Operations Management Report: IKEA's London Delivery Challenges

This report provides an in-depth analysis of IKEA's service delivery challenges in London. It begins with an executive summary outlining the core issues, including poor product delivery due to increased waiting times, ineffective service delivery systems, and inadequate IT infrastructure. The report then describes IKEA's background, product delivery methods, customer identification, and market analysis. It delves into the service delivery system, examining service culture, employee engagement, quality management, and customer experience. The report highlights the importance of infrastructure in managing service delivery and identifies the key problems, such as long waiting times, lack of training, and IT issues. The analysis section focuses on identifying the causes and impacts of the service delivery problems, emphasizing customer dissatisfaction and reduced employee productivity. Finally, the report offers recommendations, including the implementation of queuing theory, route planning, staff training, and improved communication, to reduce waiting times and improve overall operational efficiency.

OPERATIONS MANAGEMENT

EXECUTIVE SUMMARY
Ikea is manufacturing organisation which designs latest furnitures for its consumers in the
World. Organisation is managing its business activities in 47 countries. Product delivery of
furnitures is so poor due to increased waiting time of delivery in the London. Further, firm is
holding many consumers like industrial, domestic as well as retailers to perform effective business
in the many nations. Service delivery system and information technology infrastructure is not
appropriate which is directly affected its supply chain operations of Ikea in the London city. In
addition, service delivery system is not effective due to inappropriate service culture and ineffective
allocation of employees in the Ikea. In addition, Importance of SDS and infrastructure also
provides proper guidance to improve its supply chain operations in the London. Further, Cause and
effect diagram as well as impacts of poor delivery services such as company share, image and
revenues also helps management of Ikea to analyse the problem in the city. In addition,
Recommendation of organisation like Queuing-theory, route planning, training of staff members as
well as proper communication with employees are also provided effective benefits to reduce
waiting time for furniture delivery for consumers in the London.

Table of Contents
Executive summary .............................................................................................................................2
Introduction..........................................................................................................................................5
Part 1.....................................................................................................................................................5
Describing the Background of organisation....................................................................................5
Defining the product delivery of Ikea..............................................................................................5
Identification of customers and markets..........................................................................................6
Defining the Service delivery system..............................................................................................6
Infrastructure to manage service delivery system............................................................................7
Importance and support of SDS and infrastructure to support the market that the serve................8
Problem which may improve to lie..................................................................................................8
Part 2.....................................................................................................................................................9
Analysis of the service delivery problem........................................................................................9
Analysis of the service delivery problem.......................................................................................11
Appropriate recommendation to improve performance.................................................................11
conclusion...........................................................................................................................................12
References..........................................................................................................................................14

Illustration Index
Illustration 1: Service delivery system.................................................................................................7

INTRODUCTION
Operations management is managing business practices and activities to generate optimistic
level of efficiency and productivity in the corporation. It is considered for converting raw materials
into furnished goods and services. This process also helps the corporation to earn highest profit in
the market (Slack, 2015). IKEA is British manufacturing company which provides effective
furniture products such as desks, chair as well as bed to its consumers in United Kingdom. The
present file repersents product delivery of Enterprise. It also represents service delivery system of
IKEA for London Branch. It reveals infrastructure of organization to arrange its service delivery
system in the city. It analyses problems and its recommendations of IKEA Corporation to increase
its performance and efficiency in furniture industry.
PART 1
Describing the Background of organisation
IKEA is a multinational company which manufacture furniture like bed, chairs and desks in
many countries. This organisation is the largest furniture retailer in the world. Firm was founded in
the year 1943. The company is famous for its latest architectural designs for different kinds of
appliances, furniture and its interior design work. IKEA organization manufactures Eco- friendly
products for safety of environment in many countries. Further, enterprise concentrates on
operational details, continuous product development and cost control which enable the organisation
to keep lower prises. Corporation has big corporate structure in the world. Operations of of the
company is controlled by many foundations which is situated in the Luxembourg, Liechtenstein as
well as Netherlands. Main headquarter of IKEA is situated in Delft, Netherlands. Current chairman
and CEO of this organisation is Peter Agnefjall. As per the report of 2015, corporation have 373
stores in 47 countries. There are 12000 product s which are sold by Ikea to its customers through
internet This organisation is also responsible for 1 percent consumption of the wood in the world. In
addition, Enterprise is holding approximate 147000 employees all over the world. IKEA has
covered maximum continents like Europe, Asia, North America and Africa to sell its furniture
products.
Defining the product delivery of IKEA
Product delivery of IKEA is not effective for its consumers in United Kingdom. Mainly,
Organisation uses many modes for delivering products. In addition, corporation uses online and
offline service for its consumers for purchasing furniture in the London.. Generally, enterprises also
offer home delivery of furniture to its clients in the city (Hill and Hill, 2012). Management of IKEA
uses enterprise resource planning (ERP) to manage its supply chain operations in the nation. This
process provides huge reliability to manage its activities in the IKEA. ERP provides facilities to

