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Analyzing the Sustainability Performance of Electronix Company’s Supply Chain

Analyzing the Sustainability Performance of Electronix Company’s Supply Chain

1. EXECUTIVE SUMMARY:

The main aim of this report is to evaluate and analyze the sustainability performance of Electronix electric car company’s supply chain management. By using the concept of the triple bottom line, Electronix’s supply chain is studied and analyzed in environmental, social, and economic impact assessed. The key highlights of the analysis focused on CO2 emission and product life cycle management, which requires development from the company. Benchmarking analysis is then conducted using Tesla as a benchmark and studying their management and addressing the issues of the Electronix company. Finally, a recommendation is made by using the product life cycle as a way for Electronix and its products by recommending the best management of the product life cycle for the future development of the company and take different steps in improving and updating with the situation in the market in its social and environmental sustainability.

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2. AN ANALYSIS OF THE SUSTAINABILITY PERFORMANCE OF ELECTRONIX COMPANY SUPPLY CHAIN:

Triple bottom line analysis:

Triple bottom line is accounting framework of three components environmental, social, economic impact on the companies and industry. This helps to analysis the company from all over area and sustainability of the company in the market. Analysis of components for Electronix company and its product is discussing as under:

Environmental Impact:

Electronix PLC company main focus is to provide high ended luxury electric cars in the market with minimum environmental pollution. Company first product Electronix Pegasus 4S is built around the same philosophy of sustainability and environmental consciousness with a fully electric saloon car. With speed and range of400 mile range and 0-60 mph time of 2.8 seconds, innovative material is used to reduce carbon emission during production and transport. By the use of the ‘Plastica’ which is 95% post-consumer plastic waste and coated in a special gel coat which can easily be painted ordinarily. The interior trim is made from a hemp material that can be used for a long time. Even in the seats of the cars, leather is not used and a special fiber called “Vegan” which is Ultraleather and Alcantara material made up which support environment friendly for a long time and reusable easily. (Bradbury, H., 2003)

As mentioned in the figure. The weight of the vehicle is reduced by replacing the iron cast with the aluminum and magnesium material and even reduce the fuel composition by a 10% percentage. By using less-weight material with proper application and technique and using more reusable products makes the product eco-friendly. The battery of the car with the “buy-back option” plays a major part in environmental commitment. The product contains a large 100 KWh Lithium battery, after a long time of use of the battery, it can be used as household or grid power storage easily and the company would pay 25000 pounds for the battery if it is exchanged in the company.

The company has focused on using material eco-friendly and reduce carbon emissions but due to the transport of material from different countries and assembling issues all the energy saved or protected with the use of the material vanished. Inefficient management of the supply chain and assembling process makes product value decrease and environmental protection work also. With the current situation, it is becoming more difficult to protect the environment and invest in the assembly line of the production with less pollution as more delay than 2022 cannot be afforded by the company due to booking and payment by the customers. The current situation is unpredictable and manging material import from different countries is making more difficult for the company to manage it with the limited fund’s ad resources and achieve the target efficiently. (Murray, M., 2016.)

Social Impact:

With the reduction in air pollution. the environment would become healthier and the impact of global warning reduces by the reduction of the greenhouse effect on society. With the fresher air, water and land society get mental and physical indirect benefit with innovative products. The price paid on recharging the battery is very less than refilling the fuel in the vehicle which would increase their saving and the maintenance cost of the product is very less as the battery is resalable to the company or can use in-house or grid power.

Economic Impact:

The demand for petroleum will be reduced, which would bring the cost of the petroleum product and fuel decrease and this fuel can be used at an affordable price in the company where the requirement of fuel is high. The battery can be recharged by generating power through solar panels and this would make the cost and maintenance reduce. With the less emission in the environment requirement or need of cleaning the air reduce which decrease the cost of the maintenances and help the economy to grow gradually. With reusable battery provided by the company makes economic friendly for the customers and problem of the waste maintains reduces. (Bradbury, H., 2003)

For now, it is difficult and very challenging for the company to launch the product by Q1 2022, as delay in the import of the material from different countries is seen and even the cost of the materials are fluctuating and the problem of maintaining a workforce with proper safety in the situation is difficult for the company. (Murray, M., 2016.)

3. BENCHMARKING ELECTRONIX PLC COMPANY WITH TESLA:

Tesla is known for its innovation with excellent research and development departments and its supplier relationship management. For an Automobile company, the requirement of the raw material and assembly of the vehicles required around 300-400 parts for the production of one car of one model. For an automobile company, managing the supplier efficiently is important to continue the production and innovation at cost-effective rates. (Bradbury, H., 2003)

Procurement:

Tesla:

Tesla belief in building the components in-house to have high vertical integration, which would reduce the dependence on the suppliers and reach the economies of scale up to a certain level. Due to the large quantity of production i.e. around 1000000 production of Model S makes suppliers adjust with the location of the production and material cost. For the Model S product, Tesla Change the location and shifted to Silicon Valley which is difficult for transportation but supply agree to transport and help in the production of the cars with the company. Tesla manages the supplier effectively by treating them as a partner in production and produces a large quantity of the product and manage the cost of production effectively. (M. E.2012).

