Detailed Analysis of Operations Management for IKEA (Report)

This report provides a comprehensive analysis of IKEA's operations management, focusing on various aspects critical to its success. The report begins by explaining the importance of operations management and analyzing IKEA's operational functions, including its manufacturing processes and resource management. It then evaluates IKEA's operations using a process model, highlighting the input, conversion, and output stages. The report also assesses the significance of the 'Three Es' (economic, efficiency, and effectiveness) for organizations and examines the tension between cost minimization and quality maximization. Furthermore, it evaluates the importance of five performance objectives in operations management. The analysis extends to assessing the value of linear programming and evaluating critical path analysis and network planning within IKEA's context. The report concludes by producing a set of operational outcomes for IKEA, creating a network plan with the critical path, and justifying the application of quality management techniques to improve operations. The report underscores the importance of effective operations management for achieving efficiency, profitability, and customer satisfaction, making it a valuable resource for students studying business and operations management.

OPERATION
MANAGEMENT

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
1.1 Explain why operations management is important...............................................................3
1.2 Analyse operations functions of IKEA.................................................................................4
1.3 Evaluate, by using a process model, operations management of IKEA...............................6
TASK 2............................................................................................................................................7
2.1 Appraise the importance of ‘Three Es’ to organisations.......................................................7
2.2 Assessing impact of tension between cost minimisation and quality maximisation in
organisations...............................................................................................................................8
2.3 Evaluating significance of five performance objectives which is required in operations
management................................................................................................................................8
TASK 3............................................................................................................................................9
3.1 Assess how linear programming adds value to a given production process.........................9
3.2 Evaluate critical path analysis and network planning.........................................................10
TASK 4..........................................................................................................................................10
4.1 Produce a set of clearly defined operational outcomes for IKEA.......................................10
4.2 Produce a network plan indicating resultant critical path...................................................11
4.3 Justify how quality management techniques are applied to improve operations in a
selected organisation.................................................................................................................14
CONCLUSION..............................................................................................................................15
REFERENCES..............................................................................................................................16

INTRODUCTION
Operation management refers to the management of production and other operations,
which are important for maintaining productivity and functionality of organisation. It will assist
in achieving higher level of efficiency in organisation performance. Operation manager of
company has to manage resources like human resources, materials and goods in an effective
manner. By evaluating, manager will be able to design effective systematic chain in firm. Main
motive of manager is to utilize resources in an effective manner for boost production, which will
assist in company productivity and profitability. IKEA is well established company in furniture
market, they manufacture parts of furniture goods (Alexander, 2013). They are working as
market leader since 2008 and till now they are able to managed lead to themself. In this report,
nature and importance of operation, link between operations management and strategic plaining,
organising production process and techniques of production work in an organisation will be
defined. These all are important topic for operation management, as these will assist manager to
maintaining the level of efficiency and effectiveness in operations in IKEA.
TASK 1
1.1 Explain why operations management is important
In every types of business, operation activity play vital role. For this, manager of
company should perform operation management functions in an organisation. This will assist in
achieving profit in market and many other benefits. So, importance of operation management are
as follows:
Importance of operation management
 If operation management will be conducted in effective way, further this will reduce the
cost of production and services
 This will help in satisfying customers need. Thorough this, company will be able to
generate more revenue.
 This will improve quality of service and goods for satisfying costumer.
 It help in reducing amount of investment
 This will assist in innovation and effective use of resources.

 It will reduce the wastage of resources in organisation and assist in proper utilisation of
resource
 This will aid in getting productivity and profitably.
These are some important reasons, for which operation management should be performed
effectively in an organisation. All these importance shows that operation management play vital
role in organisation productivity (Becker, Kugeler, and Rosemann, 2013). IKEA deals with more
then 500 customers in a day. For managing the customers, productivity of services and goods
should be effective for satisfying the customers needs. This will help in developing market of
cited company and assist in productivity and profitability. Due to this stakeholders will also get
satisfied because of business performance.
1.2 Analyse operations functions of IKEA
IKEA is a company, who manufacture the furnitures parts and sale to customers.
Purchaser of the goods will assemble the parts and make the well furnished furniture, which is
ready for use. A person who manage the manufacturing of goods and operation is known as
operation manager. There are some important resources which are needed in operations. These
will be managed effective by the operation management skills. These resources are as follows:
 Human resources
 Land or place for manufacturing unit
 Raw materials (wood)
 Electricity
 Machines
 Transportation methods
 Big Stores
By the support of these, IKEA will be able to manufacture quality of furniture parts in
units. These are some basic resource which are needed for good performance in an organisation.
Operation activity will assist in achieving effective goals and objectives of business (Dumas,
2013). There is a process for manufacturing the goods in IKEA.

