Operational Management Techniques in IKEA

The report provides a detailed analysis of operational management in IKEA, focusing on productivity enhancement, user-friendly products, and reduced waste and defects. It also discusses critical path and network planning to achieve targets and profitability. Management techniques such as fish-bone and 6 sigma, Pareto diagram, and variance analysis are applied to improve operations in IKEA.

OPERATION
MANAGEMENT IN
BUSINESS

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1 Importance of management operations to make success of IKEA...................................1
1.2 Analyse the functions of operations within IKEA...........................................................2
1.3 & D1 process model in operation management of IKEA.................................................3
M1 Identified and analysed link between core operation functions and support function.....4
TASK 2............................................................................................................................................4
2.1 Essential of three Es within IKEA....................................................................................4
2.2 Cost minimisation and quality maximisation that create impact on the firm...................5
2.3 Significant of five performances objectives in to the operation management................5
M2 ..........................................................................................................................................6
D2 Key performances objectives that are most relevant for successful business operation. .6
TASK 3............................................................................................................................................6
3.1 and M3 Linear programming within the production process...........................................6
3.2 CPM and network plan in the organisation......................................................................7
3.3 Requirement of operational plan .....................................................................................8
TASK 4............................................................................................................................................9
4.1 Operational results for the chosen business .....................................................................9
4.2 Effective network planning to make result of critical path..............................................9
4.3 Justify how quality management techniques are applied to improve operations in IKEA11
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

Illustration Index
Illustration 1: Process model............................................................................................................3
Illustration 2: Critical path...............................................................................................................7
Illustration 3: Network planning....................................................................................................10

INTRODUCTION
Operation management is concerned with converting raw material and labour into
finished products or services with maximize profits and revenue. When business is not following
operation management, they are unable to succeed their functions and operations to make
profitable outcomes (Martínez-Jurado and Moyano-Fuentes, 2014). In this context, report take
example of IKEA which is private sector business of furniture. Their main aim is to deliver wide
range of well designed furnishing products at low price. In the enterprise, there are more than
123,000 workers are working across different functions such as purchasing, distribution, retail
and Swedwood products. In order to focus on company, report discuss importance of operation
management within success of IKEA. Furthermore, it covers importance of Three Es' within the
chosen enterprise. In addition to this, it assesses the linear programming adds value in production
process. At last, report includes management techniques for improvement IKEA results.
TASK 1
1.1 Importance of management operations to make success of IKEA
Operation management is very important element that include set of activities such as
planning, organizing, leading and controlling the operations of IKEA. It is essential to managers
for the following reasons:
To improve productivity: Productivity is very important aspect in success of every
business. It is ratio of output to input that helpful to measure efficiency of manager and
employee to scare resources for producing goods and services (Choi, Chan and Yue, 2017).
When the numerical value is zero, efficiency will be enhanced in IKEA.
To measure efficiency: Further, operation management consist with measuring efficiency
of the chosen enterprise. When IKEA is focus on producing goods and services within the
enterprise, it is important to manage proper functions and outcomes.
To demonstrate marketing activities: The marketing division is success, when the cited
enterprise reliant on successful operations (Fullerton, Kennedy and Widener, 2014). It is
determines successful outcomes on time to delivers product and services in market. It assists to
provide useful message regarding product or services that is being produced in appropriate
numbers. When product is determines in effective term, best marketing will be used in market.
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To automate functions of information technology: Nowadays, operation management is
concerned with information technology (IT). This is because, it is providing very good and
effective features to manage tasks (Pagell and Shevchenko, 2014). In this way, functions of
different department in IKEA develops easier, conversely when operation management is going
poorly.
1.2 Analyse the functions of operations within IKEA
Operation management is very important business function that is responsible to manage
process for creating goods and services. It includes planning, organizing, coordinating and
controlling of the company resources to produce goods and services (Boehm and Thomas, 2013).
In IKEA context, functions are explains under here:
There are mainly two types of functions included:
Core functions
Core functions are useful to monitor and establish modernized organisation with all
required resources to delivers effective products or services to each customer of chosen firm.
Start-up: In respect to write the plan of IKEA, it is important to operate functions that
includes creating of products or services. Therefore, the organisation need to concentrate on
management of tasks that are involves to facilitate growth. They have to create detailed map that
considered to installing resource planning (Fullerton, Kennedy and Widener, 2014).
Ongoing: Another operation function in IKEA assist to identify flow of company to
installed system and meet with department reviews. In this aspect, smooth efficient operation
considered throughout the business. With the help of communication and cooperation among
departments. Operational efficiency will be enhanced that evaluates response and capabilities of
staff into production, sales and delivery (Martínez-Jurado and Moyano-Fuentes, 2014).
Support functions
Support functions are key elements that assist to make organisational success with all
activities that aligned to deliver product and services effectively for achieving organisational
goals.
Continuity: Another function is considered in operation management is contingency
planning that assist to deal with disruptions from natural disasters, emergency and crisis. In
continuity plan of IKEA includes list of procedures that undertake in different scenario. There
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are several people includes who possess their outcomes with functions as coordinators to make
decisions.
Benefits: With the help of detailed organisational planning project, several inefficiencies
has been developed through company will grow. Regular attention to operations planning assures
efficiency in operations that enable to take quick return for profitable activities of IKEA.
1.3 & D1 process model in operation management of IKEA
Operation management transform input such as labour, capital, equipment and land, etc.
into outputs in term of finished products. It provides effective value to customer through
transformation process if follows. This system is designing in IKEA with blue print as per their
customers need. Following are three attributes in a business determines:
Input: In this aspect, various elements are included such as raw material, employee,
managers and so on (Pagell and Shevchenko, 2014). Therefore, IKEA need to firstly determined
managerial activities and resource location in input to make effective results.
Process: In the process part, there are various terms has been implemented such as
production terms, ideas implementation and processing strategies for the managers. It includes
machinery, innovative ideas and operational store for developing results at workplace (Choi,
Chan and Yue, 2017).
Output: Within the output, quality of products such as BILLY and KLIPPAN is
determines with unique features. In addition to this, they are also facilitated goods and services
for monitoring and controlling the results.
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Illustration 1: Process model
Source: (Jaiswal., 2017)

