An Analysis of IKEA's Supply Chain for Productivity Improvements

This report provides an in-depth analysis of IKEA's supply chain and its potential for productivity improvement. It begins with an introduction to productivity and its importance, focusing on IKEA, a major player in the retail industry. The main body delves into IKEA's supply chain management processes, offering specific recommendations for enhancement. The report explores various productivity improvement strategies, including tracking time spent on tasks, fostering teamwork, and utilizing project management tools. Furthermore, it examines theoretical frameworks like Lean Production and Strategic Operation Management, detailing their application within IKEA's operations. The report concludes with a discussion on increasing overall productivity and the implementation of formative strategies. The report also suggests the importance of rewarding employees. The report aims to provide actionable insights for improving IKEA's efficiency and output.

Productivity
Improvement

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Organisation or supply chain and make recommendations on how the productivity could be
improved.................................................................................................................................1
CONCLUSION ...............................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Productivity is measure of output per unit of input from certain production procedure. An
organisation focus on labour productivity for becoming more precise. Here, productivity
improvement includes analysing present operation procedure of company and determining
specific along with high impact area of opportunity (Chaichan and Kazem, 2018). In an
organisation, productivity improvement strategies implement within a place for enhancing
efficiency and production output. Advantages from productivity improvement involve reduction
within overall cost which is combined with an increasing revenue. This report is based on IKEA
which is part of retail industry founded in 1943 and its founder was Ingvar Kamprad. Products
offering by them are ready to assemble furniture, food products and home ware which they are
serving at worldwide level.
This report will going to discuss supply chain system of company along with
recommendation on how it will improve productivity. In addition to, productivity improving
activities, tool and techniques will implement for improving future productivity of business. In
the end section of report, productivity improvement project will design along with how it will
help company in improving future productivity.
MAIN BODY
Organisation or supply chain and make recommendations on how the productivity could be
improved
Supply Chain management is broad range of activity which needed to plan, control as
well as execute a product's flow from material to production to distribution within economical
manner (Kumar and Singh, 2018). In simple term it can be said that, SCM is related to handling
of production flow of goods and services. This start from supplying of raw component till the
way to deliver final product to consumers. For accomplishing this entire task, an organisation
have to create a network of suppliers who move products along with suppliers of raw material to
the company who are dealing direct with its users. In relation to IKEA, implementation of proper
supply chain management result in several benefits such as higher profits, lower costs, new
efficiencies as well as increasing collaboration. Along with this, it also help IKEA in managing
better demand, carrying right amount of inventory, dealing with disruption, keeping cost
minimum as well as meeting demand of customers in more effective manner.
1

There is proper supply chain management process which IKEA have to implement within
their working as it result in delivering products in effective manner and making customers satisfy
(Zheng and Lu, 2019). Explanation of this are as follows :-
 Planning – First step in related to planning and managing resources which is needed for
meeting demand of customers in relation to products and services. When manager of
IKEA establish supply chain it is important to determine metric because it help in
determining its efficiencies, effectiveness as well as it will help in delivering values to
customers and result in meeting goals of organisation.
 Sourcing – In this step manager of IKEA select suppliers for providing goods as well as
services which are needed for creating products ( Rantala and et. al., 2018). In addition to
this, there is requirements of establishing procedure which assist in managing relation
with suppliers. This key process involve ordering, receiving, managing inventory as well
as authorizing supplier payments.
 Execute – In this stage within that well-designed procedures are implemented for giving
perceivable shape to existing plan in form of manufactured products that are ready for
testing, packaging and delivering. Manager of IKEA design cost effective IT solution
which enable customer to build excellence. Along with this, enhance efficiency at the
time of executing supply chain management procedure.
 Deliver – When entire process reached at this stage manager have responsibility to
deliver products and services by ensuring their right quantity, place and time through
employing suitable carriers (Laufer, 2019). Manager of IKEA have to implement IT tools
which help them in tracking warehousing networks, inventory models and payment
receipts.
 Return – It is last step of supply chain management procedure as it don't involve only
product reviewing as well as its return for quality purpose but also related to managing
inventory. In relation to IKEA supply chain manager should distribute their resources
which support them in technology for faster pickups. Quick replacement and so on.
It is important for an IKEA to improve productivity as it will assist them in serving
customers within effective manner and make satisfy. Explanation of these in relation to
respective organisation are as follows :-
2

