction, implementation and so on