M1 Identified and analysed link between core operation functions and support function
In the chosen organisation, there are efficiently managed spectrum and accommodate to
various users. Core operating function in business determines as planning and frequency
allocation, monitor inspection facilities and enforcement, etc. In this aspect, IKEA need to
mandated to establish modernized and detection signals for monitoring. However, these core
functions are supported with supportive activities such as identifying and utilizing the best
practices activities. With the help of reviewing policies and processes working practices drive to
implement new ways of working (Fullerton, Kennedy and Widener, 2014).
TASK 2
2.1 Essential of three Es within IKEA
The Three E' s stand for Efficiency, Economy, Effectiveness. Importance of these
elements in the organisation are as follows:
 1) Economy covers the financial side through which activities can be achieved. If the
cost of resources are balanced, then goals can be achieved at reasonable prise. IKEA is
manufacturing its products with the best materials at low cost and making them available
to its consumers at reasonable price (Fullerton, Kennedy and Widener, 2014). The
chosen organisation has given a challenge to its competitors by providing value delivery
to its customers at right price.
 2) Efficiency is to make proper use of the resources to accomplish a task. IKEA is
utilizing its inputs and raw materials properly without any wastage and with a motive to
achieve its goals. It has worked to reduce wastage and consuming less to deliver the
same amount of value. IKEA has adopted lots of methods and practices to use the same
resources to accomplish its work load which has helped it to deliver products at fewer
efforts. It has worked hard and smartly to place the right inputs and faced the problems
in the easiest way to achieve its goals (Choi, Chan and Yue, 2017).
 3) Effectiveness of an organisation is to understand achievements of goals. IKEA has a
motive to understand its goals. If a company is doing its best internally and unable to
deliver consumers needs than it is not effective in the market. IKEA is trying its best to
deliver the expectations of its consumers on time (Webmaster, 2012).
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2.2 Cost minimisation and quality maximisation that create impact on the firm
Every enterprise demand to maximize their profits and revenue with minimize cost of
production. Cost minimisation is bind with developing outcomes through reducing price for
products or services that offered to customer. Beside this, quality maximising stand to improve
quality of business products that assist to meet with customer needs. Both elements have
opposite relation to determines effective results at workplace (Pagell and Shevchenko, 2014). It
is generally same for assess supply relations within IKEA to make unique features of BILLY and
KLIPPAN. When the business required to enhance profits, they have to look towards quality and
characteristics of products which they are provides to customers.
IKEA is deals with furniture products so that they have to maximize profits of the
business through increase sales and reduce raw material cost. Tension between profit
maximisation and cost minimisation cannot be ignored. In respect to diminish gap, the cited firm
need to implemented process of cost minimisation (Boehm and Thomas, 2013). Therefore,
minimisation process is developing with effective way in term of reducing cost and providing
proper salary to employee, reducing transportation cost and overhead cost, etc. but not diminish
quality of input material. Through carrying cost needs is to be decreased with various resources
undertake in consideration.
2.3 Significant of five performances objectives in to the operation management
There are five performances objectives underpin the operation management such as cost,
flexibility, dependability, speed and quality (Wixom and et.al., 2014). They are functioning in
businesses in the following context:
Cost: Cost is expenses for the business that occur to provide value and effective result to
customers in their requirement of products or services. In this aspect, IKEA can perform very
well to expand their business without changing price as per many competitors in furniture
industry (Nordmeyer, 2017).