assess fast information and customer orders for service delivery in London. With the help of this
tool, firm gives delivery of furniture to its customers in the market of United Kingdom.
Management of IKEA takes customer address for product delivery. IKEA uses transportation
facilities like trucks for furniture delivery at home. But these services do not provide effective
consumer satisfaction in the country (Peng and Lai, 2012). On the other side, waiting time of
product delivery of IKEA also frustrates its clients in London and its associated areas. This thing
affects its operations of supply chain management in United Kingdom. These issues are creating
problems for customers regarding product delivery.
Identification of customers and markets
Identification of customers
Organisation follows franchise and online systems to sell its furniture in the London branch.
There are many customer of IKEA like, industrial consumers as well as retailers in the city. Mainly,
the firm is also selling its products directly to its end customers through website in United Kingdom
(Brown, Bessant and Lamming, 2013). Management of organisation sells its furniture with the help
of dealers. Enterprise has appointed many dealers in many areas to increase its sales. So these
dealers also purchase products directly from the company in the nation. This way, IKEA sells its
material in United Kingdom. In this process, all customers are facing waiting time issue during
product delivery in the nation. These issues also affect its sales in national and global areas. In
addition, competitors of firm are also taking the advantages of this issue to earn profit in London
(Gunasekaran and Ngai, 2012).
Markets
Management of IKEA is holding various markets to sell its furniture in the world.
Organisation is covering is national and international markets to increase sales of products in the
many countries. It covers many products like sofas, bed furniture and many other things to attract
consumers in the many countries (Lewis and Brown, 2012). Generally, organisation is selling its
material in 47 nations. It is expanding its operations to increase its revenue in the world.
Defining the Service delivery system
In the service delivery system, organisation is not focusing on aspects of service delivery
system in the many nations. Service culture- Management of IKEA has developed service culture on the basis of
organisational norms, mission, vision and requirement of customers in the nations but
organisation is facing many problems regarding service culture. These issues are affecting
supply chain management operations in the London branch (Singhal and Singhal, 2012).
Because of this, it has They increased waiting time of product delivery for consumers in

various area of city.
 Employee Engagement- IKEA organisation is retaining employees for better consumer
service in the world. Due to higher sales and work load, management is unable to manage its
service delivery system for furniture in the London. This thing is not satisfying its customers
in the city (Brandon-Jones, Piercy and Slack, 2012).
(Source: Key Elements of a Service Delivery System, 2015).
 Quality management- Management of IKEA has also set quality standards for service
delivery system. They do not follow these rules and regulations due to higher work pressure
and ineffective operation managements in London Branch. These things are creating adverse
impact on supply chain management operations of IKEA which are increasing waiting time
of service delivery for customers (Key Elements of a Service Delivery System, 2015).
 Customer experience- Organisation is using various tools for feedback of consumers and
their reviews in the nation Due to many operational problems, IKEA is unable to implement
these methods in proper way for better service delivery system in the nation. So, corporation
is not focusing on these problems regarding improving supply chain management in London
(Hazlett, McAdam and Walker, 2013).
Infrastructure to manage service delivery system
Infrastructure can greatly help the management of IKEA to manage service delivery system
in the world. Current infrastructure of organisation is not appropriate to manage its operations in the
nation. Although IKEA is using Enterprise resources planning (ERP) and consumer relationship
Illustration 1: Service delivery system

model (CRM) to manage its service delivery system in London. These tools are not properly
implemented due to higher work load and shortage of IT experts in the organisation. There is one
more problem in this software Data traffic is highly increased due to storage of lot of data on
servers (Phan and Chambers, 2013). This thing has also slowed down the processing of
information access for employees in the IKEA. Management of organization is not getting proper
information on the right time Because of these issues, employees and managers of IKEA are not
able to take any type of operational decision in London Branch. This process is highly affecting
supply chain management of IKEA in United Kingdom. In addition, waiting time of service
delivery has been increased due to these problems in the city. Consumers are affected because of
poor service delivery management system in London (Holmström and Romme, 2012). So these
current infrastructure issues are affecting service delivery system of IKEA which is increasing its
complexities in the city.
Importance and support of SDS and infrastructure to support the market that the serve
Importance and support of service delivery system plays essential role for IKEA to improve
overall supply chain management operations in London branch. This way, corporation can serve
market in an appropriate manner. This process can also help the enterprise to improve service for
consumers in the city. In addition, IKEA can reduce its waiting time for delivery (Brown, Bessant
and Lamming, 2013). This way the organisation can improve its supply chain management system
in the city. Effective service delivery system can also help the firm to increase sales of the
organisation in London. Further, Infrastructure can contribute effective role for IKEA to serve the
market effectively. Better infrastructure facilities can help the organisation to improve its supply
chain operations as well delivery of furniture to clients in London branch. In addition, organisation
can get huge help to serve customer by reducing waiting time of delivery in the city in an
appropriate manner. This way, IKEA can increase its revenues by giving effective facilities to
clients in London (Infrastructure Managed Services, 2015). With the help of these things,
management of corporation can increase its customer satisfaction which helps to create positive
impact on customers.
Problem which may improve to lie
Management of IKEA is also suffering with higher waiting time problem of furniture
delivery to customers in London city. There are many causes for these issues in the Organization.
In the operation department, employees are facing many problems like lack of training, lack of
guidance, Information technology problems as well as shortage of staff members in the IKEA.
These things are increasing work pressure on employees in London branch. These complexities are
affecting operations of supply chain management in the city (Lewis and Brown, 2012). In addition,

