Detailed Analysis of Operation Management in IKEA Business Report

This report provides a comprehensive analysis of operation management within IKEA, examining key aspects such as operation functions, process models, and performance objectives. It explores the importance of effectiveness, efficiency, and economy in IKEA's business, addressing the tension between cost minimization and quality maximization. The report details five performance objectives, including cost, quality, speed, and dependability, and their significance to IKEA's success. Furthermore, it delves into adding value to the production process through linear programming and network planning. The report also investigates operational outcomes and techniques of quality management to improve operations within IKEA. This report offers a detailed overview of IKEA's operational strategies and their impact on the business, making it a valuable resource for students studying management and business operations.

OPERATION
MANAGEMENT

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
1.1 Operation management importance for IKEA.................................................................3
1.2 Operation functions of IKEA...........................................................................................4
1.3 Evaluating the operation management with use of process model...................................5
TASK 2............................................................................................................................................6
2.1 Importance of effectiveness, efficiency and economy in IKEA business........................6
2.2 Tension between cost minimisation and quality maximisation and its impact on IKEA.6
2.3 Five performance objectives and its importance to IKEA...............................................7
TASK 3............................................................................................................................................8
3.1 Adding value to production process through linear programming...................................8
3.2 Network planning and critical path analysis....................................................................8
3.3 Operational planning and control needs...........................................................................9
TASK 4............................................................................................................................................9
4.1 Operational outcomes for IKEA.......................................................................................9
4.2 Network plan and critical path.......................................................................................10
4.3 Techniques of quality management to improve Operation in IKEA..............................11
CONCLUSION..............................................................................................................................11
REFRENCES.................................................................................................................................13

INTRODUCTION
The process of controlling production of product and commodities in the business is
referred as operation management(Mohammadi, Soleymani and Mozafari, 2014). It is a
management area of business organization which is related to business production. The operation
management is conducted by the individuals and team which ensures that production must be
carried out effectively and efficiently with less resource and high production. Operation
management conducted within the organization helps in meeting demand of the customers
significantly within time frame. It is important for organization to have operation management to
produce quality of goods and service with minimum cost to ensure complete satisfaction of the
customers with affordable cost. The operation management is the key factor in organization
which helps in increasing the capacity of production, managing inventory and product designing.
In the following assignment we will study the importance of operation management for IKEA
Ltd. In the report detail information of operation management is discussed. The benefits of
operation management are understood with the help of the following assignment. The function
and the elements effectiveness, efficiency and economy are explained in the report significantly.
IKEA is the business organization which produces the furnitures for living area and bedrooms
the importance of operation management is studied in the assignment.
TASK 1
1.1 Operation management importance for IKEA.
IKEA carries down one of the management function i.e. operation management for
controlling production of furnitures and controlling inventory of organization. It is a necessary
part of management like human resource and financial management. It is important for IKEA in
production function of organization. The operation management is a key factor in success of
organization. It helps in designing significant production process for IKEA to produce furnitures
which satisfy user. Operation management have helped business in long term success by
producing good quality of furnitures. The quality is maintained by appointing trained and skilled
human resource for production process(Niknam, Meymand and Mojarrad, 2011). The process of
operation management helps in acquiring raw materials for organization with minimum cost and
within the time frame. This helps in continuous operation of production cycle with increase in
the production and minimising the cost of furniture. It helps directly in the success of IKEA for

