Comprehensive Analysis of Operations Management at IKEA

This report provides a comprehensive analysis of IKEA's operations management, covering various aspects of its business strategy. It begins with an introduction to operations management and its importance, followed by an examination of IKEA's operational functions, including design, planning, and coordination. The report delves into the process model of organization management, outlining inputs, conversion, monitoring, and outputs. It then explores the significance of the 'Three Es' (Economy, Efficiency, and Effectiveness) in operational management and discusses the impact of the tension between cost minimization and quality maximization. Furthermore, the report analyzes IKEA's five performance objectives: cost, quality, dependability, speed, and flexibility. It also examines the application of linear programming, critical path analysis, and the need for operational planning and control. The report concludes by summarizing IKEA's operational outcomes and highlighting quality management techniques.

OPERATION MANAGEMENT IN BUSINESS

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1 Operations management
is important for organisations.....................................................................................................1
1.2 Operations functions of IKEA.............................................................................................2
1.3 Process model of organisation management.........................................................................3
TASK 2............................................................................................................................................4
2.1 Importance of three Es'..........................................................................................................4
2.2 Impact of the tension between cost minimisation and quality maximisation.......................5
2.3 Five performance objectives.................................................................................................6
TASK 3............................................................................................................................................7
3.1 Linear programming adds value to a given production process...........................................7
3.2 Critical path analysis and network planning.........................................................................7
3.3 Need for operational planning and control ...........................................................................7
TASK 4............................................................................................................................................8
4.1 Operational outcomes for IKEA...........................................................................................8
4.2 Network plan and critical path..............................................................................................9
4.3 Quality management techniques.........................................................................................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Operation is that component of an enterprise, which is define with the information of a
way of inputs into services having the product quality level. Management is a best process,
which transforms different sources in the business operation of an organisation, into added
services value in accordance with policies communicated. It create highest level efficiency
possibles. It concerned with merging wages and materials into products and services to maximize
the organisation profit. It is a best terms to design various method of inputs like materials, labour
etc. and outputs like products and services. Ingvar Kamprad founded IKEA in 1993. Their vision
is to create better like for the many person. Their concept is based on positioning of market
statement. IKEA has more than 590 million tourist per yearly to its stores(Ageron, Gunasekaran,
and Spalanzani, 2012). Company offered different channel of marketing like catalogue that is
provide worldwide as 191 Million photo copies. Company has 9500 various products and they
offer unique services.
TASK 1
1.1 Operations management
is important for organisations
Operations management is the best resources to define goods and services that can be
sole and make a benefits. These sources like inventory, time, facilities and employees etc. it is
essential because it apply every company to maximize their profits it used properly.
Related to IKEA, operation management define the best way that organisation distribute
and produce goods and services. The information related to business reflects the important
concept of operational management. It is a systematic control and development process that
contribute goods and services. Their function define as a percentage of physical assets and
employees in most enterprise. IKEA applied this management system and determine what should
go into an developing system, such as materials, power, energy, facilities, information related to
inputs and outputs etc. company managers are responsible for all activities like capacity
planning, organising, product quality, scheduling and material management.
Operation management is very important because it has increased regularly in current
years(de Menezes, Wood, and Gelade, 2010). There are different way that define it is very
essential like significant competition, product and service life cycle is shorter, quality conscious
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consumers, capability of innovative technology etc., these function to improve productivity while
giving a best techniques of high-quality services and products.
Above this digram show the operational management is very beneficial in different organisation.
These benefits show their important at whole organisation.
1.2 Operations functions of IKEA
Operational function define IKEA position in market place and define their products or
services. There are approx 123000 Co-workers which can define functions like distributing,
purchasing, product range, whole-sale and their groups. Today their product range is 9500 while
home furnishing articles(Diabat, and Govindan, 2011). Their product design is good looking
but their product price is very low. This group develop every items which are necessary to
customers needs and wants. IKEA is responsible for providing different products its unique name
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Illustration 1: Benefits of operational management