 Input: In this raw material will be purchased according to the need and others resources
which are required in operation will be collected according to needs. All the resources
which are needed, these are described above, but in this level of work, human resource,
capital and land will be managed by operation manage. In this stage, they will gather all
the resources which are required in processing.
 Conversions process: In this stage of operation functions, processing of wood will be
will be conducted. They will give design to the raw material. In this processing human
resource and machine will be used. This is the stage, where IKEA is converting the wood
into finished goods.
 Out put: This is the last stage, in this company will get the finished good, but it is not
ready to sale in the market, because packaging of goods will be conducted in this stage.
After that furnitures of IKEA is ready to sale to its final customers.
Operation management play the vital role in IKEA manufacturing unit. Operation
manager have to manage all the functions of operation in an organisation (Heizer, 2016). It will
assist in achieving the goals and objectives of company.
Planning: There are various situations in the organisation such as government policies and
regulation, competition and economic condition etc. so company need plan all the activities
which help the organisation use their resources in the effective and efficient way.
Designing: it is related to the development of the products and services. Which may include the
different features of the products. In the organisation customers orders are received and they
produce the goods and services accordingly.
Managing: in the operation management all the decision related to the work are taken by the
group. Team leader encourage all the members of the group to manage their task in the proper
way and work effectively.

Coordinating: In the operation management all the activities are inter-related with each other, so
organisation need to manage that activities in co-ordinate way that overlapping of the efforts can
be reduced.
1.3 Evaluate, by using a process model, operations management of IKEA
Manager of oration department has to manage functions of manufacturing. There are so
many resources required for manufacturing. So manager has to identify all of them and insure
that utilization of resources should be in effective manner. This will assist in reducing in wastage
of resources in manufacturing. It will give impact on investment funds. Every organisation has
manufacturing units, which are divided in three stage, these are stages are input, processing and
output.
For managing the performance of manufacturing unit, operation manager should designs
the processing of manufacture unit in organization. This should be planed according to needs of
manufacturing products. Like, input should be in such area, where transportation can reachable
easily. Processing work will be near to him. Place of manufacturing should be outside the city,
but it should be easily reachable for labors because labors are the human resource and they are
important aspect of manufacturing. Output of production will be near to stores and
transportation system (Hill, and Hill, 2012). This design of the manufacturing unit will assist in
effective productivity and profitability for organization. The centralized method should be used
for controlling the operation activities, this will prevent the chances of repetition of activities.
The various methods can be used to judge the important activities.
If operation of business activity will be managed effectively, then this will aid in
generating revenue for company. For this, manager of organization have to create effective
development in manufacturing unit, this development can be done by employing the latest
technology which will be created by planning and designing of manufacturing functional
requirement This will make effective quality of products and services, it will also improve the
standard of operation which will satisfy stake holders. Trough this company will be able to
generate productivity and revenue of cited company.

TASK 2
2.1 Appraise the importance of ‘Three Es’ to organisations
In every organisation manager has to perform their activity effectively. For gating
effective management of activities in an organisation, operation manager has to manage the
manufacturing units and activities of a firm. For managing effectually, manager has to analyse
these three E's, which are as follows:
 Economic: The economic side always play vital role in every organisation. In this funds
has been given by owner, for performing task. Manager has to utilise that fund in a
effective methods, which will provide benefits in terms of revenue. In operation
management, manager has to identify the cost of operations and there resources and
which reduces the wastage of funds. This will also play important role in getting profits,
because this will reduce cost of manufacturing products.
 Efficiency: The IKEA company is not using traditional methods for manufacturing
because it will consume to much time in operations. Due to this, operation manager bring
modern machine in organisation. This will consume less time and work get effectively
completed. It also reduce needs of human resource in an organisation, but machine are
man-made, so company are not using fully modern concept. They are also using
traditional work, where art is required (Houy, Fettke, and Loos, 2010). Operation
manager have to identify demand of products in market, according to this company has to
select the size of supply and production of goods.
 Effective: In existing time period, company providing high quality of goods and services
in market. IKEA are producing or manufacturing quality of furniture prats, through this
company will be able to become leader and maintain leading position in market. There
are so many functions, which has to be managed effective in cited company. Operation
manager has to plan and design of operation activity. These will provide benefits to cited
company.
These will assist operation manager for managing performance of manufacturing in
effective methods. Through this, company is getting development and benefits in terms of
revenue and market position.