long run by increasing customers for it products. Operation management have also helped in
coordinating and controlling production process of IKEA, which reduces the miss management
in production cycle and increases the effectiveness and reduces wastages in process. This directly
increases the quality of product at minimum cost and helps in success of IKEA by increasing
customers and profitability. The operation management helps IKEA to adopt new technology in
production which increases efficiency and leads to success.
1.2 Operation functions of IKEA.
IKEA have different operation function where management is necessary to increase
effectiveness and efficiency in performance(Moghaddam, Seifi and Niknam, 2012). The
organization must ensure that the complete satisfaction level of the customers must be achieved
through product provided by the organization. The operation management helps IKEA in
performing different functions of organization. The operation functions of IKEA are described as
follows:- Product designing:- The product design is a key element in the success of a business.
The better product design will help organization to attract the new customers for product.
The operation management helps in effective product designing. Job structure:- The job structure is the stage where all the employees of organization
contribute there work in different stage of production cycle. The operation management
helps to frame effective job structure which helps in effective and continuous run of
production cycle. Supply chain:- The operation management helps to define proper supply chain of raw
material which helps in long run of production cycle. It ensures that the raw materials
must be allocated within the time frame with minimum cost. Production Planning:- Production planning is one of the operation function of IKEA.
Operation management helps in planning for production cycle where the operation has to
be done and sets the time frame with quality standard in production. Packaging:- The packing of the product plays significant role which helps to attract the
customers. Operation management plays a vital role in designing the packaging of
product(Heizer and Barry, 2013).

 Maintaining warehouse:- Operation management helps IKEA to maintain the warehouse
from where the supply of the products can be done easily to meet the customer demands
within time frame along with maintained quality.
1.3 Evaluating the operation management with use of process model.
The process model has certain stages through with the evaluation of operational
management can be significantly performed(Li and Feng, 2014). The process model in
evaluation is described as follows:-
Input:- The input is the first stage in process model where the inputs of the production process
are allocated. The inputs are the raw materials of IKEA which includes woods, adhesive and
tools and machinery to complete the desired product. The operation management helps in
allocation of these inputs within the time frame with minimum cost. Along with the raw
materials land and labours are also the factor which is required for effective production.
Conversion:- The conversion stage is next after stage of input. At this stage available resource
are put together in order to begin the production process. In the following stage the conversion of
basic raw materials are converted by labours and workers in the production line by the use of
machinery. The operation management of IKEA helps in conversion process by framing job
design and production process to achieve desired results.
Monitor:- This is a stage where the operation managers keep eye on the conversion process of
raw material into finish product. The operation management checks whether the production

cycles is performing significantly or not. In the case where conversion stage is not up to the mark
operational management gets the knowledge of leakage though monitoring and helps in
eliminating the following.
Output:- The output is the final stage of the production process in which the final finished
product is ready for meeting up the demand of the customers. The operation management helps
in conducting these process model significantly and achieving the desired
result(Bazmohammadi, Karimpour and Bazmohammad, 2012). The operation management is
only factor which helps in maintaining the minimum cost for the output in IKEA a furniture
business.
TASK 2
2.1 Importance of effectiveness, efficiency and economy in IKEA business.
The effectiveness, efficiency and economy are referred to 'three Es' of the company.
These factors helps in increasing the performance and effectiveness of the business organization.
The all the three have great importance within IKEA(Tsarouhas and Arvanitoyannis, 2010). The
importance are described as follows:-
Effectiveness:- The achieving the desired results which helps to achieve the satisfaction level of
the customer through product is referred as effectiveness. The effectiveness has the great
importance for the organization in increasing the customers for the organization. The effective
product helps to achieve the complete satisfaction level of the consumer by products which helps
in retaining the existing clients and increasing the new clients for the IKEA. The increase in the
product uses helps in increasing the profitability of the organization.
Efficiency:- The ability to produce product within the time frame at minimum cost is referred to
the efficiency. The efficiency has great importance for the IKEA in comparing the actual result
with the planned result of the organization. In is a bench mark for the organization to measure
the results of production. If the desired performance level is not achieved operational manager
must take certain necessary action in order to achieve the goal and objective.
Economy:- Economy is the most important factor its states the financial condition of the
organization. The economy states whether the company have high or low cost in production. As
per the economy the IKEA must conduct the production cycle with the minimum cost as it may
be possible without destroying the quality of product.

