2022
IMPLEMENATION OF
QUALITY
MANAGEMENT AT
TESLA
[COMPANY NAME] | [Company address]
Contents
1.
INTRODUCTION................................................................................................................. 2
2.
LITERATURE REVIEW .................................................................................................... 2
2.1 Total Quality Management (TQM) .................................................................................. 2
2.2 Differences between TQM and Six Sigma........................................................................ 3
2.3 TQM In Industry................................................................................................................ 4
2.4 TQM In Service Sectors ..................................................................................................... 4
2.5 Six Sigma ............................................................................................................................. 4
2.5 Six Sigma in Industry......................................................................................................... 4
2.6 Six Sigma in Service Sector ............................................................................................... 5
3.
CASE STUDY OF TESLA MOTORS ................................................................................ 5
3.1 Six sigma principles adopted by Tesla Motors ................................................................ 5
3.2 Identification of constraints............................................................................................... 5
3.3 Continuous improvement .................................................................................................. 6
3.4 Application of control measures ....................................................................................... 6
3.5 TQM Principles adopted by Tesla .................................................................................... 6
3.6 Communication and integrated design. ........................................................................... 6
3.7 Continuous Improvement .................................................................................................. 6
3.8 Focusing on Customers ...................................................................................................... 6
4.
References .......................................................................................................................... 9
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1. INTRODUCTION
1.1 History and development of quality management
Quality management has been practiced in many different civilizations throughout history. King
Hammurabi of Babylon introduced the concept of product quality and liability into the building
industry at the time. Different people performing the same task will follow the same steps. This
reduces deviation from the requirements. In 1924, “Western electrical engineer” Walter Shewhart
proposed quality controls (Koskela, Tezel & Patel, 2019). After many decades after that,
manufacturers continued to define the methods of quality management by going beyond various
kinds of inspection to focusing on the strategies required for the incorporation of people and
processes for the system which had end-to-end quality management (Schachter, 2017).
The rise of mass production in the twentieth century raised the necessity for product quality
control. When we look back at the evolution of quality management, we can see that we have
gone through several stages, from quality control to quality assurance, and finally to complete
quality management. Over the decades, the economy in the post-war period started to boom which
provided consumers with higher power than ever. As the competition for quality increased by 1970,
Japan began to get the upper hand over the United States. Because of their incapacity to calculate
the quality, Americans began to experience economic problems, which prompted corporate
leaders in the US to finally act. A "standard for Quality Management" known as ISO 9000 was
created by the "International Organization of Standardization" (ISO) in 1987. The standard is now
utilized by several enterprises all around the world, and it is also widely regarded as the "gold
standard for quality management."
2. LITERATURE REVIEW
2.1 Total Quality Management (TQM)
TQM is a technique that puts customers and quality first above all else, applying the techniques
of TQM on the auto industry is complementary as their production is focused on customer
satisfaction and quality of cars produce. There are six main quality management techniques, Total
quality, Six Sigma, Top-down and Bottom-up approach, ISO 9000, Cost of quality and Kaizen.
TQM has some essential elements, these are, commitment, continuous improvement (Kaizen),
competitive benchmarking, employee empowerment, team working, knowledge and awareness.
Advantages of TQM are customer orientation, philosophical approach involving everyone (team
working, fosters multi-disciplinary activity, employee involvement), structured approach,
however there are also disadvantages with TQM these are too much emphasis on customer, no
clear implementation path, focus or goals, slow to show improvement, improvement may be
intangible and costly to implement.
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Fig 1. Principles of total quality management (TQM)
TQM is backed up by Deming theory. which emphasises the "systems of profound knowledge"
and the "Shewhart cycle of plan-do-check-act" as well as the management points that have been
discovered. He acquired notoriety for the ratio he developed, which states that "quality is equal to
the results received from work efforts over the entire costs." Four points are involved in
accomplishing overall quality management in his systems of profound understanding.



Understanding systems.
Understanding variations
Theoretical understanding of psychology
He asserts that knowledge-based process modifications can be used to improve quality. In addition
to the "PDCA cycle," he put out "fourteen criteria" for quality management.
