Tuesday, March 21, 2017

Tesla's Dirty Little Secret - They Suck at Supply Chain

“Hi this is Evan Zlotnick (pause) Zee as in Zebra, L, O, T as in Tom, N, I, C, K… Yes, Zlotnick. Yeah, I brought my car in four weeks ago to get an estimate. Well, that’s the thing, you never called me back. What do you mean, you don’t know when the parts will be here? Did you put in the order? You didn’t get a confirmation and expected delivery date? Look, I’m not a supply chain expert… Oh wait, I am! This doesn’t make any sense…”

That is an actual conversation I had with one of the body shops in Austin. Backing up a little bit, a year ago, I drove from Austin to Dallas and picked up my midlife compromise car. I was driving a 4 wheel drive Cayenne which seemed to make a lot of sense when I lived in Seattle, but in Texas, I no longer needed four wheel drive. When the air conditioning on it died and I was looking at spending another $1500 - $2000 on fixing it, making payments for a year, and then trying to sell it with over 100,000 miles on it for the amount I had sunk into it over the course of the year in the form of car payments - I did what every sensible person would do. I bought a new, used car.

I did my research. I had a list of requirements. The new car must be capable of getting all four members of my family in it, so the back seats had to be actually usable. It had to be fast. I needed a great stereo. Since I traded rain and snow for good weather, I naturally wanted a convertible. Lastly, I didn’t want to spend too much money.

While Austin is the 29th most populous city in the United States with limited inventory, within three hours are the larger cities of San Antonio, Houston, and Dallas. I decided to buy a three year old Mercedes E550. This underrated beast sports a twin turbo 407 horsepower engine, surprisingly spacious seating, reasonable gas mileage (22 mpg with me constantly flooring it), a kickass Harmon Kardon stereo, and my payments would be lower than I was making on the Cayenne.

It didn’t take long for me to fall in love with the Mercedes. With all the power and performance of a Porsche 911 and none of the stigma at a fraction of the price I couldn’t believe I was able to find exactly what I was looking for. Unfortunately, our love was not meant to be as six months later, my wife was rear ended at 45 mph. While my wife was unharmed, thanks mostly to the precision German engineered safety equipment, the car was not. It was eventually declared a total loss.

My first thought was to replace it with another Mercedes E550, but I was unable to locate a comparable vehicle in the Great State of Texas. I then looked at getting a used Tesla Model S. The used vehicle I eventually purchased was $15k more than the Mercedes and I had to do some mental gymnastics to rationalize the price difference. I figured I was spending roughly $200 - $300 a month on gas and the extra money spent on the new car payment would be offset by the savings I was about to receive from no longer needing gas.

All was well for about a week when the new, used Tesla got rear ended in a parking lot. While still drivable, there was a giant dent in the rear of my new vehicle. The insurance company provided an estimate and I went to one of only a handful of body shops in the area certified to do repairs on Teslas. Six weeks went by and after multiple phone calls, I never heard back from the shop. So, I brought it to a different shop. The new shop provides plenty of status messages to me and will return my calls, but the status is still the same. The shop is waiting for parts from Tesla.

The shop has gone so far as to provide proof that the part was ordered on 2/6. There is a confirmation number on the order, except in subsequent follow ups with Tesla, the response was, “We lost your order.”

It turns out that my experience of waiting on parts is pretty much par for the course. A writer for the financial news site, the Motley Fool, penned the seminal article explaining the situation:

The author, who had only a slightly more damaged rear fender than I did, waited a full eight months for his repair. In fact, these kind of waits for repairs seem common amongst Tesla owners. While it is inexplicable that someone could be kept waiting this long for a repair depending on simple parts, what is more perplexing is that these supply chain issues seem to be caused by Tesla themselves…

A few years ago, articles started popping up about how Tesla wrote their own ERP (Enterprise Resource Planning) software (Source). Rather than use the industry standard SAP or Oracle, Tesla decided to do it themselves. Heck, they got it done in just four months because, well, they’re Tesla and clearly they know what they are doing. But not really. Maybe I am a bit jaded but in all of my years working in supply chain and using SAP, I have never, not once, heard of an order “lost in the system”.

I had high hopes for owning a Tesla. I love the fact that it gets nearly 300 miles worth of range with zero gas. However, if the company can’t handle something as simple as taking an order and actually delivering on said order, everything else they do is moot. At this point, all I can do is wait, wish I still had the Mercedes, and wonder why anyone would be so arrogant as to write an entire ERP system from scratch.



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