 Track and limit how much time spending on task – For improving productivity it is
important to track how much time staff members are spending on particular task
(Trojanowska and et. al., 2018). Thus, manager of IKEA have to implement tool such as
Rescue Time within their working as it will help them in estimating accurately how much
employees are spending on daily task. It is necessary because spending much time on
particular activity hamper overall organisation productivity.
 Teamwork – For improving productivity company have to make sure that each and
every member in team is working in collaboration with each other. Because team
working result in accomplishing desired goals and objectives. But is it responsibility of
leader and manager to make sure that within team member should be of different skills as
well as knowledge (Lu and Hasan, 2018). In simple term it can be said that effective team
formation is required as it will be the only way which result in achieving higher
productivity.
 Project management tools – It is related to planning, execution as well as project
monitoring for getting desired outcomes. For project it doesn't matter how much big or
small it is but it contain risk or failure. In relation to this if project manager of IKEA
respective tool within their working then it will result in reducing human error as well as
give business corporation better control within assessing options and organising
priorities.
Apart from this, there are several theoretical framework by using which IKEA can improve their
productivity. Explanation of these are as follows :-
Lean production – It is an approach to management which mainly focuses on cutting out
waste and ensuring quality. Lean production approach can be implement in every aspects of
business from designing, through production to distribution. Implementation of lean production
will provide assistance to IKEA in cutting costs by making business more efficient as well as
responsive towards the market requirements (Salami, 2018). This approach will set out by
company with the motive of cutting or minimising such activities which will not add value
within production procedure such as holding of stock, repairing faulty products as well as not
needed movement of people and product around the business. IKEA company apply lean
production method in their working for minimising process which don't add value to the
customers because with the assistance of this they can save money (lean manufacturing (lean
3

production), 2020). There are five steps which involved within lean production explanation of
these are as follows :-
(Sources: Lean Logistics, 2020)
 Define value from perspective of customers – Value is created through producers but
defined by customers. Thus, it is important for organisation to understand the values
which customer places on their production as well as services which will help IKEA in
determining that how much money customers are willing to pay (Pheng and Meng,
2018). An business firm should strive for eliminating waste as well as cost from their
operations because with the assistance of this customer's optimal price can be
accomplished at their highest profit for business.
 Identify value streams in the organisation – Within this principle includes recording as
well as analysing flow of information or material which needs for production of products
or services with the intension of waste identification as well as method of improvement.
In addition to this, value stream encompasses overall life cycle of production from raw
4
Illustration 1: Lean Logistics

material through to disposal (Marodin and et. al., 2019). IKEA production manager will
examine each stage for eliminating waste which will not add value to customers.
 Create flow to the customers by eliminating waste – In this step, functional related
barriers will eliminate as well as ways for improving lead time will identify which ensure
the processes are smooth. Flow is important to the elimination of waste. Lean
manufacturing relies on preventing interruptions within the production procedure as well
as enable harmonized and integrated set of process within that activities move in constant
stream.
 Establish a pull system – This principle means company have to start new work only
when it is required. Lean manufacturing process utilise pull system instead of push
system (Khalil and Khalil, 2019). Pull system simply means that nothing will made until
its not required. Moreover, pull relies on flexibility as well as communication.
 Pursue perfection with continual process improvement or Kaizen – Lean
manufacturing rests on the concept of continually striving for perfection which entails
targeting main reason behind quality issues and ferreting out as well as eliminating waste
across the value stream.
By implementing lean manufacturing in working IKEA can improve their production procedure
as well as also eliminate such things from their working which will not create value for them.
Strategic Operation management – This theory is set of practices which an
organisation utilise for efficiency in production. Operations management is related with
controlling the production procedure as well as operations of business in efficient manner as
much possible as can (Durdyev and Ismail, 2019). In simple term it can be said that,
implementation of operational management help IKEA in managing process through that raw
material, energy as well as labour get converted within goods and services. There are several
aspects which play important role within the success of operation management in organisation
such as people skills, creativity, rational analysis as well as knowledge related to technology.
Operation manager in company perform several activities explanation of these are as follows :-
 Process design – In this manager of IKEA will figure out exact steps which needed to be
carried out for meeting their business goals in effective manner. This can mean helping
plan out a one-time project or creating procedures for repeatable work (Nakamura,
5