2.2 Differences between TQM and Six Sigma.
TQM
Management philosophy of quality
improvement
Encourages involvement of all employees
Senior management provides direct support
Quality oriented
Improves existing processes and systems
Doesn’t require training
Six Sigma
A philosophy that focuses on defect & cost
reduction
Relies on a selected group of highly trained
employees
Senior management is held accountable for
results
Business results oriented
Identifying the defects and eliminating them
Requires well-trained professionals
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2.3 TQM In Industry
TQM used in industry is highly beneficial as it looks to improve customer satisfaction by having
a customer focus and considering customer needs and customers are almost always satisfied when
their expectations are met, satisfied customers are returning customers. However, it isn’t the only
factor as a business can go broke trying to make customers happy. TQM improves business
efficiency and effectiveness by establishing processes that align to produce desired outcomes and
the productivity of a process compared to the resources used. Being able to consistently produce
desired outcomes without wasting resources like time, material and money is critical for a business
to make it over the long haul [6]
2.4 TQM In Service Sectors
TQM used in the service sectors can be tricky to implement, such a reason is that in the
manufacturing industry, quality managers can quantify the products quality but in the service
sector this can be hard to measure, another paper backs this claim up by stating that the two
industries are completely different and that they are distinct operations with different customer
relations. TQM in manufacturing focuses on the quality of goods and processes whereas the
service sector has emphasis on acceptance and customer support.
2.5 Six Sigma
Six Sigma is a systematic approach to reduce or eliminate activities that do not add value. It
showcases and highlights removing wasteful steps and streamlines it to a more effective process.
There is a theory called Ishikawa’s theory also known as “the last theory”. He developed the
theory on the quality improvements through a human standpoint and stated 7 basic tools for
quality improvement, these are as follows, Pareto analysis, cause and effect diagrams,
stratification, check sheets, histograms, scatter charts and process control charts.
Fig 2. Principles of Six Sigma
2.5 Six Sigma in Industry
Six sigma has been used in many industries including ford, General Motors, Toyota and tesla to
name a few to help improve their efficiencies. Before it was introduced there were many problems
on the factory floor, including faults and errors that were carried on down the production line with
little detail to fix or resolve these issues. When ford started making its first ever car, the model T,
the panels where crafted by hand and very rarely did they meet flush or line up, any mistakes that
occurred on the production were carried on and rectified individually, with little to no care of
finding out why they these defects where occurring. Fast forward to the modern day and take a
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company like Toyota who have perfected this put a lot of emphasis on quality control and as such
their production line makes very little errors or faults. The result of this increases revenue
increases effectiveness and improves customer loyalty.
2.6 Six Sigma in Service Sector
Six sigma helps by improving processes involved with human resources, sales and marketing.
Using DMAIC methodology, six sigma helps in implementing quality in any industry by reducing
defects. Implementing six sigma in the service sector can increase profitability by reducing waste,
improves customer focus, sets direction and goals, generates sustained improvement and fosters
continuous learning and development, research shows that if a service sector doesn’t make
changes to poor quality in some cases it can add 50% to costs there is a case study by Genpact, a
global leader in transforming and running processes and operations, the particular study covers a
claims department and that they had a long wait for processing claims. It proposed technology to
automate certain activities, this combined with some other small changes reduced the time waited
for processing claims and increased the business impact by roughly 20% this provided an increase
of $15 million approximately.
3. CASE STUDY OF TESLA MOTORS
This case study will review the processes at Tesla Motors, a well-known manufacturer with US
headquarters. Tesla’s products are known for their outstanding performance, sustainable energy,
and unique design. However, balancing and improving productivity without sacrificing quality
has been a huge challenge for Tesla in the past. TQM and SIX SIGMA methodologies can foster
competitive advantages, putting the company in a better position to compete with massive
automakers like Ford and Toyota.
3.1 Six sigma principles adopted by Tesla Motors
3.2 Identification of constraints
Six sigma identifies flaws based on the type of waste produced during the manufacturing
process, the following are Tesla Motors' major production flaws.




Development and research
Overproduction.
Transportation.
Correction
The failure of the research and development department has resulted in the production of faulty
batteries and wasted time on ambitious projects. The cited overproduction is due to Tesla Motors
producing more vehicles than consumers demand. The supply chain includes elements such as
transportation and correction. The company's insufficient flow is to blame for the decline in
vehicle delivery. When deliveries are late, customers complain. Tesla Inc. mentioned avoiding
surplus inventory. Therefore, it is acknowledged that Tesla Inc.'s top management understands
the significance of using minimal processes to create cars that are efficient despite utilizing
extraneous, pointless processes that provide no value.
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3.3 Continuous improvement
The Six Sigma approach will assist the company in reducing waste. The theory of constraints
supports the concept of innovation, which emphasizes production quality over product
development. In this regard, Tesla Motors’ research and development department should
prioritize improving vehicle fuel efficiency over developing newmodels. To reduce the amount
of time lost as a result of weather issues, the logistics department has outsourced its operations.
