An In-depth Analysis of Operation Management Strategies at IKEA

This report provides a comprehensive analysis of operation management within IKEA, a leading multinational furniture company. It begins with an introduction to the significance of operation management, highlighting its role in maximizing profit, expanding the business, and maintaining a robust supply chain. The report then delves into the various functions of operation management at IKEA, including design, planning, and resource allocation, emphasizing the importance of efficiency and cost control. A key aspect of the report is the evaluation of operation management using a process model to streamline operations. Furthermore, it explores the significance of the '3 Es' – economy, efficiency, and effectiveness – in IKEA's business environment. The report also examines the impact of cost minimization and quality maximization, and the importance of performance objectives. It concludes with an assessment of how linear programming adds value to production, critical path analysis, network planning, and the justification of operational planning and control. The report provides insights into IKEA's operational outcomes and the application of quality management techniques.

OPERATION
MANAGEMENT

Table of Contents
OPERATION MANAGEMENT.....................................................................................................1
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1 Operation management importance......................................................................................1
1.2 Functions of operation in IKEA............................................................................................2
1.3 Evaluation of operation management using process model..................................................2
Task 2...............................................................................................................................................3
2.1 Importance of 3 Es to IKEA.................................................................................................3
2.2 Cost minimisation and quality maximisation impact in organisation ..................................4
2.3 Significance of performance objective..................................................................................4
TASK 3............................................................................................................................................5
3.1 Assess how linear programming adds value to a given production process. .......................5
3.2 Critical path analysis and network planning.........................................................................5
3.3 Justify the need for operational planning and control in a selected production process ......6
Task 4...............................................................................................................................................7
4.1 Operational outcomes for IKEA...........................................................................................7
4.2 Network plan and critical path.............................................................................................8
4.3 Justification of quality management techniques...................................................................9
CONCLUSION................................................................................................................................9
REFRENCES.................................................................................................................................11