2.2 Tension between cost minimisation and quality maximisation and its impact on IKEA.
Cost minimisation and quality maximisation both the term have great significance for the
IKEA. The cost minimisation with increased in quality of the product is the key factor in the
success of the business organization. The cost minimisation is the process where organization
tries to reduce the cost for production which reduces the per unit cost. This helps organization to
provide product with affordable price and helps in increasing the profit of organization. The cost
minimisation have great impact on the quality of product. The quality of the product directly
decreases with minimizing the cost of production(Smith, Rahn and Wang, 2010). The cost
minimisation have positive impact on the organization in providing the furniture products at
affordable cost to the customers. The low cost will increase new customers and helps in retaining
the existing customers for IKEA(Burke, 2013). The quality maximisation also have positive
impact on the organization it helps to deliver quality product to the customers which helps in
attaining the complete satisfaction level this increase the brand image among the business world.
The quality maximisation have negative impact on increasing the cost of production which
directly increase the cost of the product. The increase in the cost due to quality maximisation
leads in decreasing the number of the customers as it can be affordable only for the good income
groups. The increase in the cost due to maximisation of quality decreases the earning on the
product due to high cost beard by the IKEA. The operation manager must determine the
significant cost for the product within the maintained quality to ensure profits for the IKEA.
2.3 Five performance objectives and its importance to IKEA.
The performance objectives of the organization has great importance for the IKEA. The
operation management team must ensure that this performance objectives must be achieved
significantly in order to enhance the performance of organization. The five performance
objectives and its significance is described as follows:-
Cost:- the cost is one of most significant objective of performance. The cost of the production
must be maintained in order to increase the profits from the furniture products. The cost control
in production helps in lower down the cost for the product. The product with minimum cost
helps in attracting the new customers for the organization. Thus the cost plays significant part in
performance of the IKEA.
Quality:- The quality have a significant consideration in the performance of IKEA. Quality of the
furniture products must be maintained by the organization to attain the complete satisfaction

level of the customers. The quality product helps in attracting the customers which helps to
enhance the performance. The quality performance must be maintained by the business to
increase its profitability.
Speed:- The speed is related to time of production of furniture product. The speed of production
cycle must be maintained with cost and quality of product. The speed of production with
maintained quality and cost will helps organization to meed the demand of customers within time
frame(Wang, 2010).
Dependability:-The delivery of the product within the time frame to the customers is considered
as the dependability. The IKEA must fulfil the demand of the customers by delivering reliable
product as per the need and wants. It is also considered as the promise to the customers by
organization to deliver the product within time.
Flexibility:- The flexibility is referred as the change which as to be adopted by the IKEA. Due to
the dynamic world the needs and wants of the customers changes accordingly. This organization
must be flexible to adopt t eh innovation which will help to fulfil the wants and needs of
customers accordingly as per need and preference.
TASK 3
3.1 Adding value to production process through linear programming.
It is a mathematical process which helps in decision making to the management of
organization. The linear programming is the most commonly used for industrial
engineering(Huang Jing and Yuancai, 2012). The programming helps the manager significantly
to make decision regarding the production process of organization. The tool is used by
operational manager of IKEA in reducing the cost of production and maximising the profits of
the organization. The sales units and prices can be determined by the managers with the use of
linear programming to maximise profits of IKEA. The linear programming helps management to
determine and eliminate the issue create in the cost and prices of products significantly.
There are certain advantages and disadvantages of linear programming which is described as
follows:
Advantages:- Linear programming is very simple and easy to understand and is done by using
available resources. Helps to solve many diverse and combined issues. It is more adaptive and
flexible in identifying problems. Supports in providing good quality decisions.

