12 ms·

Manufacturing rate is one measure of success. First Pass Yield (FPY - % of cars that don't require rework) is another. It seems like Tesla is sacrificing the la

Manufacturing rate is one measure of success. First Pass Yield (FPY - % of cars that don't require rework) is another. It seems like Tesla is sacrificing the latter in service of the former, or at least they were towards the end of Q2. I want to see Tesla succeed, but it seems like they really need to focus on increasing FPY in order to improve their long-term odds of success.

wongarsu 8y ago
What makes FPY an important factor seperate from manufacturing rate? (if we assume a car is manufactured once it is ready to ship) Of course it impacts your manufacturing rate, since anything not passing on first pass needs rework and possibly additional parts, making logistics more difficult etc. But all of that just influences manufacturing rate and cost per vehicle.
- dgritsko 8y ago
  > all of that just influences manufacturing rate and cost per vehicle. It seems like you answered your own question? These are really important for a company that's trying to make money.
  - Klathmon 8y ago
    Unless it's found that it's cheaper and faster to crank out the cars with a poor FPY, and fix most of them up afterwards. Especially if the problems are known problems. If a specific step needs a person or 2 to fix a problem on 90% of cars, but afterwords it works 100% of the time, what's the issue? Changing that step to fix that problem might introduce other issues, or cause problems with the supply chain, or could possibly just not work. Hiring a few extra people to fix the problem that you know about in order to keep moving forward not only gives you the time to really design and think about a "proper" solution, but also keeps the money flowing in.
    - Skunkleton 8y ago
      Its not cheaper, and it won't result in better quality. Any time rework is done outside of the normal process it is a big deal. There are whole organizations meant to make sure things like that happen as little as possible.
      - Klathmon 8y ago
        It seems significantly cheaper than stopping production to fix the initial problem, test it, ensure it doesn't cause any other problems, ensure it doesn't upset the supply chain, ensure it is reliable, and more.
        Skunkleton 8y ago
        Yeah, it is cheaper than stopping the world. It is much more expensive than not making the mistake in the first place. So much so that I would guess that Tesla is losing money on each car that they had to rework. And remember, Tesla had so many production issues that they _did_ have to stop the world and move into a tent of all places.
        Klathmon 8y ago
        You think Tesla is losing money because of 37 minutes per car that needs rework? Roughly $15 per car of labor? Not making the mistake in the first place isn't possible at this point... Your options here are "stop everything and fix it at the source, burning piles of cash every second it's down" or "hire some workers to spend 37 minutes per car to fix these known issue while you work on solving them at the root". And going with option 1 seems like a fast track to bankruptcy.
        joshuamorton 8y ago
        Do you know how long it takes to build an entire vehicle? If its 60 hours, then 37 minutes probably isn't breaking, but if its 8 hours, then that 37 minutes is 7.5% of a vehicle's construction time. If Tesla is wasting 7.5% of its time fixing defects, its running at at least 7.5% less than peak efficiency, and if margins are less than 7.5%, that does indeed mean that the vehicles are being produced at a loss.
- wjnc 8y ago
  In the Toyota / lean-theory rework is the start of an near-exponential process where different tasks are waiting for the other to be completed ad infinitum. If you've ever worked at an old-school firm you'll recognize this: the quality of your input, a colleagues output (say, a dataset) is sub-par, so you start checking it regularly. If it falls short to your standards, you ask for a new set and wait. He does his work again, and you restart your task and start checking his work even before you start your real work. That's a lot of time ill spent. Multiply that over departments and many processes and the result is great inefficiency. So FPY is the KPI to stop all that. FPY is not really valuable by itself, but hopefully by the culture it supports. Swapping FPY for # delivered is false management and points to cultural issues. In this case: managing by the wrong target (# delivered instead of the "total worth of the value chain"). Nobody would care if Tesla would just deliver growing amounts of cars at falling costs. It's the bootstrapping (in the Baron of M-sense) towards false metrics that gets the poison going and management is totally working within that frame of mind. They should find their own frame, and operational excellence just might be one. (Apologies for the MBA bs-bingo, but in this case I think it's to the point.)