By analyzing process flows andoffering an effective site layout with associated lead times,
Six Sigma helps to solve transportation problems. Six Sigma methodologies have helped in the
development of leadership skills and culture in the microenvironment.In this way, the
manufacturing sector for Tesla benefits from the application of Six Sigma techniques
3.4 Application of control measures
Control procedures are necessary throughout the improvementphase to ensure that the
development plan will be successful. To minimize the effects of its improper application, the
concerned workforce must be aware of how this process should be carried out. Sufficient
training is required. It is recommended that Tesla, Inc.'s senior management establish a training
and development program for the current workforce so that employees can learn how to use this
strategy.
3.5 TQM Principles adopted by Tesla
3.6 Communication and integrated design.
The two main TQM principles that Tesla has embraced are communication and integrated design.
Effective communication is a key factor in success in the workplace. To encourage effective
communication, staff members work in lean offices where they are in constant contact with their
managers. Tesla has a robust integrated system. Integration of functions at Tesla promotes
smooth communication while ensuring that teams remain coordinated, hence facilitating the
improvement of processes in line with TQM objectives.
3.7 Continuous Improvement
Tesla, a leader in the electric vehicle industry, must grasp the idea of continual progress. The
correction of flaws in earlier versions must be included in later ones. This plan would make it
easier to correct any detected errors by replacing the non-functional parts with improved ones.
Thankfully, Tesla already understands this aspect, so Tesla deployed a battery protection system
and distributed it free of charge to customers when fires were reported in 2013.
3.8 Focusing on Customers
Customer satisfaction is important to the management of Tesla. By producing high-quality goods
at competitive rates, they can fulfil this purpose. One of the most revolutionary vehicles has been
the Model S. (Krebs 2016). Tesla's performance since the launch of this model is depicted in the
graph below.
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Fig no 3.0
In addition, the business is contacting possible partners to develop hybrid items that will enhance
client happiness. This objective is primarily being met by developing open-patent goods like
automobile batteries and Superchargers. Companies are aware of the need to remain in touch with
consumer feedback because the customer ultimately determines what constitutes excellent. Large
manufacturers like Ford and Toyota, which have enormous resources at their disposal and may
use them to sway market outcomes, compete with Tesla for the same client base. Quality would
therefore be Tesla's primary tactic for competing with larger automakers.
Production of TESLA in recent years after adopting TQM and SIX SIGMA methodologies.
YEAR
PRODUCTION
2014
35000
2015
51095
2016
83922
2017
100757
2018
254530
2019
365232
2020
509737
2021
386759
Table no: 3.1
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Figure 3.2
Revenue of TESLA in recent years after adopting TQM and SIX SIGMA methodologies.
YEAR
ANNUAL REVENUE
2014
$3.2 billion
2015
$4.05 billion
2016
$7 billion
2017
$11.76 billion
2018
$21.46 billion
2019
$24.58 billion
2020
$31.54 billion
2021
$22.35 billion
Table no 3.
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Fig no 3.4
4. References
[1] Talib, F., 2013. An overview of total quality management: understanding the
fundamentals in service organization. International Journal of Advanced Quality Management,
[e-journal] 1(1), pp.1-20 DOI: 10.1108/02656711311299845.
[2] Sureshchandar, G.S., Rajendran, C.K. and Anantharaman, R.N., 2001. A concept model
for total quality management in service organizations. Total Quality Management, [ejournal] 12(3), pp.343-63. DOI: 10.1080/09544120120034492
[3] Rakesh Nair. (2017). Six Sigma in Service Sector – A Comprehensive Review. [Online].
grey
campus.
Last
Updated:
18
December.
Available
at:
https://www.greycampus.com/blog/quality-management/six-sigma-in-service-sector-acomprehensive-revie [Accessed 5 December 2022].
[4] Genpact. (2018). How six sigma benefits the service industry?. [Online]. greycampus. Last
Updated:
14
July.
Available
at:
https://www.greycampus.com/ckeditor_assets/attachments/32/genpac.pdf
[Accessed
5
December 2022].
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[5] Adawiyah, W.R., Pramuka,B.A.,& Sholikhah,Z. (2020). Deming’s Quality Management
Pratices by Small Businesses in Rural Areas. In SHS Web of Conferences (Vol.86). EDP
Sciences.
[6] Dominic Tramontana. (2020). How Can TQM Make Your Business More Successful?. [Online].
QAD. Last Updated: 12th April. Available at: https://www.qad.com/blog/2020/04/how-can-tqm-makeyour-business-more-successful [Accessed 5 December 2022].
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