2.2 Impact of tension between cost minimisation and quality maximisation in organisations
Every organisation has some same objectives, like generating more and more profit for
business and development of business activities. For this, company has to manage the
performance of operation in an organisation, which will be manage by operation manager. He
has to make effective planing and designing of the manufacture process in a firm, which will
give effective impact on company performance. For making organisation productivity, manager
has to find out every factors of manufacturing and analyse all of them. These factors are defined
above. The operation manager has his own goals and objectives.
Operation manager has to make effective organisation productivity. For this, manager has
to find out all factors, which are impacting on operation activity. This will assist in identifying
cost of every resource and activities, which are performing in an organisation. The cost of every
factors will be manage effectively and manager has to check, every one of them for using
resource effectively (Jeston, and Nelis, 2014). Through this, resource will be used effectively in
an organisation and reduce the wastage of resources. This will help in saving resources in an
organisation. This will resduce the cost of products and which will assist in making quality of
products in organisation. It will aid in becoming leader in market. This will provide satisfaction
to employees and customers.
Quality maximisation and cost minimisation can be done in several ways such as,
 When all the operations of the organisation will produce quality goods and services for
the customer satisfaction.
 Proper use of innovation which help the company to reduce cost with the qyality
production
 decrease the products defects
It will help the firm in many ways such as
 Reduce direct and indirect cost of the venture.
 More emphasis on the direct cost investment.
 Control over all the overheads.
2.3 Significance of five performance objectives which is required in operations management
For effective operations management, IKEA has to analyse five performance objectives.
This will assist in effective operation activity in an organisation. These will give impact on

organisation productivity. For this manager of organisation has to identify all these five
performance objective to manage operation management. These are as follows:
 Speed: Seed is related to time period of company manufacturing. The production of
company have to be completed, according to demanded time period. If Clint need the
parts of furniture in specified period. Organisation has to to give that part before the time.
This will create satisfaction for the employees (Krajewski, Ritzman, and Malhotra,
2013). This will assist in maintaining the leading position of IKEA in furniture market.
 Flexibility: Oration or manufacturing unit should be in a way, which will give
satisfaction to employees. The main objective of an organisation is to satisfy customers.
For this company has to become flexible, because demand of the Clint is never be stable.
 Dependability: In today's market customers are highly confused in purchasing products.
So company has to produce effective quality of products, which will make satisfaction to
costumers and employees. Company have to make it promise with customers and full fill
it in every situation.
 Quality: In this, organisation have to make quality of products, which will assist in
satisfying the need of costumer. The quality of products and services will measured by
manager, then he will allow to sale products in market. For this, manager has to make
measurement of every batch of production.
 Cost: Manager has to manage the pricing of production work. In this, he have to set
funds, which will be used by organisation for manufacturing. Manager will set standard
of costs in production unit of organisation (Myers, 2013). This will reducing cost of
production and reduce costs of products, through this margin of profit will be increased.
TASK 3
3.1 Assess how linear programming adds value to a given production process
In an organisation there are so many factors, which can affect the customers satisfaction,
one of them is pricing of products. it should be managed by operation manager, for this he will
use techniques and methods which will bring in efficiency and effectiveness in system. In IKEA
operation manager use the linear programming for managing the price according to demand in
market. Linear programming is the method by which company will be able to make effective
management of cost and price of any goods.

Liner programming assist in increased and decreased of cost. This will help in generating
revenue from market. For this, manager should identify the demand and supply of the products in
market. Manager knows about customers need and products quality in market, which will assist
in managing cost of products (Slack, 2015). It is very easy to understand, this give aid in
maximizing profit and minimising profit. For this company manager has to identify all the
factors which give impact on the price and this has to be done by manager of operation
management department.
3.2 Evaluate critical path analysis and network planning
In every organisation, operation department play a very vital and important role. It will
help in enhancing organisation productivity (Trkman, 2010). The operation management get
effective when manager pushes for effective development in quality of products and services.
This will provide safety to the customers need. For this operation manager has to establish a
efficient and effective operation and for that he will use liner programming. Regarding this
manager has the make critical path for the productivity and network plan for the manufacturing
market.
 Critical path: In this manger will find out the process and structure, according to this
manufacturing unit has to perform activity in a firm. It will support in reducing wastage
of resources in an organisation. This will give effective impact on organisation
productivity.
 Networking Path: Networking planing help in reducing complexity from performing
task of manufacturing in an organisation. For this, manager has to set standard time
period to performing the task in manufacturing unit. This will develop the organisation
productivity.
 Critical path:This critical path analysis help manager in planning of operations that
could prevent the risk of delay in operation which help in increasing productivity of
organisation as well as help in increasing operational management efficiency. It helps
manager to focus on important activities. The various advantages of using the Critical
path method This helps in reducing the cost associated with project. By analysing the
critical path the unnecessary activities can be prevented. As it helps in planning of
activities it decreases the chances overlapping and repetition of activities. It provides

