IKEA Supply Chain Management Analysis
Added on 2020-01-28
12 Pages3009 Words153 Views
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OPERATIONS ANDLOGISTICS MANAGEMENT1
TABLE OF CONTENTSINTRODUCTION.............................................................................................................................4Task1 Techniques adopted by IKEA company to compete with in its business area...................4Task2 Operation strategy processes that apply to IKEA company...............................................5Task3 Analysis of different competitive strategies that IKEA might use for achieving itsoperational objectives....................................................................................................................6Task4 Contribution of operations management in organization's strategy improvement. ...........7CONCLUSION.................................................................................................................................9RECOMMENDATIONS..................................................................................................................9REFERENCES................................................................................................................................102
INTRODUCTIONOperations and logistics management is defined as a process of producing services andgoods in the rightt quality and quantity and distributing them at the right place and at the righttime. It is a effective system forof managing supply chain activities of the business by usingquantitative and qualitative tools of management. Present report is based on operation strategiesused by IKEA company for running its functional work processactivities. In addition to thisevaluation of different competitive strategies used by the company is done and recommendationsfor improving functional process are given to the organizationscompany.Task1 Techniques adopted by IKEA company to compete with in its business areaThe main objective of IKEA company is to manufacture reasonable and good qualityproducts for its consumers. It works with a vision “To create a better everyday life for the manypeople”. The powerful brand image of the company and wide range of products and styles in thefurniture category makes it different from its competitors. It design and sells ready to assemblefurniture, home accessories and appliances. IKEA is world's largest retailer in thisthat segmentand known for modern architectural designs used for its furniture and other products. Eco friendlysimplicity used in ofits interior design of its store iswork is widely appreciated by its consumers(IKEA design for everyone. 2016.). Company continuously work for quality improvement by using cost control methods,product development and by doing transformation in work structure. IKEAIt operates itsfunctional activities in 48 countries through its 384 stores. The business idea of the enterprise is“To offer a wide range of well-designed, functional home furnishing products at lower price sothat it will become easier for its consumer to afford them” (IKEA design for everyone. 2016). Forachieving this objective companyit works in a planned and organized manner to develop long-term supplier relationships and by investing in highly automated production process byandoptimizing entire value chain of the organization. The financial principle of the firm is to groweconomic resources by using its physical and human resource in a effective manner. The3
designers and developers of IKEA company work with a diverse team of manufacturers,technicians and specialists to develop a superior and high quality product. For IKEA companydistribution is an important part of its operational activities and major objective of this is to createa short and accessible path between customers to manufacturer. The aim for doing this is to makea global distributions network for the company to sell large volume of its furniture and homeapplianceits products (Christopher, 2016). The firm uses high-flow facilities and low-flowwarehouses transactions methodsfor operating its stores which provides a efficient method forutilizing physical resources of the firm in a appropriate manner. IKEA usesapply automatic storage and retrieval systems in its stores to reduce its cost ofoperations. The in-store logistics manager uses an inventory replenishment management processknown as minimum setting to arrange the store in a unique way by utilizing space in best possibleway.respond to store-level inventory reorder points (IKEA design for everyone. 2016). IKEAcCompany's propriety inventory system assist logistics managers to know about the point-of-saledata and records of inventory, that comes in store through direct shipping and from distributioncenters. IKEA faces direct threats from competitors firms including Wal-Mart, Home, Depot andPpier. The sales of company reached to $36.8 billion in financial year 2016 and. tThe majorcountries where it sells its products is Germany and U.S. and both the countriescombinelyrepresent 15% sales of IKEA group. The firm added 13 stores in 9 markets in the year 2015 byopening multiple stores in China, France and Germany.Task2 Operation strategy processes that apply to IKEA companyIKEA company works in the area of offering home furnishing products to its consumersat a reasonable price. Operational strategies are used by the firm for running its functionalactivities in an efficientcost-effective manner. A systematic procedure is used whileimplementing these strategies in the companyorganization. A plannedorganized and step by stepmethod is used which provides guideline for executing the plan of action in a better and effectivemannerway (Waters and Rinsler, 2014). The first stage which is used is Ooperational strategyformulation in which business strategy is designed by top management after doing analysis ofexternal and internal business factors. It is the first stage where action plan is developed in thecompany regarding its overall functioning. Idea generation and screening is done by topmanagement to improve working culture and creativity in the firmof the firm. Product feasibility4
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