Quality: The chosen enterprise need to assess their raw material quality continuously. In
this aspect, they can check their furniture products which provides to customers (Choi, Chan and
Yue, 2017). In respect to maintains and provides high quality of products and services, they can
easily enter in competitive market to increase the cost.
Speed: IKEA is leading with furniture products so that they have to build effective
network through easily products can delivers to customers as per their expectations. More fast
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network assist to maintain high satisfaction level to set the targets and goals (Kastalli and Van
Looy, 2013).
Dependability: Service department of the chosen firm need to focus on customer
requirement and their expectations. Therefore, they have to integrate different types of activities
to develop effective results at workplace.
Flexibility: At workplace of the selected organisation, flexibility is needed for service
channel. Further, production procedures also assist to make immediate changes as per customer
needs (Carter, Rogers and Choi, 2015).
M2
In respect to make effective results cost and quality both are important parameters that
assist to minimize cost and enhance product or service quality within the business environment.
In this aspect, IKEA need to monitor on their performances objectives that would be beneficial to
attain overall growth through maximize outcomes and results (Choi, Chan and Yue, 2017).
D2 Key performances objectives that are most relevant for successful business operation
In successful business operations, five key performances objectives assist to create
effective results. It includes cost, quality, dependability, flexibility and speed (Beske and
Seuring, 2014). Theses all elements play vital role in success of IKEA for enhance profitability
and performances in successful manner.
TASK 3
3.1 and M3 Linear programming within the production process
In every business, operational plans are required to determine process of production for
smooth and proper working. In this planning, linear programming consist with sequence of steps
that lead in optimal solution to problem. In IKEA, there are generally two types of graphical
linear programming and computer solution implemented. With the help of graphical linear
programming, visual portrayal included with many important concepts (Martínez-Jurado and
Moyano-Fuentes, 2014). In production process of the chosen business, linear programming is
powerful and quantitative tool are also used by operation managers to demonstrate optimal
solutions towards problem that includes restrictions and limitations.
There are several activities, in which linear programming application can be applied. It
includes establishing locations for emergency equipments with minimize response time (Stark,
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2015). With determines optimal schedule for planes, pilots and personnel groups in IKEA could
be monitored. Through developing financial plans, linear programming model is describes as
mathematical representation for optimized problem. There are 4 components provides structure
of linear programming model such as objectives, decision variable, constraints and parameters.
Maximisation objectives in the production process includes profit, revenue, efficiency and rate of
return that assist to meet with goals and objectives in systematic manner (Oakland, 2014).
3.2 CPM and network plan in the organisation
In order to assess complexity of the tasks, CPM and PERT are important elements to
make effective plan. This method is used to by project manager in IKEA to accomplish all types
of activities. It involves construction, defence, research project, project development and
maintenance, etc.
Critical path
In the above diagram critical path has been shown within the chosen organisation.
Critical path of this analysis is done in 6+2+3+2+4+1+1+6=25 days. IKEA need to concentrate
on their procedure that is taken in most appropriate aspect. They are frame unique features to
grab effective customer satisfaction and attention in their operations. In the plan, the company
should planning regarding their store rooms, customer enquiries and many other activities
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Illustration 2: Critical path