INTRODUCTION
The following report is prepared in order to make the user understand about the
importance of management operations in the business. IKEA is one of the most leading
multinational company which is dealing in the furniture business which are designed in the
unique manner. It was founded in 1943 . In this report the various concepts of operation
management that are followed in the IKEA will be discussed in detail that how it is providing
benefit to the business (Niknam,Meymand and Mojarrad,2011). Thereafter different Es will be
discussed in order to make the learner understand about its importance in the business. Also the
difference challenges faced by the cited company will be discussed in detail.
TASK 1
1.1 Operation management importance
Operation management is the process through which any business achieve effectiveness
and efficiency in the business. IKEA is dealing in the furniture business therefore a large variety
of operational activities take place in the business on daily basis like manufacturing, packaging,
assembling etc. The system of operation management help the cited company in various forms:
 Helps in maximisation of profit.
 Assist in expanding the business by converting the material and labour into final output
which is more effective.
 This system keep strong supply chain so that the operations do not get disturb due to
unavailability of raw material by making sure that the required amount of raw material
is made available as and when require (Bahmani-Firouzi and Azizipanah,2014).
 It is the duty of the operation manager that the quality of goods are maintained that too
on the reduce prices so that the cost of production can be controlled.
IKEA is having its suppliers from more than fifty countries therefore it is a tough task to
maintain coordination with each one of them in which operational manager helps in establishing
effective communication among them. Wastage is also reduce to minimum by the system of
operation management by doing the time management and allocation's of resources in the perfect
manner. The importance of operation management has increased due to the change in the
external environment. Now customers has become more educated and give more value to the
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quality of product and do proper research before buying any particular product
(Moghaddam,Seifi and Niknam 2012).
1.2 Functions of operation in IKEA
There are different functions which are performed by the operation management system.
These are the core functions which need to be performed effectively as they are important for
IKEA. These functions are performed with the main aim of bringing efficiency in the business
which help in reducing the total cost of the production. Different functions performed by the
operation management for the cited company are as follows:
 Designing- As the cited company deals in the product which need to be designed in the
most attractive manner so that customer get attracted towards the products and keep
buying their products. It is the duty of the operation management system to select the
quality designs keeping the standards high.
 Planning- for any business planning is most important. It act as a guidance to whole
organisation as through planning the whole project is clearly understood in advance and
all the precautionary steps are taken in advance.
 Maximum use of plant at minimum cost- Operational management help the employees in
taking the best use of the provided resources by using them efficiently. This help IKEA
in producing more output from the same amount of input used (Heizer and Barry,2013).
 Allocation of resource- As different resources has their different use it is important that
they are allocated effectively. Huge investment is done in purchasing the resources for
manufacturing and other process therefore it is important these are invested in a way that
they give maximum output to the business.
1.3 Evaluation of operation management using process model
As the operation management deals maximum with the ground activities like the level
where operations take place it has to simple. It is necessary for it to to be smooth so that it can
help the employees in carrying out the different activities, it should make simple strategies which
are acceptable and understood by all. If the operation management system is complex than it will
have its direct impact on the total output therefore the management need to make sure that the
employees are well communicated about how to use the different strategies so that effective use
of it can be taken (Mohammadi,Sedaghati and Kavousi,2014). Process model helps in improving
the operation management system as it helps in understanding the different process require to
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follow the different task. If the company arranges its machinery and equipments a manner that
they are set one after the other on the basis of its use it will reduce the total time require to
complete a given project. Through the operation of process model right person is given the right
job which suits to his capabilities and skills. This help in getting the right output and with the
desired quality.
Task 2
2.1 Importance of 3 Es to IKEA
In the business environment it is very important to maintain effectiveness, effeciency and
economy so that the business can grow and serve the cuoustomer with the best products. As the
cited business is dealing in the products that require to be supported with quality and effective
price it is important for them to maintain the three E's in the businees which are as follows:
 Economy- for any business it is important to produce products which are economic in
nature. As the customers are most price sensitive it becomes the most important element
of the other three 3s. It is important for IKEA to invest its resources in a way that they
can give maximum output after being processed through the process of production. High
investment is done on buying the raw material therefore its allocation decisions need to
be taken after doing proper analysis of the requirement of each activity in order to
allocate them in the best manner.
 Efficiency- Completing the given task is not the main aim. Doing the task with most
efficiency is more important. In other way efficiency is the ability of IKEA to convert the
provided inputs into output keeping control on the cost. Efficiency is achieved when
different activities take place in the most systematic manner. Efficiency is achieved in the
cited business when the actual output is similar to the desired products. If there are
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deviations than it is said that efficiency is not achieved and accordingly the management
need to take the actions (Niknam Meymand and Mojarrad,2011).
 Effectiveness- Effectiveness is the process through which the cited company can achieve
its targets with the set targets against them. It is the process of production which is
supported with quality and cost control. Also apart from this through the system of
effectiveness the production is done in the given time so that the delivery of products are
also done in the required time frame.
2.2 Cost minimisation and quality maximisation impact in organisation
For IKEA it is important to maintain both quality and cost of the product. Not for this
business but it is a big challenge for all the different organisation. When the companies work on
maintaining quality they end up increasing their total cost as for this more resources need to be
employed and also high technology is required to convert the inputs into effective outputs which
are demanded by the costumers. The challenge is to maintain this increased cost of technology
and resources as ultimately they are added to the total price of the product which if increased will
effect the demand of the customers. There are certain products which can afford to be charged
against high price due to their quality and and the features they posses. But it is not similar in all
the cases therefore it becomes a big challenge for the IKEA to maintain quality at reduced cost as
both increases together. In this case operation management help the business to take the correct
actions for the business which help the management in allocating their different resources in a
way that they can be utilised to their maximum capacity. This way more output is produced from
the same amount of resources and therefore this way the quality is maintanin without harming
much to the total cost of the product (Bazmohammadi,Karimpour and Bazmohammadi,2012).
2.3 Significance of performance objective
First of all, Corporate strategy of a company needs to be describe and then leads to
recognize the objectives of operational performance which help to achieve the strategy.
Five performance objectives which needs to improve the operations of IKEA are follows-
 Quality Performance Objective
The quality is measured by specification, service recovery, image of company and client
retention. Quality means to produce the product with specification and without any error. Quality
also relates to durability of product which satisfy the needs of the customers.
 Speed Performance Objective
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It refers to a speed at which any company needs to sale its product and delivers its products.
 Dependability Performance Objective
It means to delivered the products to customers according to the promises made with them. It
refers to the operations of company that the products are delivered to customers on time and in
accordance with cost and prices agreed.
 Flexibility Performance Objective
It refers to the ability to do changes in operations. It can comprises of following things:
◦ change in the production volume
◦ change the time in production
◦ change the mix of product and services
◦ to introduce new product and services
 Cost Performance Objective
It refers to changes in the cost of product due to changes in the units of products. If more
varieties of product are produced than it will reduce the volume produced and higher unit cost
and vice versa. It means to produce products at low cost (Yang Xin and Yang,2011).
TASK 3
3.1 Linear programming and production process
It is a mathematical process which is used by the IKEA so that they can easily find out
the best solutions for their problems. Problems in company can be of many types such as :
 If company wants to increase the sales of their products and services.
 If they want to increase their productivity (Niknam and Golestaneh, 2012).
 If they also want to develop their market share etc.
They can use this programming in their business. It is very effective tool that will also
help the company in their decision making. With the help of this manager of the company can
also know that where they can invest more so that it will help to enhance their profits. If IKEA
use the linear programming then they can also produce their goods and services in more effective
way. This tool also help the IKEA in their distribution process (Mohammadi,Mozafari and
Solimani,2014).
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3.2 Critical path analysis and network planning
Critical path is the tool which help the management in understanding the different
complex task of the business. It helps in controlling the problems faced by big ventures by
arranging the different activities in priorities so that they can be carried out effectively. It helps
IKEA to arrange the assets and time limit for different activities by doing administration of the
tasks. Also by setting the time limit against the different activities the company is able to achieve
the targets and can make the delivery of the required products on time. It helps the business in
recognising the activities which need to be controlled so that the overall development can be
done of the production team (Nakayama and Bucks,2012). This way management can also keep
control over the working staff as when they are provided with the targets their results can be
evaluated and accordingly decisions can be taken as who all are potential employees of the cited
enterprise.
3.3 Justify the need for operational planning and control in a selected production process
It is very essential for the IKEA to make proper planning for their operational activities
and also control over it. Planning is like a blueprint for the company so that they can conduct
their business in an effective way. It may include each and every thing in their planning such as
regarding the production, how they can transform their goods in the final products etc. it is also
necessary for the company that they need to take an effective decision so that they can increase
the productivity as well as sales. There are various needs of operational planning and control on
the production process which are described as below:
Allocation of resources: It is very essential for the company to allocate the available
resources properly so that they can use utilize it properly to enhance the profits of the company.
If they can use resources properly then also it will help to reduce the cost of the products and
services.
Cost reduction: If IKEA develop proper planning and control over the activities of the
business then it will also help them in cost reduction. If cost of the products and services are
effective then it will help the company to increase their sales (Baek and Kim2011).
Maximisation of profits: If the efficiency and effectiveness of the products and services
increase then it will help the company to increase their profits as well as market share.
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Efficiency improvements: If the employees of the company follow the proper guidelines
then it will also helps in the improvement of their performance. Employer or manger can also
provide them training that will also help in their development.
Meet the demand: If IKEA fulfil the demand of their customers on timely basis then it
will provide them satisfaction. As result to it the reputation of the company will also increase.
Company can also take advantage from their competitors in the market place.
Reduction in cost: If the company reduce its wastage and also control over the activities
of their business then it will also help them in the cost reduction.
Task 4
4.1 Operational outcomes for IKEA
Operational outcomes are particular, measurable statements of improvements of a unit
which will helps to make its program and services. Outcome should flow from the general goal
of unit (Niknam and Golestaneh,2012).
These are the short-term goals of a company which brings a organisation closer to
achieve its long-term goals. The middle managers set the operational outcomes of a company.
Outcomes of IKEA always need to be SMART.
 S- Smart
 M- Measurable
 A- Attainable
 R- Realistic
 T- Timely
First, an operational outcome should be specific. A specific objective refers to the
expected outcomes of the company. This leads to restrict the possibility of working of employees
for different goals.
Secondly, it should always be measurable which helps people to know whether it has
been achieved or not.
Thirdly, an outcome should always be achievable. Stakeholders also agrees to it, by
employees. It believes that it is unachievable goal then it wi9ll lead tom demotivate them.
Fourthly, an outcome should be realistic and challenging too. They should also be
reasonable with their available resources.
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Lastly, outcome should always have a particular time period for its achievement. It lead
to prevent work dragging and also helps in increasing productivity. It need to be fulfilled in
particular given time to have influence on customer satisfaction.
It is very difficult to determine operational outcome that accepted by employees which
have different values. So, it is important to allow employees to participate in the determination of
goals. After determining the objective of company then business plans are also made to achieve
them (Jung, Lee and Park,2014).
4.2 Network plan and critical path
The above critical path gives the idea of how much time will be taken by different activities in
IKEA. According to the nature and complexity of an event time requirements varies to a great
extent. Therefore, it becomes necessary to make planning before regarding need of time duration.
This gives a clear idea to the management of how much time will they require to complete their
project. The above critical path of different activities are given which is showing the maximum
time taken by them to be completed. This will help the controlling team to keep control over the
different activities so that task is completed in the given time frame.
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Illustration 1: Project plan

