Concerning news regarding executive turnover at Tesla along with building concerns focused on CEO Elon Musk has led to yet another executive re-structuring. However, Supply Chain Matters has some optimism regarding production and supply chain leadership changes.

By now, many Supply Chain Matters readers have likely observed a lot of concerning reports concerning management change at Tesla Motors. Last week was what can only be described as a tumultuous week for leadership perceptions.

On Friday came the announcement that the electric auto maker’s accounting chief resigned after just one month on the job. This is the executive that, as The Wall Street Journal reminded its reading audience, has to certify all financial statements and reporting. That same day, the company’s head of human resources, who was on leave, elected to resign and not return to work. This was similar to what has often been described as Tesla’s most noteworthy executive hire, that being Doug Field, Senior Vice President of Engineering who also elected to resign after taking employment leave after several previous weeks of leave. Field was the engineering genius of the Model 3 in terms of product design, and later a troubled manufacturing process.

And then came the most disturbing incident of all in the eyes of investors and the Wall Street community- CEO Elon Musk featured on a streaming interview smoking pot and drinking whiskey. That incident and others caused Tesla stock to drop like a rock last Friday, near its lowest point in the year. The latest incident came in the midst of increasing concerns as to whether Musk has overextended himself in workload and day-to-day responsibilities. His decision to utilize Twitter as a medium to announce that Tesla stock may be taken private, without the apparent sanction of the company’s Board has drawn the attention of the SEC.

 

Some Cause for Optimism

The above stated management developments aside, Supply Chain Matters had some cause of optimism that came form announced senior management realignments.  Tesla Model 3

Jerome Guillen, an eight- year veteran, was promoted to President, Automotive Operations, which reportedly includes all vehicle programs, engineering, customer services and supply chain.  He will be directing reporting to CEO Musk.

Guillen’s background is one of program management, including the ramping-up of Model 3 high-volume assembly in what is described as a matter of weeks. In other words, his role was to rescue a prior flawed production automation plan that was not getting the job done. That included influencing the decision to air-freight an entirely new automated supply chain, more attuned to production line worker augmentation in early June. That action helped to make an impact on closely watched Model 3 Q2 production numbers. The executive further managed Tesla’s Class 8 electric semi-truck design development effort.  Guillen came to Tesla from a program leadership role at Daimler Freightliner.

Further announced was the appointment of Chris Lister, a one-year Tesla veteran, to the role of Vice President, Gigafactory Operations. Lister is credited for helping to solve production problems encountered in high-volume battery production, associated with Model 3 ramp-up.  Lister joined Tesla from PepsiCo, where he had responsibility for leading several high-volume production facilities.

Readers who have been following our commentary stream related to Tesla’s production and supply chain ramp-up challenges will know that we have advocated that Musk appoint other executives to oversee day-to-day operations. The genius and precision of Musk was literally being consumed by his hourly and daily attention to the self-admitted “manufacturing hell” of the Model 3.

In day-to-day operations, perfection is always the goal, but realities and snafus can often come-up at any time. Many automotive manufacturers have long adopted process control methodologies such as Kaizen or the Toyota Production System that place the assembly line worker as the focal point of control and real-time decision-making as opposed to just the machine.

The best outcome at this point is for Musk to step-aside from the day-to-day and delegate that role to the new executive team being put-in-place. Our hope is that these newly appointed executives will embrace known manufacturing process control tenets and disciplines and re-energize production and supply chain teams.

Last week, business network CNBC, citing former employees and Linked-In data,  indicating that Apple has attracted scores of employees away from Tesla, including supply chain talent. That reportedly included Doug Field, the former VP of Engineering who had previously worked at Apple before Tesla. Noted in the report is that Tesla salaries are considered relatively average, and many employees have dependence on cashing-in stock options to meet financial goals. The recent round of employee layoffs and continual executive changes likely helped in raising employee concerns to “test the waters” as it were.

It would appear that Apple and other Silicon Valley firms now know of the building investor concerns and consequent employee discord within Tesla, namely being constantly asked for extraordinary efforts while the company’s stock continues to slide.

Our optimism, although admittedly not full throated, is therefore based on a belief that Musk and the Tesla Board can now focus more on strategic direction and on investor confidence.

Managing production and supply chain challenges, regardless of degree of challenge, should be vested in leadership with new energy and ability to bring teams together and improve self-worth and recognition for their efforts.

We are not convinced that Tesla has turned the corner in manufacturing ramp-up. The coming weeks and months will again provide the determinant as to whether the Model 3 can meet the expectations of being the long-sought mass market alternative in electric car innovation. After all, the Model T did not become “the people’s car” until many Americans could afford one and have the car visible on streets and driveways.

 

Bob Ferrari

© Copyright 2018. The Ferrari Consulting and Research Group and the Supply Chain Matters® blog. All rights reserved.