Kaihatsu and Yagi, 2019). A real-life example of operations in projects would be creating
a timeline for developing some software for the client.
 Standard management – In this operation manager of IKEA will help in creating as
well as optimizing budgets, scheduling equipment maintenance and also make sure that
staff members are following standard procedures etc.
 Process improvement and optimization – Its is responsibility of operation manager
manager in organisation to focus on production process with motive of improvement. By
improving it in effective manner IKEA will be able to serve their customers as per
requirement.
With the assistance of proper operation management IKEA will be able to improve their
productivity and serve customers in effective manner. Apart from this, for ensuring high
profitability and long term sustainability organisation is required to make significant increase in
overall productivity of employees and organisation. This can be duly increase with the
assistance of undertaking formative strategies (Jabbar and et. al., 2019). In addition to this, it is
essential for organisation to offer reward and benefits to their workforce as labour hold utmost
capacity to significantly increase overall productivity level of entity. A General Theory of
Productivity has been undertaken by Morrison as to make increase in their overall productivity
level. Mentioned below there are two different most productivity system:
Effectiveness: Accomplishing task that are duly linked with purposeful goals.
Efficiency: Completion of task in particular framework of time.
Productivity can only be increased with the assurance of having meaningful goals. In
addition to this, it is also important for Morrison to ensure that their goals and targets complete
on particular time manner. There are some certain form of components mentioned below that can
significantly aid company to positively increase productivity of entity:
 Creative energy - It is one of the most effective straightforward method in which
individuals can effectiveness able to influence themselves by setting right conditions.
With the assistance of this technique employees within Morrison can make themselves
innately creative by setting positive conditions (Mochida and et. al., 2019).
 Focus - It has been identified that it is important for Morrison to direct and encourage
their employees to have laser -focused approach in terms with project, task, idea reality
and time. With the help of this organisation can significantly able to increase overall
6

productivity of both employees and entity in best effective manner with having more
focused approach.
 Motivation - The higher workforce of organisation are motivated the higher they offer
productive outcomes. Thus, it become essential for Morrison to ensure that regular
motivation is being provided to employees as to make significant increase in their
productivity. It will also allow employees to stay focused on their task and complete
project in well defined manner.
 Aptitude - Proficiency of task play major role on ability of employees as to accomplish
project in given time frame. Thus, it is essential for Morrison manager to provide training
and development measures to their employees as to increase their proficiency to
accomplish task in due course of time. It significantly aid organisation to increase their
productivity in best effective manner.
 Ideal time - Every task have their different set of requirement and further need time
accordingly. In this it is important for Morrison manager to provide training to employees
as to make them practice to undertake their own ideal time.
Lewin's Change management model – This is related to change management which
include three steps such as unfreezing, changing and refreezing. Lewin's model provide simple
way to organisation for understanding their change process. Explanation of these steps in relation
of IKEA are as follows :-
7