Gantt chart
4.3 Justification of quality management techniques
Quality management techniques helps to ensure the consistency of product or service of
an organisation. It not only emphasis on quality of product and services but also on different
ways to achieve it. It will ensure quality assurance and control of products to achieve quality
more consistently.
It has four components which are as follows:planning, assurance, control, improvement
of quality.
Quality management techniques to improve operation of IKEA are as follows:
 Six sigma- It is a technique which is developed by company Motorola. It helps to
improve the quality of output and company efficiency by recognizing defects in process
and also helps to reduce output variability. Every organisation follow this technique to
minimize the cost and maximize profit.
 Total quality management- It uses to solve the issues by all the teams consist of workers
from all sections in a company. The teams are given training to use the statistical tools
which are used in collecting and analysing data.
 ISO 9000- It refers to a quality system standard. It helps to ensure that needs of
customers are fulfilled by organisation (Chen.Wu and Fu,2012).
 Quality control circle- It is consist of small group of workers who works to identify,
analyse, solve and selection related issues.
 Kaizen- It is a Japanese technique which is used to reduce the waste while increasing
output product and services and help to attain improvements in processes and particular
activities.
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CONCLUSION
From the above report it can be concluded that management operations plays an
important role for IKEA. It helped the business in managing all its operations in coordinated
manner and maintain the flow of production activities. This system helped the cited business in
reducing its total cost and maximising its profit so that it can expand its business. The above
report explained how different Es are important to achieve in the business to maintain the total
quality and and standards in its operations. Also in the above report different tensions which are
face buy the cited business are discussed in detail which shows that company finds it tough to
maintain its quality at the reduced price. After in the report the critical path gave the complete
understanding of how much time is required by each activity.
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