  - Klathmon 8y ago
    But who is going to give them money to shut down the production line again and retool everything to increase FPY? And will they do it again when more issues are found? Isn't swapping FPY for # delivered while they determine the root of the issue and fix it a good plan? It keeps the money flowing in, it helps them find other issues in parallel, and keeps cars getting delivered. I see a lot of people critisizing Tesla here, but my question is what would you do? You are already in a situation where your plant is producing cars with flaws, no pretending that you don't make mistakes or are infallible and would never be there. Garbage is flying off the line, what is the solution that you would go with that is better than what Tesla is currently doing?
    - wjnc 8y ago
      Agree. FPY might not be the metric fitting the current status of the company best. It's all situation-dependent. FPY of 14% is clearly unsustainable though. That's because quality is not one or zero, but a continuum. So what's the SPY, TPY, etc.
sandworm101 8y ago
>>> they really need to focus on increasing FPY in order to improve their long-term odds of success. They really need to start being a car company rather than an investment factory. Car companies, particularly the BMWs and Hondas Tesla wants to compete with, care more about their reputation than factory output. I cannot imagine a BMW exec ever sacrificing unit completeness in the name of productivity. For Honda, an unfinished car simply isn't a car worth counting. Tesla has a long way to go before winning me over. (also Toyota)
- Klathmon 8y ago
  Nobody is saying they should sacrifice completeness, and nobody is receiving incomplete or unfinished cars. According to the article, it's an average of 37 minutes of extra work per car that has to happen.
  - eropple 8y ago
    A friend has a Tesla without a back bumper because it fell off when it rained. She's not alone, either. Tesla's saying Tesla should sacrifice completeness because Tesla chose to sacrifice completeness. And a car with a bumper that falls off in the rain is in some way one of incomplete or unfinished.
    - Klathmon 8y ago
      I worked as a mechanic several years ago, I can't tell you the number of times we were working on a car before it was sold. Cleaning up seals, fixing window motors, applying recalls. 2 years ago I bought an Audi that I was unable to get into after it dropped below freezing for the first time, because the window leaked water internally which froze and the door can't be opened unless the window comes down slightly. That doesn't mean the Audi was unfinished, or that all Audis are awful... Shit happens, not every car is perfect, and i'm not saying it is, i'm just saying that they aren't selling half-finished cars. Defects are defects, not an incomplete product.
      - 8y ago
stinos 8y ago
First Pass Yield (FPY - % of cars that don't require rework) is another I get that, but isn't it expected that if you create a new car factory, sort of from scratch, your FPY won't be exceptionally high? Unless you really know what you're doing due to previous experience in car manufacturing?
- Someone1234 8y ago
  > Unless you really know what you're doing due to previous experience in car manufacturing? If you hire the right people you will have that expertise.
- threeseed 8y ago
  Wouldn’t you learn how to properly manufacture a car before trying to release it at scale ?
  - northwest65 8y ago
    To learn to build it is one thing; you could have a dozen highly trained engineers assemble it at their leisure and have a near perfect car every time. But to build the same car at scale on a production line is going to be an entirely different kettle of fish, with all new lessons to be learnt. It seems to me that it would be an entertaining albeit high pressure job/problem sorting that out. You would of course try to engineer as much of the solution ahead of time, but in production scenarios, shit most definitely happens.