this has decreased the efficiency and performance of the enterprise. This is creating negative impact
on consumers in the United Kingdom. They are reducing the furniture sales of IKEA in the London.
So these issues also need improvement in reducing waiting time of service delivery for consumers
in the city.
PART 2
Analysis of the service delivery problem
The major issue faced by IKEA is service delivery problem because every nation has
different culture. It has increased the dissatisfaction level within customers as well as it has also
affected the productivity of employees in a negative manner (Azhashemi, 2012). It is important to
analyse issue to determine cause and impacts on operations of the company. After the identification
of the major critical areas, it can be easy to find out the new ways and strategies to resolve the
problem of IKEA. There are some theories which are applied analyse the issue which are as
follows.
Cause and effect diagram: It is also called Fishbone Diagram and it enables the company to
emphasise on the problem (Brand, 2007). The purpose of using this theory for resolving the IKEA
service delivery problem is to summarize the major reasons of the issue and determine the potential
root of development of the problem. The areas which have been considered at the time of analyzing
the problem of IKEA are people, machines, environment, methods and management.
Area Cause Effect
People Lack of training
Lack of experience (Besterfield and
et.al., 2011)
Create service delivery problem which
leads to increase in waiting time of
delivery of the goods to the customer
place.
Methods Ineffective arrangement of process of
manufacturing
Create a delay in delivery of the
products which has increased waiting
time.
Machines Ineffective lifting machines.
Lack of direction systems (Chase, 2000).
Create a delay in delivery of the
products which has raised waiting time.
Management Poor return policy.
Faced issues while accepting new process
or system.
Create a delay in delivery of the
products which has raised waiting time
(Edmonds, 2011).

Environment Lack of communication between staff
members.
Less availability of experienced senior
staff.
Unable to provide guidance. (Bititci and
et.al., 2012)
Create a delay in delivery of the
products which has raised waiting time.
Impacts of poor delivery services
In the present time, service delivery is still an issue for all manufacturing and service
delivery companies. In the case of IKEA, presently company has faced poor delivery service issues
which cause long waiting time for delivering the product at the customer door (Hajmohammad and
et.al., 2013). The impacts of these issues are as follows.
Company image: The increase in waiting time has affected image of the firm as well as sales
because when the customers discusses bad experience with the other people, it spreads in the market
with high speed (Rogers, 2011). If this thing happens with IKEA then it will affect the goodwill of
the firm as well as brand image in the market. For example, word of mouth publicity has spread the
news regarding the poor delivery services of IKEA in the market. It has affected the brand image of
the firm in negative manner and customers will not buy the commodities from IKEA (Stefanuk and
Zhozhikashvili, 2002).
Market share: It has taken long time to gain a high market share but when the company loss his
goodwill in the market, the market shares have not taken a single day to fall. The poor delivery
service of IKEA affects the market share in the most negative manner (Wright, 2011). The result of
this is that the investors and the other business partners will pull out their investment from the
company. For instance, the unpleasant experience of the customers while receiving the product
from the company side has increased the dissatisfaction level (Akintunde, 2008). Due to this, the
services users will switch to other brand to get the products within a particular time.
Revenue: Decrease in market share and loss of customers have reduced the profit of IKEA which
has affected the stock value (Ashby, Leat and Hudson-Smith, 2012). In this regards, to maintain the
market share, company can take various steps such as reduce costs of the products, use t new
strategies to attract the customers etc. For saving the money, firm will further cut the cost over
training and will buy low quality raw material at the lower cost. It will again affect the business and
it will become more challenging to survive in the market for long time (Bahmani-Firouzi and
Azizipanah-Abarghooee, 2014).

