How Tesla Outsmarted The Chip Shortage.

How is Tesla mitigating the chip shortage? In the first quarter of 2022 Tesla delivered over 300,000 vehicles. That is about a 68% increase from the same period of 2021. Yes, impressive. Tesla is outsmarting the competition by innovative thinking. Every time Tesla encounters a problem they tackle it head on and look at solutions from multiple angles. Supply chain professionals should benchmark Tesla and see what they are doing different that sets them apart.

The chip shortage that began in late 2020 and continued into 2021 affected a number of industries, including the automotive industry. Many automakers, including Tesla, faced challenges due to the shortage of chips, which are used in a wide range of automotive components, including electronic control units, infotainment systems, and powertrain systems.

In response to the chip shortage, Tesla took a number of steps to mitigate its impact on the company’s operations. Some of the strategies that Tesla employed to outsmart the chip shortage included:

Prioritizing production of high-demand models: Tesla prioritized the production of its most popular models, such as the Model 3 and Model Y, which had the highest demand and were likely to generate the most revenue.
Utilizing in-house chip design and production: Tesla has its own chip design and production capabilities, which allowed the company to design and produce its own chips rather than relying on external suppliers.
Increasing chip stockpiling: Tesla increased its stockpiling of chips in order to ensure that it had a sufficient supply to meet its production needs.
Diversifying its supply chain: Tesla worked to diversify its supply chain in order to reduce its reliance on a small number of chip suppliers.

Overall, Tesla’s strategies helped the company to mitigate the impact of the chip shortage on its operations and maintain its production levels. However, the chip shortage did still have some impact on the company’s production and revenue, and it is likely that the shortage will continue to be a challenge for the automotive industry in the coming months.

Tesla and Supply Chain

Quotes on the Chip Shortage and Supply Chain.

“It’s early days, we’re doing a lot. Ford knows how to scramble. We’re adjusting yield management, moving the chips that we do have to the most profitable vehicles, our electric vehicles. You know, protecting production of strategically important vehicles. We’re working through it right now.” ~Jim Farley, Ford CEO.
“You will not find it difficult to prove that battles, campaigns, and even wars have been won or lost primarily because of logistics.” ~ Dwight D. Eisenhower.
“Because demand will remain high and supply will remain constrained, we expect this shortage to last through 2022 and into 2023.” ~Glenn O’Donnel, VP Research Director.
“We need a company like TSMC [Taiwan Semiconductor Manufacturing Company] in Arizona times ten, and many more in the U.S. if we want security from interruption.” ~Mark Frichtl
“Supply Chain is like nature, it is all around us.” ~Dave Waters
“Telling me how to allocate is bad for a chip CEO. Telling me where I need to locate is bad. So I’m concerned we have a real train wreck coming even when we got beyond some of the short-term stuff.” ~Dewardric McNeal
“We need to accept that we won’t always make the right decisions, that we’ll screw up royally sometimes — understanding that failure is not the opposite of success, it’s part of success.” ~Arianna Huffington
“The amateurs discuss tactics: The professionals discuss logistics.” ~Napolean Bonaparte
“Those in supply chain know the impossible is possible.” ~Dave Waters