In every industry there always tend to be some standouts and people examine the company to determine what is their secret sauce? It can be a variety of items from the boardroom to operations, what makes the company successful?
In an article from the New York Times New Service, in the automobile business one of the biggest concerns has been computer chips because the average vehicle uses 200 computer chips and that is only going up. The chips allow the vehicles to have more features and the owners can maintain their vehicles better. Ever since COVID chips have been harder to get because of the demand from other sources – more gaming at home, more people working from home (they need work station(s), more household services have chips and the list goes on. However Tesla has somehow been able to produce vehicles at record levels, what gives?
The answer is the company had a superior command of technology and its own supply system. When Tesla could not get the chips it wanted, the engineers at Tesla rewrote the software on the chips it could receive to suit its needs. The larger companies could not do that because they rely on outside suppliers for much of their software and computing expertise.
Professor Morris Cohen of the Wharton School at the University of Pennsylvania noted Tesla controlled its own destiny by writing their own code.
Linking to dividend paying stocks, most companies who sell items to the public have embraced the supply systems which are in place. In most companies outsourcing is a way of life and that works very well until it does not. Sometimes doing everything inhouse works, sometimes it does not, the issue is how does the company react when the supply system does not work well?
There are more questions than answers, till the next time – to raising questions.