Electronix:

As a start-up, it very difficult to procure and maintain the relation with the suppliers, as suppliers are also new with the company, and time is required to make trust and respect in the market. In the beginning, the company has to manage themselves as per the supplier and try to make a good relationship with the supplier for future work. currently, vertical interaction in the company is not possible, as required a large number of resources or in-house procurement. (Hunt, T. ,2015)

Production:

Tesla:

Tesla has integrated automation in its manufacturing processes by giving some level of human intervention (Thompson, 2018). This is helpful to ensure productivity and operational efficiency within its production plant. With the help of vertical integration, Tesla manufacture, gearboxes, electric motors lithium-ion battery packs, and many other components for their various car models in their in-house production plant which leads to less dependence on the supplier for the material and parts in the production. The Gigafactory 1 covers 3.5 million sq. feet in size and with a production capacity of manufacturing batteries for more than 500,000 cars per year (TESLA, INC., 2018).

Electronix:

At this stage, the company has to outsource the material from the supplier, as in-house production and vertical integration require strong financial and human force support. During this pandemic, it would be very difficult to manage the materials even from the outside country due to various restriction on the countries and assembly of the products require huge capital and space with machines and equipment. This would lead to large dependence on the suppliers and difficulty to maintain relationships in long run with the suppliers.

Warehousing:

Tesla:

The strategy of success of Tesla is arranging Logistical nearness to suppliers, resources, and markets which reduce the time and cost of the production of the parts. Apart from the Tesla factory in Fremont, California, they also have manufacturing and assembly operations in Lathrop, California, USA, and Tilburg, Netherlands.in Gigafactory 1 and 2, production of the battery takes place which is the main part of the electric vehicles. (TESLA, INC., 2018). Tesla believes in traditional sales strategy and so they have their stores without any intermediaries of dealers and agents. They have their own Tesla flag-ship stores without any intermediaries such as dealers or ad agents. Partnership with Toyota has helped the tesla by reducing the cost by implementing just in time strategy for inbound inventory (Lambert, F.,2018,).

Electronix:

Strong supply chain management and warehousing facilities are required to become successful in this competitive and uncertain market. Due to the startup of the company, investment in warehousing would require a huge amount whereas in automobile investment in research and development would give you more benefits than an investment in another department. Currently, outsourcing or partnership with the warehousing company would be more beneficial for the company until the sales of the product in the market. Success would be seen after the sale of the product through the initial pre-order of the company has given the big start for the company production. Partnership with the other company would benefit the company like tesla has partnership with Toyota and Panasonic for the materials.

Transportation and logistics:

Tesla:

Tesla Gigafactory has increased the capacity of the production and warehousing of the products is available due to large space. Due to good relations and huge quantity order with the suppliers, Tesla tries to make production plant of the company nearby its factory so that time and cost of the transportation reduce and easy availability of the resources are possible. With that parts which are easily available from nearby area, Tesla outsources them easily and focus on major parts in the in-house production like production of lithium battery which reduces dependence on the supplier and the smooth production process is possible. The use of the information system and partnership with its company helps to make and runs efficient logistics of the products and the parts of the different vehicles in the company. (M. E. 2012).

Electronix:

Due to the USP of the company, final assembling of the products is to be done in the UK and for that transportation of the parts from all over the world to the UK is to be done and then assembling process setup and equipment would be required to finalize the products. In all this process, the cost and time utilized would be more and which leads to the success of the product in the competitive and pandemic situation becomes difficult for the company. The company has to bear the cost and will not be able to play a cost-effective part in this condition in the market.

Packaging:

Tesla:

Tesla company believes in delivering the product directly to the customer and does not go for the dealership or partnership in the selling of the products to the customers. Personal company interaction with the customer helps to know the true feedback and requirement to the company and best after-sales services can be provided by the company to the customers. The reusable of the batteries and other products makes the product more efficient and cost-benefit to the customer and the company in the market with the environmental protection. (Lambert, F.,2018,).

Electronix:

The company is providing reusable batteries i.e. batteries after a long time used can be used in household or grid processes easily which would be a cost-benefit to the customer and even the environment can be protected with these batteries. (Hunt, T. ,2015).The other option of gaining 25000 pounds from the company on returning the batteries to the company is also provided which makes the more reliable company in the market. Competition is increasing and also uncertainty in this situation makes it difficult for the company to launch the product, as the delay from 2020 to 2022 has seen. Delaying more time in the launch of the product would make the more difficult for the success s the cost of the materials and another fixed cost would go on increase in the company financial report. (Murray, M., 2016.)

4. RECOMMENDATION THROUGH EFFICIENT PRODUCT LIFE CYCLE MANAGEMENT:

For any company, managing its product life cycle is important to sustain in the market for the long run and become a successful company in the market. Similarly, for Electronix company also, managing its product Pegasus 4S is important as it is the first product in the market. Currently, it is at the introduction level, as it is not launched in the market and it is still at the level of production and development part. Managing the product life cycle from the introduction makes the success of the product easy. Tesla is known for its efficient management of the products with major investment in the research and development department and continuous analysis of the market trends makes them more reliable. (Murray, M., 2016.)