wongarsu 8y ago

What makes FPY an important factor seperate from manufacturing rate? (if we assume a car is manufactured once it is ready to ship) Of course it impacts your manufacturing rate, since anything not passing on first pass needs rework and possibly additional parts, making logistics more difficult etc. But all of that just influences manufacturing rate and cost per vehicle.

dgritsko 8y ago
> all of that just influences manufacturing rate and cost per vehicle. It seems like you answered your own question? These are really important for a company that's trying to make money.
- Klathmon 8y ago
  Unless it's found that it's cheaper and faster to crank out the cars with a poor FPY, and fix most of them up afterwards. Especially if the problems are known problems. If a specific step needs a person or 2 to fix a problem on 90% of cars, but afterwords it works 100% of the time, what's the issue? Changing that step to fix that problem might introduce other issues, or cause problems with the supply chain, or could possibly just not work. Hiring a few extra people to fix the problem that you know about in order to keep moving forward not only gives you the time to really design and think about a "proper" solution, but also keeps the money flowing in.
  - Skunkleton 8y ago
    Its not cheaper, and it won't result in better quality. Any time rework is done outside of the normal process it is a big deal. There are whole organizations meant to make sure things like that happen as little as possible.
    - Klathmon 8y ago
      It seems significantly cheaper than stopping production to fix the initial problem, test it, ensure it doesn't cause any other problems, ensure it doesn't upset the supply chain, ensure it is reliable, and more.
      - Skunkleton 8y ago
        Yeah, it is cheaper than stopping the world. It is much more expensive than not making the mistake in the first place. So much so that I would guess that Tesla is losing money on each car that they had to rework. And remember, Tesla had so many production issues that they _did_ have to stop the world and move into a tent of all places.
        Klathmon 8y ago
        You think Tesla is losing money because of 37 minutes per car that needs rework? Roughly $15 per car of labor? Not making the mistake in the first place isn't possible at this point... Your options here are "stop everything and fix it at the source, burning piles of cash every second it's down" or "hire some workers to spend 37 minutes per car to fix these known issue while you work on solving them at the root". And going with option 1 seems like a fast track to bankruptcy.
        joshuamorton 8y ago
        Do you know how long it takes to build an entire vehicle? If its 60 hours, then 37 minutes probably isn't breaking, but if its 8 hours, then that 37 minutes is 7.5% of a vehicle's construction time. If Tesla is wasting 7.5% of its time fixing defects, its running at at least 7.5% less than peak efficiency, and if margins are less than 7.5%, that does indeed mean that the vehicles are being produced at a loss.
wjnc 8y ago
In the Toyota / lean-theory rework is the start of an near-exponential process where different tasks are waiting for the other to be completed ad infinitum. If you've ever worked at an old-school firm you'll recognize this: the quality of your input, a colleagues output (say, a dataset) is sub-par, so you start checking it regularly. If it falls short to your standards, you ask for a new set and wait. He does his work again, and you restart your task and start checking his work even before you start your real work. That's a lot of time ill spent. Multiply that over departments and many processes and the result is great inefficiency. So FPY is the KPI to stop all that. FPY is not really valuable by itself, but hopefully by the culture it supports. Swapping FPY for # delivered is false management and points to cultural issues. In this case: managing by the wrong target (# delivered instead of the "total worth of the value chain"). Nobody would care if Tesla would just deliver growing amounts of cars at falling costs. It's the bootstrapping (in the Baron of M-sense) towards false metrics that gets the poison going and management is totally working within that frame of mind. They should find their own frame, and operational excellence just might be one. (Apologies for the MBA bs-bingo, but in this case I think it's to the point.)
- Klathmon 8y ago
  But who is going to give them money to shut down the production line again and retool everything to increase FPY? And will they do it again when more issues are found? Isn't swapping FPY for # delivered while they determine the root of the issue and fix it a good plan? It keeps the money flowing in, it helps them find other issues in parallel, and keeps cars getting delivered. I see a lot of people critisizing Tesla here, but my question is what would you do? You are already in a situation where your plant is producing cars with flaws, no pretending that you don't make mistakes or are infallible and would never be there. Garbage is flying off the line, what is the solution that you would go with that is better than what Tesla is currently doing?
  - wjnc 8y ago
    Agree. FPY might not be the metric fitting the current status of the company best. It's all situation-dependent. FPY of 14% is clearly unsustainable though. That's because quality is not one or zero, but a continuum. So what's the SPY, TPY, etc.

sandworm101 8y ago

>>> they really need to focus on increasing FPY in order to improve their long-term odds of success. They really need to start being a car company rather than an investment factory. Car companies, particularly the BMWs and Hondas Tesla wants to compete with, care more about their reputation than factory output. I cannot imagine a BMW exec ever sacrificing unit completeness in the name of productivity. For Honda, an unfinished car simply isn't a car worth counting. Tesla has a long way to go before winning me over. (also Toyota)

Klathmon 8y ago
Nobody is saying they should sacrifice completeness, and nobody is receiving incomplete or unfinished cars. According to the article, it's an average of 37 minutes of extra work per car that has to happen.
- eropple 8y ago
  A friend has a Tesla without a back bumper because it fell off when it rained. She's not alone, either. Tesla's saying Tesla should sacrifice completeness because Tesla chose to sacrifice completeness. And a car with a bumper that falls off in the rain is in some way one of incomplete or unfinished.
  - Klathmon 8y ago
    I worked as a mechanic several years ago, I can't tell you the number of times we were working on a car before it was sold. Cleaning up seals, fixing window motors, applying recalls. 2 years ago I bought an Audi that I was unable to get into after it dropped below freezing for the first time, because the window leaked water internally which froze and the door can't be opened unless the window comes down slightly. That doesn't mean the Audi was unfinished, or that all Audis are awful... Shit happens, not every car is perfect, and i'm not saying it is, i'm just saying that they aren't selling half-finished cars. Defects are defects, not an incomplete product.
    - 8y ago

stinos 8y ago

First Pass Yield (FPY - % of cars that don't require rework) is another I get that, but isn't it expected that if you create a new car factory, sort of from scratch, your FPY won't be exceptionally high? Unless you really know what you're doing due to previous experience in car manufacturing?

Someone1234 8y ago
> Unless you really know what you're doing due to previous experience in car manufacturing? If you hire the right people you will have that expertise.
threeseed 8y ago
Wouldn’t you learn how to properly manufacture a car before trying to release it at scale ?
- northwest65 8y ago
  To learn to build it is one thing; you could have a dozen highly trained engineers assemble it at their leisure and have a near perfect car every time. But to build the same car at scale on a production line is going to be an entirely different kettle of fish, with all new lessons to be learnt. It seems to me that it would be an entertaining albeit high pressure job/problem sorting that out. You would of course try to engineer as much of the solution ahead of time, but in production scenarios, shit most definitely happens.