IKEA is a Swedish furniture manufacturing company established in 1943 and found by Ingvar Kamprad, he was able to develop IKEA through 60 years from the woods of southern Sweden manufacture to be expertise in a major retail in 40 countries around the world which specializes in manufacturing and assembling furniture such as beds, chairs, sofa and global home product. In addition, it is the largest furniture retailer company in the world ever. (IKEA. A, 2015) IKEA's vision is to: “Create a better everyday life for the many people” (IKEA. B, 2015) It is done through providing the quality, value and the design always with sustainability in mind (IKEA. B, 2015). Ikea is designed to serve customers in a smooth way from parking into the store itself, helping customers to reserve and picking up the products easily, also it provides junior children with a playing area, cinema and baby room for the kids so children can stay safety during their parents are buying at IKEA. On the other hand, Ikea has a huge network of 1,300 suppliers, 10,000 non-suppliers, wholesale and transport operation. In addition to 26 distribution canters. This makes Ikea a vital group and that is important for ongoing Ikea Mission and vision. (Slack et al, 2013). This has been the main target of IKEA since it started in Sweden. (IKEA. A, 2015). This report will show how the operations management of IKEA is trying to improve day life for many people to get the customer satisfaction and what IKEA's inputs, outputs transformation process are? And how they work to improve their goods and services designs to get high quality home furnishing products at acceptable demand products and prices. Furthermore, it will show how IKEA works on the five performance objectives to provide the clients a high product quality for a low price, a high flexibility of choosing and changing goods or services and the dependability. In addition, this report will show how operations processes (volume, variety, variation and visibility) are working together to keep the operations moving smoothly.
2. Operation management (OM)
OM is about creating and delivering services and goods in different methods that done by organizations. (Slack et al, 2013). OM is upset with organizing and guiding the transformational operation which takes input of assets and goods outputs of services and goods to find out customer's satisfaction (Johnston and Chambers, 2009).
2.1 Operations function (OF)
OF is the part of firm that is trustworthy for creating and delivering services and goods. Moreover, every firm should has operations function due to having some kind of service or/and goods ( Bozarth, Handfield & Chandiran, 2013). Figure1.2 explain the relation between the operations jobs. According to IKEA, it has five functions, the first one is the marketing functions, they utilise their marketing to reach their vision for many people and to expand their products and services by providing people a good service. They do that by using many kinds of advertising to ensure that they offer the customer's needs by that IKEA achieve their main goal. Regarding to (Slack & Lewis, 2011) Marketing has responsibility to deliver firm's goods and services to it is markets to ensure that it is offer customer's needs. The second one is the service development functions, IKEA is working on developing their goods and service to match customer needs in order to improve the service provided. According to Slack et al (2013) the goods and services development function is in charge of motivation new service and goods in order to improve the future customer's needs. The third one is the finance and accounting functions, the fourth one is the human resources functions and the last one is the information system.
Figure. 1.2 Shows the relation in function inside the organization
2.2 IKEA's Customers (Internal & external)
IKEA has two kinds of customer. Firstly, internal customers who work inside the business and they are employees who need training to help the external customer with their needs and they work as a team. Secondly, external customers who are out of company actually they are the consumers who are looking for good goods (furnishings, etc...) and services.
2.3 The Input- Transformation-Output process
As indicated by Bozarth, Handfield and Chandiran (2013), the simple method to know how the operations are working inside organization is through using transformation process by taking the inputs and transform them in some way in order to get output. Figure. 1.3 explain the process.
IKEA in general has three main circumstances illustrated in figure 1.4 and it has direct interact with the surrounding environment as follows, getting the input from the environment, transforming these inputs to outputs and emptying IKEA's output into their environment,
In addition, IKEA has two main transformation process:
Firstly: for material process
Furniture and warehouse are transforming by workers and they are processing storage, designing & refill to find furniture ready to collect by the clients, see figure 1.5.
Secondly: for information process
The workers transfer the data that they got it from their survey to process this data in order to resend new updated information through newspaper and flyers to the customers. See figure 1.6.
2.4 Customer Satisfaction (CS)
Referring to Ruth (2015) CS is the result to which customers are feeling satisfied after their experience of buying service or products by dealing with it is workers. Furthermore, CS reflects into increasing, decreasing or steady on firm's sales. As a result of improving the customer satisfaction by developing goods and service to enhance customer's needs. On the other hand, a wide variety of choices reflects and gives a massive chance to the client's satisfaction (Cheng et al, 2015) . Also CS depends on company's capability and on market analysis by finding client's needs (Blythe, 2002) . Ikea finds high customer satisfaction through five aspects: the design characteristics, operational performance, order product & deliver product, product's price, and guarantee (PR Newswire, 2015). In addition, IKEA rated as a high ranked in clients satisfaction with 789 scores out of 1000 points in overall.