Disadvantages:- It works with only with the linear variables. It does not support in solving non
linear functions. Cannot solve issues which have two or more variables. It do not consider
variable changes and evaluation.
3.2 Network planning and critical path analysis.
The critical path analysis and network planning is described as follows:-
Critical path analysis:- The critical path analysis is a method helps the manager in
implementation Total Quality Management within the IKEA by analysing the activities of the
production. The key purpose of the tool is to determine the time taken during the complete
production process. The method helps in the producing the order which helps in the
implementation.
Network planning:- The network Planning is the factor which helps in eliminating the
complexity from the task of production cycle. With the help of network planning the business
can run the production cycle continuously(Niknam and Golestaneh, 2012). The network planning
reduces the miss management in the process of production which increase the effectiveness and
efficiency of the production.
There are certain advantages and disadvantages of network planning and Critical path analysis
which are discussed as follows:-
Advantages:- Supports in decision making and aids in time and money saving. It supports in
analysing critical activities of business which has to be done within time frame. Supports in on
time production and forces managers to focus on activities involved in particular project.
Disadvantages:- Make pressure on manger to achieve targets on time. The process is time
consuming. Estimations may be invalid and unreliable. It is creates only on the basis of
estimations. Do not support in determining actual cost of project and project quality.
3.3 Operational planning and control needs.
Production control can be achieved with planned cost and quality standard with the help
of operational management. The operation planning is the process where the activities which has
to be performed is preplanned to implement in future(Jung, Lee and Park, 2014). The planning is
a structure for conducting the task. The planning includes all the information which has to be
taken in place in production cycle. The needs of planning and control are described as follows:-

Allocation of resource:- The production planning helps in allocating the required resources
within the time frame to meet the production cycle and helps in continuous running of
production cycle.
Cost reduction:- The operational planning helps in minimising the cost of production and also
helps in controlling the cost. The production cost must be controlled in order to reduce the cost
Maximising profit:- The operational planning and control helps in maximising the profit with
the help of controlling the cost for product.
Increasing efficiency:- The operational planning and control helps in increasing the efficiency
of the IKEA by making available of the required resource within the time frame with help in
running of production cycle continuously.
Meeting the demand:- The planning and control is important in order to fulfil the needs of the
customers within time frame by forecasting the future needs.
Reduction in wastage:- The proper planning and control is must needed which helps in
reduction of the wastage of the available resources.
TASK 4
4.1 Operational outcomes for IKEA.
The production process of the IKEA company have certain operational outcomes. These
operational outcomes are described as follows:-
Increase in profits:- The operational managers of the IKEA company which produces furnitures
have significantly managed the production cycle. The significant operation management have
helped to achieve the targeted profits for the organization by applying different strategies in
management of production cycle. The operational management have helped to reduce the
wastage of raw materials and other resources in the production process which helped in reducing
the cost and increasing the profit for the organization(Chen, Wu and Fu, 2012).
Reduction in cost:- The operation management have lead to the positive outcome which have
reduced the cost of the production. The operational managers have allocated all the required
resources in production process within the time frame and at minimum cost. The allocation of
the resource at minimum cost have directly reduce the cost of the production which helped in
declining the product cost(Bazmohammadi, Karimpour and Bazmohammadi, 2012).

Achievement of the desired targets:- The significant strategies used by the operational
managers of IKEA have helped in achieving the desired production targets within the time
frame.
Time management:- The operation have the positive outcome of time management. The time is
managed in the production process significantly which have helped to produce the product
within the time frame and helps in delivering the products to the customers at right time.
Customers Satisfaction:- The significant operational management have lead to the production
of quality product and at the minimum cost which have helped to achieve the complete
satisfaction level of the customers.
4.2 Network plan and critical path.

4.3 Techniques of quality management to improve Operation in IKEA.
It is necessary for the IKEA a leading furniture company to have a quality management
function in order to produce quality product to achieve satisfaction of the customers(Burke,
2013). The quality management can be done by effective planning for the production process and
controlling the process of production. The some of the tool is described as follows which have
helped in quality management of furniture products produced by IKEA.
Sales:- The business organization must build the good relation with the customers which will
help in the determining the needs and wants of the customers. The determination will help the
organization to develop and maintain the quality of the product and services as per their needs
which helps in maintaining the quality of the furniture products.
Inventory:- The organization must maintain the inventory significantly which will help to meet
the demand of the customers as per their needs. The organization can develop the warehouse for
maintaining the quality of inventory the well maintained inventory will directly help in
production of quality products.
Purchase process:- The purchasing process of the organization plays a significant role in quality
management of the product. The IKEA organization must take better decisions in purchasing of
the raw materials for production of raw material. The better purchase of quality raw material will
directly help in producing the quality furnitures by IKEA company(Chen, Wu and Fu, 2012).