Figure: Study of product life cycle management case study of Tesla

Introduction: Pegasus 4S is in this stage where it is still in the development part and production. changes can be made easier now with the change in the market trends and competition. The company should analyze market trends continue, as currently, the pandemic has changed the dynamic of the market and currently people investment in automobiles is less due to medical and unemployment and restriction in the countries. Import of the parts are affected badly due to this and delay in the parts and equipment makes it difficult for the company to assembling the process and launch the product on the pre decided date. (Bradbury, H., 2003)

Growth: Product has achieved growth up to a certain level before the launch because of the pre-order of the product and received 70000 pounds in the advance for the product booking which has helped the company in cash management of the company. Due to this, the chance of the success of the product is high and once it is launched, demand for the product would increase with the increase in the demand of finance for the production and delivery in the countries. For this, strong financial support should be determined at an early stage would make the use of the time effectively at the demand period. (Murray, M., 2016.)

Maturity: Achieving this level required the time and continuous demand of the product in the market. At this level, continuous innovation and research and development are required to maintain the position in the market. The major investment of the company should be lay on the R&D department than in investing in warehousing and logistics which can be outsourced or partnership can be done easily. (Hunt, T. ,2015)

Decline: At this stage, demand for the product is no more, with continuous product development in hybrid, fuel-based, pure, and other innovative products and development company can avoid this stage in the life cycle.

Battery life cycle:

www.researchgate.net%2Ffigure%2FAutomotive-lithium-ion-battery-value-chain_

The above figure gives the life cycle of the lithium batteries used in the electric cars were at the initial stage, cobalt production and production of the raw materials or acquiring of the raw material is done. Tesla in his Gigafactory has a battery production plant that manufactures 560000 batteries in the year and which they used in their different electric vehicles. Cobalt is the main material in the production of batteries with the major percentage in the production. After that, cell component manufacturing takes place and raw components are manufactures or outsourced. Then cell manufacturing process takes place by combining different components in the production cycle. With that battery pack is also manufactured which is the last stage of the production of the batteries after that the batteries can be used in electric cars. Batteries are assembled in the cars and the cars are ready to use for the customers in the market. After the long use of the batteries, at the end of the life of the batteries, it is sent for the recycling process so that it can be reprocessed and reused in the production.

5.CONCLUSION:

By analyzing the company’s sustainability through the triple bottom line, key problems are analyzed are CO2 emissions from transport and delay in the production due to covid issues and import of parts and assembling process in the UK was highlighted. By analyzing and studying the Tesla company’s sustainable supply chain management helps in addressing the issues and different ways and approaches in tackling the problems effectively. By analyzing and recommending the solution for the problem of the product life cycle for the company is important as it is a start-up and is an essential period if this problem is not handling effectively then it would create the problem in the success of the company in the future. Overall, an improvement in Electronix company management and its product management would with continuous sustainability performance lead only to the protection of the environment but will also provide the company the standards and the success which company is looking forward to in this competitive environment and pandemic situation with continuous increase in their product line and development. (Hunt, T. ,2015)

6.REFERENCES:

About Tesla. (n.d.). Retrieved from www.tesla.com: https://www.tesla.com/about

Tesla Will Have a Tough Time Ramping up Production. Here’s Why. Retrieved from Industry Week: https://www.industryweek.com/continuous-improvement/tesla-will-have-tough-time-ramping-production-heres-whyBoylan, C. (2016, May 27).

A Brief History of Tesla Cars In One Simple Infographic. Retrieved from Clean Technical: https://cleantechnica.com/2016/05/27/brief-history-tesla-cars-one-simple-infographic/Carter, C. R., & Rogers, D. S. (2008). A framework of sustainable supply chain management: moving toward new theory.

Bradbury, H., 2003. Sustaining Inner And Outer Worlds: A Whole-Systems Approach To Developing Sustainable Business Practices In Management. Journal of Management Education, [online] 27(2), pp.172-187.

Murray, M., 2016. An Expert’s Guide to Lean Supply Chain Management. [online] The Balance.

Hunt, T. (2015, June 2). Is There Enough Lithium to Maintain the Growth of the Lithium-Ion Battery Market? Retrieved from green tech media: https://www.greentechmedia.com/articles/read/is-there-enough-lithium-to-maintain-the-growth-of-the-lithium-ion-battery-m#gs.Lkmlb4EtK

Lambert, F. (2018, September 22).Tesla launches ‘door -to-door service’ called ‘Tesla Direct’ to help with Model 3 delivery during rush week . Retrieved from electrek: https://electrek.co/2018/09/22/tesla-direct-door-to-door-service-model-3-delivery-rush-week/Mangram.

M. E. (2012). The globalization of Tesla Motors: a strategic marketing plan analysis. Journal of Strategic Marketing,20(4), 289-312.

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