various methods to with unusual situations. Disadvantage : it may be cost consuming as it
require software and time wasting in small project
TASK 4
4.1 Produce a set of clearly defined operational outcomes for IKEA
In an organisation, operation activity play vital role, HR manager will make effective
planing and design of manufacturing unit. This will assist in developing organisation activity. If
manager will make effective critical path and networking path. This will give effective out come
to organisation.
The out comes of the operation management will be in terms of benefits. Designing and
layout will assist in getting full image of chair patters, this will give satisfaction to employees an
customers needs because this will, enhance the quality of products and services (Van Der Aalst,
2013). This will give productivity and profitability to an organisation. This will increase the
productivity of the organisation.
Operation outcomes
 Increase the productivity of Furniture prates and services
 Give standard of products on time
 Reduce wastage of resources in organisation
 Develop production chain in the organisation
 Project will be completed before time
If these will be performed in an organisation, this will assist in achieving growth and
development for the company. It will also support in identifying problems and issues related in
process of manufacturing in organisation. This will be solved by the operation manager because
he has to manager the human resource in the organisation. Every organisation want to be market
leader in the market, but IKEA is the market leader in the market (Wheelen, and Hunger, 2011).
He has to maintaining the productivity and customers in the market. This is the main motive of
the company.
There are several outcomes that can be achieved by the IEKA with the hep of their defined
strategies, that are as follows:
 It will reduce the cost of production as the waste can be reduced and the organisation will
use their resource in the effective and efficient way.

 The time for manufacture the products will reduce as the company will keep update of
every incoming and outgoing of the inventory so it will reduce the time and the
customer's orders will be fulfil at the right time.
 The strategies will enhance the quality of products as the resources such as financial,
human resources, inventory and funds will use in the proper way.
 All the operations of the organisation will be flexible as all the activities will be done at
the right time.
4.2 Produce a network plan indicating resultant critical path
In an organisation company manager has to make effective management of operation
activity in an organisation. For this, manager has to identify strategies of the IKEA and
according to this cited company manager should do planing and deigning of the production
house. It is like as process of operation planing. This will give effective development to
company. This structure will be be implemented in the organisation. This will give so many
benefits to the employees. These benefits has been defined above and process if IKEA operation
activity is defined blew in critical path method.

The critical path of the project is 1+3+5+7+8+9+11 which state that the project will be finished
in the 16 weeks.
This critical path will help in managing the productivity of an organisation. In this all the
functions and works has been defied as per the process. This will assist in making development
of the organisation. Through this critical path operation of IKEA will be given. This will help in
developing and reducing the wastage of resource and selecting Clint need before the time. This
will aid in maintaining leading position from 2008. these type of strategy and planing has to be
made by operation manager. This is very important in this organisation.

4.3 Justify how quality management techniques are applied to improve operations in a selected
organisation
There are so many function in organisation which company manager has to mange ths
function of organisation. This will be give benefits to the company. These are some basic
functions which has to follow
 Purchasing products: Organisation make the products for satisfying customers need.
This will help in generating profit and revenue for the company. Every organisation has
to maintaining the customers. For this company has to give effective quality of service to
costumer on time and company has to records all the parches of the customers.
 Manufacturing: This is very important faction in every organisation. In this,
manufacturing has to be conducted, an operation manager has to supervise manufacturing
production. It will create effective quality of products and services in market. The
effective quality of products has been managed and price of the products has been
managed by manager (Wirtz, 2011). This will give productivity and profitability.
 Sales: IKEA has the highest market in furniture sectors. He has to make effective sales of
the products in market. By this, company will get more profit. For example, cited
company are making development by sealing furnitures prates in market. This make
development in area of sealing goods.
 It will improve the operation management in the organisation as all the activities will be
done on the time, the workers and manager will do their work on time which will help the
organisation to deliver their orders on time.
 The company can easily implement and continue the lean production
 It will help the organisation to create the quality circle.
CONCLUSION
Operation management play vital role in an organisation. IKEA has good management in
operations department, that's why they are leader in furniture market sector, but they has to
maintain there position effectively in market. Operation manager should manage the
manufacturing chain and process. This will give impact on organisation productivity. The
company manager has to use linear programming for managing cited company productivity. For
this he have to use critical path and networking path.

REFERENCES
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Houy, C., Fettke, P. and Loos, P., 2010. Empirical research in business process management–
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Online

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