services such as facilities like BILLY and KLIPPAN. There are important function of
management operation are as follows:
Designing: This function is very essential to designing and developing the product in market.
Product manufacturing process evaluate by the buyers predication related to specific products or
services. This system to design important information which improve company and individual
performances with the help of monitoring and controlling process.
Planning: Management system is based on operational function like planning, which can
manage whole resources that how company utilized needed product(Gawer, 2011). It is a
effective process which define different elements which is used in business and increase the
product and service demand.
Managing: IKEA group manager their employees and team members in effective way because
within group activity can not attain success. This group manager their productivity and
employees performances. There are different activity which can manage by company manager
like marketing, human resources and accounting activities, which is more essential into the
business.
Coordinating: IKEA is a biggest company designs its own furniture, which is develop by
approx 1220 manufacture in more that 55 locations such as countries. They have incorporate
environment which define friendly efforts related to business and their supports. Company
coordinate different countries that it has 1220 suppliers in various countries. In every enterprise
support is very important to enhance their image such as goodwill.
1.3 Process model of organisation management
Inputs: This process here depicts the equipment and other wood like adhesive etc. There
are major inputs. IKEA furniture company there are major supplier relate plastics and wood
along metals pins and stainless steel are made the design furniture(Gold, Seuring, and Beske,
2010). Also it give with materials and wood, land, capital and labour is required effectively to
manufacture furniture.
Conversion: It is a process while converting the material, in this activity labour is required.
While this flow and design the products. In this way , company plays attentions to exchange the
material and innovate the furniture design related to bring innovative product in market place.
Monitor: After the conversions, company must look this process of the goods which has been
conclude by the manufacturing unit. Under this department check the furniture quality along with
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customers demand which needs be matched at perfect time. Apart form the monitoring group
final review the duration allotted related to finished the products.
Outputs: This is the last way of product production, here company post its finished products to
many stores who have providing the order(Hart, and Dowell, 2011). It is very essential which
made as per the company requirement. Within the outputs is major issues like logistics problems,
time management, while send the wrong items to the customers.
TASK 2
2.1 Importance of three Es'
Three Es' is very important in operational management because that can be define more
flexibility in company. Many business are forces on long term strategies to improve their
performance in marketplace. These elements are very important and it is not easy to achieve in
company because it is a complex. It can define powerful concept to provide right cost and
effective product quality on innovation way. It can help to increase product and services which
is provide their target customers(Heizer, 2016). There are three Es' which is more essential to
IKEA are as follows:
Economy: In IKEA it is related to accounting process because today the economy impact on
every components. In this way operational management define the different way or company has
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Illustration 2: Process Model