2.5 The Operations Performance Objectives
According to Slack et al (2013) the respectively operations at organization need a group of five performance objectives(Figure 1.7) and these can be applied for all operation types, using Polar model is helping in finding the importance of performance objectives due to get performance objectives, operations have to be measured by cost, speed, quality, flexibility and dependability.
According to Basu (2013) quality is the visual part to client through that the consumer can be judged the products and operations and this will be effected on client satisfaction and this lead to make easier operation inside the firm. On the other hand, quality could be decreased the cost by doing the right operations. IKEA has good furniture's quality, it makes installation furniture easier as it doing by the customer at home, furthermore, IKEA's furniture made to specifications. In addition, the stores have to be clean and elegant and the style of stores are designed on way that make finding any parts of furniture easy with low cost.( Gokhale, 2012).
As indicated by Slack et al (2013) speed is the time between asking for goods or services and getting them in satisfy way. Speed has many benefits it helps to reduce the inventories and decrease the risk as prediction for a week is less risky than prediction for a year. Referring to Leseure (2010), speed is measuring by the time needed to serve the customer and it should match the client's requirements. In IKEA the speed is not the main aspect as the client want to get the time looking for products to see all product in their leisure time so the time needed starting from coming to shopping until getting the product and returning its quite a bit at usual client needs about 2 hours for that. Furthermore, it ensure to provide the wanted part immediately to customer to reduce the time taken for that process.
According to Shinkins et al (2006), dependability is about coordination, the process at organization must meet the promised delivery time for goods or services to the client. As indicated by Slack et al (2013) clients can be judged the dependability operation after they get their purchases. In addition to dependability, it could be helped to save times and to reduce the cost in order to save the money. In case of IKEA, it is not the important factor. On the other hand, there are important factors of IKEA's dependability such as deliver the purchases for customer at the agreed time, the availability of car parks and buying special equipped car to move the purchases in perfect way to the client's home.
As indicated by Slack (2012) flexibility is about introducing new goods and services to adapt with the new circumstances. Flexibility is the ability of the quick change to the operation inside the firm, the clients have probably making change on the volume or product's kinds and the firm should be flexible with these changes to be competitive in the market (Shinkins et al, 2006). IKEA's flexibility is a wide range in different aspects, it has a various designs and products. As a result it allows the client to choose goods among many choices- mixed flexibility. Moreover, volume of flexibility helps to adjust the client's number of served customer. In addition, it helps to get out of stock's parts. All of these factors help to get customer satisfaction.
According to Bozarth, Handfield & Chandiran (2013), it is very important factor in operations in company even for other organisations that compete on different brands. Referring to Slack et al (2013) all operations is working to keep low cost with take consideration of the five performance objectives that require by a client. “Cost is always an important objective of operations management, even if the organization does not compete directly on price” (Slack et al, 2013. P.55). On IKEA the cost is most important factor in it operation as it works on zero-waste policy to ensure provide their clients (High) quality furniture with cheap (Low) prices and to consider the performance objectives( Flexibility, Dependability, Speed and Quality) inside the operation.
2.6 Operation strategy
“The process of operation strategy involves formulation, implementation monitoring and control” (Slack et al, 2013.P.86).
2.6.1 Wheelwright and Hayes's Model
According to Slack et al (2013) Prof Wheelwright and Hayes's designed model which assess the operation function tasks and contributions as it shown in the bellow Figure. 1.8. The model contains four stages and IKEA located in stage number 3&4. Because IKEA aspire to be the best home furniture company ever and to provide the people with good quality and low price. In addition, it has a unique business ideas than their competitors which have good supported by operation strategy through different performance objectives such as quality, speed, dependability, flexibility and cost which are sets by the firm based of customer's needs trying to achieve a competitive aim for firm (Kumar, 2013). On the other hand, Ikea depends on forecasting to help in Supply chain's method work (stores, warehouses, regions, etc.) and to improve the operations to make sure they have a good plan in future to be a unique competitor who has the ability to compete in future markets.
