Operations Management Of IKEA

Last Updated: 09 Oct 2020
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Operation management is the activity of managing the resources, such as capital, facilities, raw materials, technology, and so on, which create and deliver services and products. ( Slack et al, 2011 ) No organization could survive in long term if it cannot manage operations management effectively. The importance of operations management is that it affects an organization’s costs. There are three activities of operations management, which is directing the overall strategy of the operation, designing the operation’s services, products, and processes, delivering to customer, and developing process performance.

IKEA’s History and its Operations Management IKEA was founded in 1943 in Sweden, and it is a successful international retailer with 276 stores in 36 countries. IKEA offers a large variety of well designed furnishing products with low costs, which has contributed to its success. IKEA also contributes a lot to the environment. It cares about the safety of raw materials and production. For example, IKEA stopping selling plastic bags, and it encourage customers to bring their own bags. To support “less plastic bags” action, IKEA reduced 30 cents each of its own recycle bags. Supply Network Design and Supply Chain Management

Most IKEA stores locate outside city centers in order to reduce transportation costs and capital costs. For example, there are two IKEA stores in Singapore, one is in Queenstown, the other one is in Tampines. These two places is not in the city center. Besides, Singapore is a small country that allows IKEA to save more delivery costs comparing with those big countries, such as America. In order to keep the price low, IKEA transports products by truck, rail, and ship. Flat packs and stackable products allows IKEA to handle more of them during delivering. Process Design and Layout

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Firstly, IKEA’s biggest symbol is its large blue building with yellow shop sign. Secondly, its showroom design is similar to ‘one way’ layout, which makes customers wanna visit the whole store. Thirdly, IKEA provides convenience to customer from free parking, large and clear notice board. IKEA not only offers functional furnishing products, but also restaurant, grocery stores which has majority of Swedish food, and children play area. ( IKEA ‘s Official Website ) Product Design IKEA designs stylish products that can be flat-packed efficiently. ( Slack et al, 2011 ) And it makes products with low costs that are affordable to customers.

Customers have to collect the flat-packed goods from the store and assemble those products by themselves. (IKEA also provides delivery service ) In this way, IKEA could reduce labor costs ,storage costs, and shipping costs in order to support its high efficiency. In fact, both customer and IKEA benefit from this concept. IKEA’s has built good relationship with its suppliers. It has suppliers from more than 50 countries and Its purchasing teams are located all over the world and work with them. IKEA insists to work environmental friendly. ( ICMR, 2006 ) IKEA only accept woods from qualified forest which is verified as responsibly managed.

According to IKEA’s introduction, it provides collection points for customers to return waste. During manufacturing process, it tries to minimize wastes. IKEA would use the waste to produce other items if possible. In a word, IKEA makes a great effort to use and produce remanufactured and renewable goods. IKEA does a great number of tests of productions every year, and it also has third-party auditors to do the tests also. Since IKEA purchase raw materials in large volume, it enables IKEA to reduce costs. With all these effort, IKEA is able to produce sustainable goods with high quality and low costs.

In a way, IKEA does not only save direct costs, but also gain intangible costs, such as good reputation and trustworthiness. Quality Management From operation’s perspective, quality is to meet customers’ expectation. In the customers’ perspective, quality is what they think the product should be. IKEA offers delivery service, assembly service, kitchen installation, sewing service, children service, interest free, gift cards, and return policy. ( IKEA Official Website ) People love IKEA’s products, but dislike the shopping experience because there is always crowded and a long queue in the store.

IKEA provides catalogue and brochures to customers, and it creates mobile Apps so that customers could download and read it. Customers can see new products and discount products with price. IKEA creates planning tools for customers, which allow customers plan before they shopping. Customer can do their planning online, and they can also check the stock availability. There is a code with every product, customer can check its availability via its official website. It is not easy to create such visibility to customers. It did help people to understand their need, and avoid crowd.

Most important, it saved customers’ time and cost since they do not need to go to the store in person first. Nowadays, people rely on internet more than ever, IKEA should try to make itself and the system more approachable and complete. Effective operations management can bring an organization competitive advantage and profit. IKEA has presented a great example. Only each process can interact effectively, can the organization run smoothly. Reference: 1. Slack, N, Brandon-Jones, A, Johnston, R, (2011): Essentials of Operations Management, Pearson Education Limited. 2. IKEA Official Website. Online ]. Available http://www. ikea. com/sg/en/ 3. 2006. IBS Center for Management Research: IKEA's Environmental Practices: Making Good Business Sense. [ Online ]. Available http://www. icmrindia. org/casestudies/catalogue/Business%20Ethics/IKEA%20Environmental%20Practices%20-%20Making%20Good%20Business%20Sense%20-%20Business%20Ethics. htm [pic]Confirmation Certificate Congratulations! You have successfully completed the Library Plagiarism Quiz. Student Name: Chen Zixin Student Number: 11300175 Date: 21 Mar 2013 THIS IS TO CERTIFY THAT (signature)……………………… HAS COMPLETED THE PLAGIARISM QUIZ

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