MANAGING OPERATIONS INTRODUCTION

The following assignment is based on operations managements followed in IKEA. The purpose of this paper to analyse the operations management function in the organisation by understanding strategic operations management, the operations process and planning and control.

Operations management is an area of business that is concerned with the production of goods and services, and involves the responsibility of ensuring that business operations are efficient and effective. It is also the management of resources, the distribution of goods and services to customers and the analysis of queue systems. About IKEA: IKEA is a privately-owned company founded in Sweden by Ingvar Kamprad. He first started to sell matchboxes, pens, wallets, picture frames, table runners, jewellery and nylon stockings and decided to add furniture in 1947. IKEA has now around 260 stores, much of which are located in Europe, the United States, Australia and Asia. During the 1980s the company grew dramatically and has expanded its operations to varied parts of the world. They have expanded into Japan, Russia and diversified into catering for different target customers like children, etc., Between 1935 and 1946 furniture prices rose 41% faster than household goods. Kamprad was intuitive enough to see this as a great business opportunity. IKEA took a new approach to selling furniture in Sweden. Instead of an expensive product that would take weeks for delivery, IKEA offered a product with a good design and f unctionality at a price that almost everyone could afford. Kamprad focused on selling furniture to young buyers who were often looking to furnish their first apartment. Also instead of the stores being small and located in downtown, Kamprad placed his stores on the outskirts of town but offered ample parking for his customers. Most importantly, IKEA took use of selling through a catalog that helped boost the business exponentially. Nowadays IKEA is known for selling modern and utilitarian furniture at lo w prices their vision is "To create a better everyday life for the many people". IKEA motto is "Affordable Solutions for Better Living". Their operations management are very strongly inclined and focused on achieving this goal; they utilisation of resources is planned effectively to enable them to gain advantage through deploying effective ways and measure for developing a more economic way for the production of their wide range of service. This has involved them in working closely with their suppliers in order to control aspects of their business from the production line.

Unlike most furniture stores, IKEA sells goods which need to be assembled by the consumer at their homes instead of selling the products in pre -assembled process. Which would consume a lot of space while in transit and while storing it in their warehouses; this has enabled them to use space more efficiently in their warehouse. The company has developed methods to satisfy customers with their Unique Selling Point (sho w room, children¶ area) and a wise use of technology (stock control, internet). IKEA¶s operations include the way they manage the processes, this includes the way they run their business -³culture´-, their norms and procedures - values-, decision making and strategic planning, and the qualitative and quantitative control of their resources- people, stock. To enable IKEA to maximise efficiency and minimise costs they need to review or maintain the processes of their operations which include the planning and co ntrol, their supply networking and the use of technology. IKEA has managed to develop effectiveness by understanding the needs of their stakeholders and incorporate them into their agenda. However, from an operations point of view the floor shop and location of key products becomes critical and requires immaculate planning to enable the organisation to achieve the desired results like display of finished products at one end to enable the customers to have a feel and look of the end product. The display has to be planned and effected to ensure that the customers have an more asynchronous view of the entire floor space with different sections easily mapped out for the customer to move from one location to another without any confusion. This whole process of laying the floor and floor planning might look cumbersome and boring from the point of view of operations managers however this is one of the critical aspects which would need to considered before implementing any new additions to the store. Problem Statement This is the operations problem that would be addressed in this study and to provide a structured process for undertaking the floor planning activities in the IKEA floor. And provide insight into the ways and means through which customer satisfaction can be attained through this innovative change strategy. Relationship with the Problem The problem is of prime importance to the organisation and this issue has a direct relationship with the organisations process of handling customers and providing un-paralleled customer service would be dependent on this criteria . Hence a systematic and concise procedure in providing the service would enable the organisation to achieve the desired results in increasing the revenue of the organisation and ensure that the customer is satisfied with the overall service and layout of the floor and easy to access from a customer point of view.

PROCESS FOR ADDRESSING THIS PROBLEM The process for addressing this problem would need to assessed using a process map. Let us understand why a process map is required? Incorporating changes to the existing systems without truly understanding the need would be a costly mistake as the time and effort invested in the effort would be wasted. There is also an outside chance of the process becoming more complicated due to the incorporation of any unplanned changes in the existing system or process which is already in place. If you cannot measure a process for its worth, the same cannot be managed effectively. If the process cannot be managed e ffectively, there is very little chance of improving the same. It is estimated that around 12 ± 20% of human effort in an office environment is lost towards re-doing things which went wrong in the first place. Process maps enable us to plot a sequence of e vents on a diagram which would provide us with a better understanding of the events involved in the same. And helps us to identify bottlenecks, capacity issues, delays or waste. Once this is achieved the same can be replicated for many other processes within the organisation and improve the process further with redoing the process map again and again. Process mapping enables an organisation to: o Establish the current state of the process o Measure the effectiveness of a project o Capture information about the gaps in the process or slack that is existing in the process. o Plan for improvements with the existing information.