(Pagell and Shevchenko, 2014). CPM is basically determines for network analysis which is the
best approach for create project network logic diagram. Network consist with two aspects such
as nodes and arrow.
From the above CPM it can be analysis that, IKEA need to accomplish activity on time
with lacking. This is because, total 25 days they have to accomplish project. Beside this, each
activity determines with completion on time. When the organisation unable to complete activity
on time, it creates negative impact on the company results.
In addition to this, network plan it takes more time and costs to identify effective results
within the organisation. Further, it also complexes to produce effective results in business unit
due to missing tasks. IKEA has threat due to external factors which cause of weather problem.
3.3 Requirement of operational plan
In order to maintains quality, operational planning and control system are the main
parameters that are used for judge the customer perspective towards products and services.
Expectations and perceptions of the customer can be match with quality of products that will
generate high profit in effective manner (DaSilva and Trkman, 2014). Operational planning and
control in production process of IKEA need to be meet with expectations of customers so that
quality of products and services is determines with unique characteristics. In respect to maintains
it, the chosen firm need to focus on maintained total quality management in term of customer
requirement, specification of products, quality output and controlling in production cost (Haimes,
2015).
In addition to this, the chosen firm required to keep their mindset regarding consumer
needs to deal with new technology and maintains products price (Wixom and et.al., 2014). IKEA
should determines their services after sales so that they can review their activivties all the time.
Raw material also taken from the best suppliers so that productivity in production process will be
enhanced. In order to judge the need of operational planning, following elements can be included
in business unit:
 Capacity utilization: In the selected production process, IKEA need to assess capacity
that can be utilize to make effective operation plan. In this aspect, the chosen firm can
assess their capacity which required to produce effective results in business environment.
In other words, capacity utilization measure extent for productive capacity to make
effective functioning in enterprise.
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 Meeting customer demands: Operational planning also required to assess customer
demand towards organisation product and services. In this aspect, IKEA can determines
their operations and functions according to customer need that helps to fulfil their
expectation through providing products and services accordingly.
 Cost minimisation: Cost minimisation is also determines as the basic rule that produce
mix of labour and capital requirement in business output at low cost. Along with this, in
IKEA it is the most effective way to make operational plan in respect to create budget
with maintaining desired level of quality.
TASK 4
4.1 Operational results for the chosen business
Operational outcomes for IKEA is determines in the following context:
 To enhance productivity through producing low cost of goods.
 Make user friendly products and services.
 Diminish complaints by customers.
 Reducing wastage and defects (Galliers and Leidner, 2014).
 Continuous monitoring within the project.
Input: All resources are carry in production through different activities such as nails,
gums, staffs, leather and saw, etc.
Activities: In this way, process of action is needed for a particular series which is requires
for effective outcomes. It includes day to day operational activities such as sawing, hammering
and product designing, etc.
Outputs: Final results of products comes within the activities. Things that are produced
need to be delivers assemble chairs, tables and cupboards, etc.
Outcomes: Results are determines in short, medium and long term perspective.
Impact: Final results accomplish through achieve high customer base with good quality
products (Heras‐Saizarbitoria and Boiral, 2013).
4.2 Effective network planning to make result of critical path
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Network planning
The following network diagram shows completion of activities in order to completion of
activities. All activities will be done in 25 days.
4.3 Justify how quality management techniques are applied to improve operations in IKEA
There are different types of management techniques could be applied that assist to
improve operations in IKEA. They are as follows:
Fish-bone and 6 sigma: This technique is frame with define, measure, analyse, improve
and control (DMAIC). It helps to staff members for understanding problem that occur at
workplace of chosen business. For instance, determines lists and shows problem with measure to
improves quality perfection and high standard that make good reputation for customers
(Fullerton, Kennedy and Widener, 2014).
Pareto diagram: Within IKEA, there are many decisions taken on table so that there
problems are considered with pareto analysis. It demonstrates decisions that assist to solve
internal and external issues.
Variance analysis: This technique gives clue for determines difference among actual cost
material and standard labour cost. With the help of efficiency variance, manufacturing variance
and efficiency will be develops that assist to understand present cost to control future cost
(Boehm and Thomas, 2013).
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Illustration 3: Network planning

CONCLUSION
From the above report, it has been articulated that operation management is very
important aspect that is used to carry functions and activities of the enterprise. In this context,
report discussed importance of operation management in IKEA for improves their productivity,
efficiency and reduce cost of production. Furthermore, it concluded about importance of 3Es in
term of economy, efficiency, and effectiveness within the chosen enterprise. Moreover, it
summarized about critical path in which the cited firm can accomplish their targets and
profitability in operational management plan. At last, it discussed management techniques that
assist to improve operations in IKEA.
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