minimum fund to its operation. Economies also support that, company production is cheaper or it
s products also very costly. The effective use of necessary resources of an enterprise to achieve
appropriate goals and objectives in a effective way. In every business take financial statement
like money or resources which is create by company related to clients needs and wants. Internal
and external economy factor is more important to develop company performance and increase
product productivity.
Efficiency: Related to production concept of the company is a very old such as traditional which
is using essential line production system, which is creating by company in effective manner.
IKEA is not able to develop high level of product production. There has lack of the control and
monitor the finance and waste. The assembly function of line production generally used by the
large companies who are develop best product but the present company face different
challenges(Holsapple, 2013). Company generally used line production. It is not measurable in
number of product but it can use effective techniques.
Effective: This elements is basically focus on the performance such as achievement of objectives
and goals, which can include good improvement. It can help to develop effective projects in
business. The existing production function is veer poor because it can reduce products demand.
Company to look for the essential operations.
2.2 Impact of the tension between cost minimisation and quality maximisation
Cost minimisation and quality maximisation is a financial statements that can help to
achieve product cost which delivering items like furniture related to the clients requirement.
Cost minimisation: It is not reduce the product and seer vice quality related to customers
requirements. It is more effective to understand to buyer needs and wants related to products.
Minimum cost which can be evaluate highest profit of IKEA. It can be involve different process
which can help to reduce cost. There are various cost profits for the future manufacturing
company. The philosophy is a first right time that maintained best and effective goods.
Quality maximisation: The main objectives of company to maximize their profit and increase
product sales in appropriate way. It is a effective process to determine profitability which can
define the first objectives to take innovative decision related to enterprise. They also develop
their goodwill and performances(Karlsson et. al., 2016). Best product quality can be reduce risk
related to business process and that can evaluate outputs. Customer satisfaction is very essential
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to enhance buyers needs and wands which can maximize productivity and profitability in
marketplace.
There are tensions between the different variables related to maximizing products quality
and call for the higher cost related to manpower, overheads and raw materials etc. Furniture
manufacturing to develop their best performance and reduce the product cost which attract
customer to by high range of buyers. Both situation are running in short and long term.
2.3 Five performance objectives
There are different five performance objectives are as follows:
Cost: IKEA is a furniture manufacturing company which need to keep the product production
related to low price in order to achieve lower cost. The essential of an enterprise is to create more
income and potential competitors in the stage of global (Kindström, 2010). If organisation is to
capable to control the product quality by keeping customer mind related to better services and
would be help the company to remove tensions between cost and quality.
Quality: It is very essential parts in order to create the long term benefits. If the product quality
is not up to time and date. Customers will not satisfied and change their manufacture process.
Operation manager needs and wants to define product quality and time management. In order to
create the high quality of items, manager of IKEA company should select and recruit experts.
Company has able to create ISO 9001:2001.
Dependability: Customers are highly educated and they choose best and innovative product. It is
a best promise which by company take. Company has many responsibility within the quality
deliver and time period. This kind attract buyers for purchases high range of products.
Speed: The furniture company is a biggest delivery company. Their delivery service is very fast
to attract the clients in a effective way.
Flexibility: Today market environment is change, it is a flexible company to handle the clients
need and demands. Innovation is the major qualification of the business(Lavastre, Gunasekaran,
and Spalanzani, 2012). Without technological tools and techniques operational management is
poor which why the company is not capable to assist the product deliver.
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TASK 3
3.1 Linear programming adds value to a given production process
Linear programming is a mathematical process in IKEA which measure both minimum
and maximum production to attain best result in appropriate manner. It is a systematic process to
introduce the target of the company which is set by the manager of the IKEA to improve their
quality of production. It is a best model to find out the best solution to get maximum profit in
marketplace. It can solve the practical obstacles to attain best result regarding the quality of
production. Basically it can helps in taking decision in business organization to get
predetermined objective in appropriate manner.
It is an essential toll to measure the business performance and assist in decrease the cost
of the production to increase the profitability in IKEA(Myers, 2013). With the help of linear
programming company can identify the cost of sale to maximize the profit at a particular
production level. It is a effective techniques to develop the utilization of the product in market
place to get higher satisfaction by the customers to enhance profitability level.
3.2 Critical path analysis and network planning
Critical path analysis- In IKEA critical path analysis is a essential process to evaluate
the business project in lesser time of period. It is a effective [process which is used by the
management to complete their project in minimum time and also handle the complexity of the
organization. Basically it can helps in reducing the uncertainty and cost of the project which is
increase the profitability and also improve the performance of the IKEA in market place.
Network planning- It is a important process to reduce the difficulty of the working task in a
organization. It can help in planning and controlling the business objectives to attain best result
in less time of period. It is a graphical process which show the effective result to improve the
quality of the production. Alternative option can be eventuated by using cost analyses as well as
intangible analysis(Pettit, Fiksel, and Croxton, 2010). This will assist in implementation of total
quantity management. IKEA define the network planning which can evaluate the effective
solution of the problems and also assist in reducing the uncertainty in business organization.
3.3 Need for operational planning and control
In IKEA there are various needs which is control and planning process which is increase
the productivity and reduce the uncertainty in appropriate manner:
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Increase efficiency- IKEA define the effective best planning process of the production activity
to improve their efficiency. Operational planning control labour, materials and quality of output.
This planning process is important to organization to control cost and define future demand of
the customers regarding particular product.
Increase profitability- Best quality of product in an organization can increase the profitability
level of the company. With the help of best planning process of IKEA can helps to increase
profit and productivity. Production planning process is essential process which is implement in
business to attain best result and get more earnings.
Cost reduction- Best planning process can reduce the production coast and increase the profit in
business organization. IKEA define their planning process to improve their performance with the
help of reducing the production cost in market place to increase their productivity(Pettit, Fiksel,
and Croxton, 2010). IKEA provide best service and product to their customers at a effective
price to get higher satisfaction by them which is assist in achieving the profitability.
TASK 4
4.1 Operational outcomes for IKEA
IKEA define following results in order to evaluate the efficiency of its operations
Development in revenues- In order to increase the total productivity of business cited
organisation use effective measures in its total operations so that the profitability can be
increased. Process of operating various functions are opted in such a manner that the total cost
can remain minimum. It adds to the goodwill of the organisation.
Reducing in cost- by adopting effectively managed production process the total cost of output
can be minimised. For this management has to ensure that all the units that are involve in the
manufacturing process are placed in such a manner that no wastage is done. Further the saved
resources can be allocated into more productive sectors.
Accomplishment of set goals – In order to experience growth and development it is necessary
that management sets practical targets for the work force. If goals are set which are not possible
to achieve with the provided resources than it may lead to disturbance in the operations and
therefore the total productivity will get affected to a great extent(Slack, 2015). Cited company
setts the goals which can be achieved by the employees if they give their efforts towards the
growth of organisation.
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Clients contentment – Be it IKEA or any other company customer is the ultimate king.
Therefore, management has to ensure that all the goods and services that is produced by them are
capable of satisfying the people who are using their services. For this quality needs to be ensured
supported with controlled cost so that it does effect the total sales of the company(Slack,
Chambers, and Johnston, 2010). If price keeps on fluctuating than it will have effect on the
company’s image also and will lead to dissatisfaction among the various stakeholders.
4.2 Network plan and critical path.
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The network plan and critical part define the time duration. The task description define
different activities and precedent activity. Critical path is create the packaging and maintaining
time period.
4.3 Quality management techniques
Apart for operational management has different techniques which is used in IKEA . This
techniques is very important to increase the product quality and business performance. There are
various tools that define productivity and performance like cost quality, benefits analysis, basic
quality techniques, experiments design, statical planning, benchmarking and other tools etc.
IKWA apply different techniques but two tools is very essential to improve product and service
quality process in effective manner.
Benchmarking : This is a very important as well as effective techniques which is used by
company. It is very essential to evaluate company performance and product profitability in a
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