(Source: Lewin's Change management model, 2020)
 Unfreezing - In First step of change management model IKEA have to unfreeze their
existing policies or process for making changes and improving their productivity (Abd el-
shafy and et. al., 2019). Unfreeze is necessary because with out this it will be difficult for
company to apply changes for further modifications.
 Changing – In second steps changes will implement within existing procedure for
conducting work in more effective manner as per the latest requirement of business
environment (Wang, 2019). In simple term it can be said that changes are necessary for
company as it will help them in accomplishing goals and objectives in more effective
manner.
 Refreezing – It is final steps, after implementing changes policies and procedure will
refreeze again. To employees of IKEA it will convey that they have to work on latest
policies on which they are working.
After going through this change model it has been analysed that company need to implement
modification in their working by following proper change model. Because before
implementation of new things it is essential to unfreeze existing policies, after that changes have
to be implement and then refreeze.
8
Illustration 2: Lewin's Change management model

CONCLUSION
From above discussion it has been summarised that, productivity improvement is
necessary for an organisation as it help company in generating revenue as well as serving
customers within effective manner. There are several techniques and tools of productivity
improvement which provide assistance to company in enhancing their productivity. In addition
to this, along with improved productivity it is necessary for an business firm to have proper
supply chain by which they can serve existing as well as potential customers in better manner.
Apart from this, it is necessary to design productivity improvement project as it provide
assistance to an company in enhancing their future productivity. In simple term it can be said
that, for gaining better place within competitive business corporation it is important to enhance
productivity.
9

REFERENCES
Books and Journal
Chaichan, M. T. and Kazem, H. A., 2018. Single slope solar distillator productivity improvement
using phase change material and Al2O3 nanoparticle. Solar Energy. 164, pp.370-381.
Kumar, R. and Singh, I., 2018. Productivity improvement of micro EDM process by improvised
tool. Precision Engineering, 51, pp.529-535.
Zheng, C., Yi, C. and Lu, M., 2019. Integrated optimization of rebar detailing design and
installation planning for waste reduction and productivity improvement. Automation in
Construction, 101, pp.32-47.
Rantala, T. and et. al., 2018. Evolution of obstacles restraining productivity improvement.
International Journal of Productivity and Quality Management, 25(1), pp.64-89.
Laufer, A., 2019. Multiple productivity objectives on construction sites. Project Management
Joumal, 16.
Trojanowska, J. and et. al., 2018. A methodology of improvement of manufacturing productivity
through increasing operational efficiency of the production process. In Advances in
Manufacturing (pp. 23-32). Springer, Cham.
Lu, M. and Hasan, M., 2018, December. Productivity improvement in operating autonomous
plants subject to random breakdowns in construction. In 2018 Winter Simulation
Conference (WSC) (pp. 3885-3896). IEEE.
Salami, H., 2018. Agricultural land productivity improvement and trade liberalization in Iran: A
CGE analysis.
Pheng, L. S. and Meng, C. Y., 2018. Managing productivity in construction: JIT operations and
measurements. Routledge.
Khalil, O. E. and Khalil, N., 2019. Business research productivity and barriers. International
Journal of Productivity and Quality Management, 26(1), pp.34-57.
Durdyev, S. and Ismail, S., 2019. Offsite manufacturing in the construction industry for
productivity improvement. Engineering Management Journal. 31(1), pp.35-46.
Nakamura, K., Kaihatsu, S. and Yagi, T., 2019. Productivity improvement and economic
growth: lessons from Japan. Economic Analysis and Policy. 62, pp.57-79.
Jabbar, E. and et. al., 2019, September. Conditional Anomaly Detection for Quality and
Productivity Improvement of Electronics Manufacturing Systems. In International
Conference on Machine Learning, Optimization, and Data Science (pp. 711-724).
Springer, Cham.
Mochida, K. and et. al., 2019. Computer vision-based phenotyping for improvement of plant
productivity: a machine learning perspective. GigaScience. 8(1), p.giy153.
Wang, Y., 2019. Integrated Lean and Simulation for Productivity Improvement for Windows
Manufacturing.
Abd el-shafy, I. And et. al., 2019. Decreased Pediatric Trauma Length of Stay and Improved
Disposition With Implementation of Lewin's Change Model. Journal of Trauma
Nursing. 26(2), pp.84-88.
10