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There are two basic types of process maps in existence and which are used in general in most of the organisations. They are Process Flowchart: These are very simple in nature and provide details about the existing information flows and processes and provide a plan to create decision points in the process. The plan can be revisited multiple times to increase the effectiveness of the process improvement techniques on an incremental basis. Deployment Flowchart: This is also at times referred to as µSwim lane chart¶. Here the segregation and segmentation of information is done on line with the people carrying out the job or departments, etc., Let us have a look at the SIPOC model which has used in different situations the SIPOC model is considered to encompass all the aspects of change or when a process is being started in an organisation the model is considered for use this follows a method of having a systematic change scenario and the flow chart is easy to follow as the starting and end points are well defined and have a major impact on

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assumptions of the strategy process that go with them. McKiernan (1996) and Mint berg et al. (1998) came up with ten different schools of strategic management. From IKEA point of view it can be said that the process of differentiation was adopted and the schools of strategic management which are relevant in this regard are Design, Planning and Positional. The Design school has been criticised by Ansoff (1991) where he states that the schools does not stand up to the criteria set out by Mint berg himself. And it has failed to differentiate between prescriptive and descriptive statements. The next strategy would be to assess the macro environment and this undertaken by the study of different factors as elaborated by Francis J Aguilar who coined the PESTEL analysis. From the point of IKEA this study has more relevance as they have entered different markets and an analysis on Political, Economical, Sociological, Technological, Environmental and, Legal aspects of the local environment in which they are entering becomes vital for the organisation to sustain in the markets they are operating. Usunier & Lee (2009) have explained the concept of 4Ps model (McCarthy, 1964) state that the ³4Ps of marketing mix (Product, Price, Place and Promotion) has been extensively used; as a paradigm it continues to assist greatly in the design of marketing strategies, serving to question their cohere nce and soundness.´ Here it needs to be understood how IKEA has effectively applied this strategy in their day to day activities and offered a product which is convenient and attractive, priced at a competitive rate, and the distribution channel is elabora tely supported by their supply chain management methods, being promoted in wide range of forums to meet the needs of target customers in various geographies across the globe. Lowson, R.H (2002) states that there are different issues that need to be addressed in an operational planning which comes under the tactical and strategic planning activities undertaken by the organisation. This includes: What resources the company would need to acquire What work flows are necessary What processes and technologies ar e required The capacities needed and the levels of flexibility involved Human resource levels Quality levels What facilities are needed

As a summarisation it can be said that they can be classified as medium and long term analysis, analysis at operations l evel, conceptuali ing at operations level, strategic thinking rather than tactical implementation. At the bottom of the pyramid lies the operational teams which plan for a limited period of time and handle the day to-day activities of the organisation. The tactical teams which operate at the medium

level plan for the mid -term and follow the guidelines set by the strategic team which operates at the conceptual stage at the top of the pyramid. Finally the concept about Total Quality Management which was elabo rately explained by Kanji (1995) with the total quality pyramid which is replicated below

The concepts which are of relevance in the Total Quality Management methodology are Customer Satisfaction Internal Customers are real All work is a process Measurement Teamwork People make quality Continuous Improvement Cycle Prevention

These were further followed up with other activities like delighting the customer, Management by fact, people based management. The real thrust towards total quality management has been from the countries like Japan and USA. However, globally the benefits of TQM were noticed by the corporate that were quick to adopt these methods in their processes at varying degrees depending upon the needs of the organisation. IKEA has also brought in these methods into the organisation at various places starting with the floor space and extending the same all the way back to its designer store where the initial developments of the products are undertaken. This backward integration has enabled the organisation to derive the advantages of Total Quality Management to the maximum extent possible. There have been other related studies related to TQM like six sigma which was concept Pande & Holpp (2002) have explained the concept where he states the benefits organisations are drawing from the leaps in sigma¶s. As per them six sigma is an incremental improvement methodology which improves customer satisfaction, reduces cycle time, and ultimately reduces defects in operations. Strategy is a highly complex term which can be defined and interpreted in many ways; there is no correct answer or a limited set of possible solutions. All strategists are involved in creative thinking and creative action. A good strategy creates space for this creativity. It is impossible to deal with formulation and implementation of strategy as different and distinct stages in strategy making. There is a massive overlap which should occur simultaneously. This overlap leads to formation of emergent strategy as a result of implementing a formulated strategy. Thus reformulation takes place with the help of emergent strategy. Structure is an essential part of an organi ation and it is closely linked to strategy formation. In order to make optimum use of resources, Organi ational structure must be taken in to consideration while formulating a strategy. Thus it is essential to have right match of strategy with organi ational culture. There are many ways in which strategy can be implemented and balanced scorecard gives a good way of measuring organi ational performance. All this methodologies and arguments are indicative of the fact that the decisions and strategies adopted by the companies are both empirical and at times based on the concepts practised by diffe rent companies in varied sectors. With the onslaught of globalisation there has been wide distribution of knowledge among various industries and the information flow has enabled IKEA along with different organisations to draw the experience and expertise o f employees from different backgrounds and ethics to adopt the methods which would ensure the sustainability of the organisation in a long term with focus being set at different levels for different tasks like the segregation of the organisation into opera tional, tactical and strategic levels have maintained the company in good stead focus the efforts on different levels with different strategies. Changes to Improve Quality Customer Focus