Employee confidence: The delay in the delivery of the product has also affected the confidence
level of the staff members of IKEA. For example, if the business of IKEA is unable to meet the
financial demands then it will start to cut down the jobs of the employees (Bamford and Forrester,
2010). It will directly affect the moral of the workers and their confidence level will decrease. They
will start to feel lack of job security within the firm and it will leads to shifted their attention from
the work. Their productivity will also side down and the errors as well as defects in the products
will increase (Raza, 2014).
Analysis of the service delivery problemAreas need to be focused for improving service delivery
system of IKEA:
As per the above discussion there are different reasons because of them company is facing
serious issues related to the service delivery system. So, for improving this system company is
required to focus on different areas such as organization needs to focus on reducing long queues in
stores of the company. Along with this, the firm needs to pay attention towards minimizing waiting
time for every customer before purchasing the products (Hobbs, 2009). Further, the organization is
required to reduce the chances of late delivery of products, damaged products, etc. Employee
engagement is also one of the major areas which affect the service delivery system of the company.
So, organization is required to adopt appropriate strategies for improving engagement of every
employee with customers and for developing strong communication with them. Appropriate
consideration of all these areas will help in developing appropriate strategies for overcoming this
service delivery system issue of IKEA (Kumaraswamy, 2011).
Appropriate recommendation to improve performance
As per the analysis of the service delivery system, problem of IKEA has reflected that
company is facing different issues such as high waiting time for customers, overcrowding, late
delivery of products, poor customer service, damaged goods and services and late delivery of
damaged products. These issues can affect overall financial and operational performance of the
company in a negative manner. Along with this, all these issues can also affect different departments
and management functions of the firm (Lind, Marchal and Wathen, 2005). So, for improving
performance and resolving this service delivery system, company needs to adopt the following
strategies: Queuing theory: IKEA should apply the principles of Queuing theory at the time of
developing service delivery system for customers. These principles include three major
components; how customers arrive, way to offer services to customers and the condition of
the exiting the delivery system of organization. It will help in managing customers which
will reduce the situation of overcrowding. Further, evaluating the problem which has

reflected that if waiting time of each customer is high than, for reducing this time company
needs to apply waiting line models and equation in its delivery system (Queuing Theory and
Practice: A Source of Competitive Advantage, 2015). Multiple channel single phased system
will be the most appropriate model for IKEA because it will help in increasing number of
channels for providing services to every customer. Using this model, the company can serve
multiple customers by which waiting time for every customer will also decline. It will help
in improving service delivery system of IKEA (Miski, 2014).
 Route planning: As per the analysis of the problem, IKEA is also facing a critical issue
related to late delivery of products to number of retailers. Major reason behind this problem
is inappropriate root planning for delivering products and services to clients (Ikea: Why is it
so bad at delivery, 2013). So, for resolving this problem organization is required to focus on
improving root planning and implementing software of root planning. It helps in managing
distribution budget of the company as well as also plays important role in calculating
shortest distance, driving time for completing delivery of products and services to clients.
 Training of employees: Sometimes due to untrained and inexperienced employees IKEA
faces problem regarding service delivery issues. These employees cannot provide suitable
products for satisfying needs and requirements of customers on time. So, for overcoming
this problem, IKEA should arrange suitable training and development program for personnel
as per this needs and requirements (Jankowicz, 2005). It will help in improving employee
engagement and their skills and knowledge for dealing with customers. Along with this, it
will also assist in reducing time for providing appropriate products to customers as per their
expectations. Overall, this strategy will also aid in improving service delivery system of
IKEA.
 Communication: Sometimes due to the communication barriers such as differences in
culture and language employees of the company etc, firm has not capable to make effective
communication with customers (Greasley, 2007). It creates confusion about delivery of
products and services. It can also create situation of late delivery of products. Therefore, for
resolving these issues IKEA needs to assure about appropriate communication with
customers using different methods such as calls, messages, emails and video conferencing,
etc. these methods will help in reducing communication problem and improving the timely
delivery of products and services to every customers. Therefore, communication tools are
the most appropriate method for improving service delivery system of IKEA.
Overall, using all the above discussed models and methods IKEA can improve service
delivery system of IKEA as well as reduce waiting time and other problems of the delivery system

of company (Akpolat and Pitinanondha, 2009).
CONCLUSION
From the above research, it has been found that Product delivery system of IKEA is not
appropriate in the London Branch. Retailers and end users render effective sales in the city.
Management of firm is also covering global and national markets for selling products to consumers.
Current infrastructure of organisation is not appropriate which is affecting supply chain operations
of firm in the London. In addition, IKEA has faced poor delivery issue. The analysis of the
following problem has been done with the help of cause and effect diagram. With the help of the
assessment, the various causes and their effects have found. The impact of the issue has put
negatively affected the company such as lack of confidence level in the customers, decreasing
market share and profit etc. Along with this, project has suggested that IKEA should adopt some
appropriate strategies for improving service delivery system such as application of Queuing theory,
Route planning, training of employees and strong Communication with customers. All these
strategies will help in overcoming the issues of IKEA and assist in improving the service delivery
system.

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