The changes that can be brought about in the organisation to improve quality and at the same time the customer focus are more inclined towards the location where the customer interacts with the organisation which is the shop floor. As there is no interaction of the customer with the organisation other than this place, the feel of the location needs to considered from all the possible ways to ensure that the customer is satisfied by addressing the needs of the customer. This can be achieved by collecting the preferences of the customer over a period of time and the same assessed to ensure that the customer is able to receive information and new products which are of his likely choices. At the other end of the spectrum the quality aspects are of primal importance to the customer as well as the organisation. Since, quality aspects are all encompassing they need to start the beginning in the factory where the products are being developed and has to be carried on from there to the floor where they are displayed this elongated approach would ensure that the organisation¶s quality s tandards remain same and standard across the breadth of the organisation as this is what is required to ensure constancy in the operations and the quality standards of the organisation. Quality management would require the constitution of different audit checks and quality audits at regular intervals to ensure that the organisation is able to sustain in the regard without any aspects of delay or otherwise. This standardised quality practices and audits would enable the company to avoid waste and loss in transit or in the production floor which would have a direct impact on the bottom line of the company. From a change perspective IKEA is evolving with new and latest designs in all seasons, the real focus should shift from what the company offers to underst anding the needs of the customer through feedback surveys and other modes of gathering information which would enable the company to gain better insight into the demands of the customers and be in a better position to provide ultimate service to its customers. Recommendations The recommendations offered through the above research and theories are as follows: The company has to adopt a systematic approach while planning the display of items in the floor and the same needs to be considered from the view point of the customer and a feeling of homeliness needs to be created. As this would be the driver from that aspect, hence, IKEA would be benefitted if they adopt the strategies concentrated around the shop floor. The other recommendation is the segregatio n of the operations management and alignment of the same with the strategic management and creation of a flat structure of management as this would enable the

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smooth flow of information and as the companies are moving towards knowledge based corporate such a move would ensure that the employees are more motivated and provide unparalleled service to the company. Conclusion Ingvar Kamprad's was instrumental to a point in the development of IKEA. He instilled the major principles of cost -consciousness, simplicity, and common sense. All of these enabled IKEA to offer such a quality product at an affordable price. Anders Moberg also played a large role in development after he was appointed CEO at 38. Moberg's plans gave way to some old ideals of IKEA and mad e way for new ones. For example, sometimes the cheapest store location was overlooked for a more quality area. These changes seemed to be well received but some believed they were not coming fast enough. Kamprad was the driving force behind IKEA's success, but he also had the insight to hire good people and encourage them think and lead on their own. This insight is what allowed IKEA to expand and grow so rapidly. The same holds true in operations management as at the end the organisation and the opera tions all depend on the human factor and the same needs to be considered before undertaking any changes the human resource factor needs to be provided a relative importance. The concepts and methods listed above have relevance to the subject of this paper and have been the fundamentals on which the corporate wer e able to build their successes. The successful entry into different markets has enabled the company to grow in various markets along with this the company was forced to adopt different concepts to be able to sustain the global demand and supply needs.
Recommendations

The recommendations in this context would be that the company adopt a singular concept of display of equipment as is followed by Container Store which has an excellent method of displaying and selling equipments from its store. The same methodology can be incorporated after suitable customisation to suit the needs of the company and then the benefits can be derived. The concept of having colour coded displays needs to be explored as it would enable the customers to relate to their products in easy and friendly conditions and would offer them the feel and comfort of the products that are being considered for purchase by them. The packaging and delivery is the strengths of this org anisation the same needs to be assessed for further improvements as the company would greatly benefit if there is a value add in this regard.

References

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