2.7 Process design
Process design is different from firm to other and it is relevant to variety and volume of the needed goods in the market. So that is helping to choose the best method of process design (Barnes, 2008). IKEA's design process is compatible with their strategy and it is impossible to compare IKEA with other company process. IKEA's business built on high volume because IKEA is going to sell a massive number of kitchens over many years then it is valuable to invest in design so they can managing the number of products and the price (Lariviere, 2013). In addition, low diversity of products is affecting on design because it needs time to make things easy and fit at home. IKEA use mass processes in production their products (Eshnak, 2013). The different variables of IKEA products do not affect the primary process of production (Slack et al, 2013). This is specially means the volume is high, with low variety. Figure. 1.9 illustrated the operation of design
2.8 Product and service design( P&S.D)
P&S.D are the first thing seen by clients in the firm. For that, this should to effect on firm. Good design means good revenue and good customer's feedback. Moreover, a goods designer who do the best to get that design which is meet with client expectations. Similarly, service designer who can put a plan to achieve client's satisfaction and expectations. Furthermore, design help companies to contact effectively with their clients by expectation with their serious needs. In addition, design could reduce the manufacturing cost and time that need for marketing in order to enhance the profit (slack, Chambers & Johnston, 2007). As it observed in bellow figure 1.9 all designs are related together. IKEA designed the service to consistent with client's demands, it provides many services that designed to help customers in their shopping. For instance, the clients can searching on IKEA's website to find what they need with full information and it provides the customers with map to get the direction inside the store to ensure customer will never getting lost. In addition, Ikea provides customer with self-check-out service it designed to reduce the time that needs in shopping. IKEA design modern products and furniture at cheap price to attract the customers this is as a result of IKEA's success. In addition, the price designed before the design of goods to achieve a good revenue. On the other hand, IKEA's service design has four main sides that intersect between client and company: firstly, customer can easily search IKEA's website to find the required products in which store and where in store (Isada, 2010:163).
2.9 The Operations Processes (OP) of IKEA
All OP are sharing in one mutual thing, they proceed the input such as (knowledge, equipment etc...) To get the output such as (products and services) and they do it in different way by using the four Vs. (Doors, 2015).
2.9.1 The Volume
IKEA produces many kinds of furniture and goods that easy of assembled by consumer itself and it allow to reduction cost because of high volume production. The negative side of this as mentioned by customer is I have same product like other people has I want a unique product .Although, IKEA has a high volume of business, it has a limitation in stores capacity for specific stock that bought to make sure it has ability to decrease the unwanted stock. (Kumar, 2013).
2.9.2 The Varity
IKEA has a high variety, it is worth for money with a lot of choices. IKEA designs their products to be stored as a small flat pack and to be sold. However, it is easy to assembly by consumer. IKEA assure the Swedish design emphasizes such as the bold colour, shapes and performances. IKEA advertise their goods to be units with a variations of the same goods to meet client needs by offer variety. Furthermore, this helps IKEA to provide customer with wide variety for it is goods without keeping a lots of stocks it's better to do not wait for sales staff to offers the service. In addition, clients could move freely around and choose what they need. Hence, no waste of client's time by waiting for staff help. IKEAs aim is to give free time shopping with free shopping choices for their clients. Nevertheless, the staff will be in help for any inquiries in the showroom. (Kumar, 2013).
2.9.3 The Variation
The differences among one sample called variation and this can be continuous or discontinuous way (BBC, 2015). It has a modest change in demand style (low variation). Despite might there is no a massive aspects such as rush and non-rush seasons that will affect the demand
2.9.4 The Visibility
Referring to Gokhale (2012) visibility is the clarity of operations activities to the clients. IKEA has a low visibility of the goods production, the clients does not see the production process. Furthermore, at IKEA customers have only three ways to communicate with staff through help desk, stock stores and cashier. (Kim, 2013)
2.10 Capacity Management
“Is the activity of coping with mismatches between demand and the ability to supply demand”. (Slack, Chambers, and Johnston, 2009, p. 246).
2.10.1 As indicated by Johnston& Clark (2005) Planning and control capacity is how the operations have to adapt with the change of demand in three-time scales: long, medium and short term capacity. IKEA has three stages of capacity planning include creating of goods generally rating depending on the change of time. Firstly, long-term capacity such as Strategic planning concentrates on increasing of capacity during the investing in capital. Secondly, mid-term capacity such as tactical planning is dealing with the total planning process of choosing resources to goods. It includes planning by time frame to deal with the demand, and includes resolutions that make changes on the capacity. For example, worker recruiting or firing and building stocks. While, the short term capacity operational planning is the definite choices to carry out the production are made. It includes planning and buying raw material and organise the capacity and final compilation (Lie & Elinder, 2012).
3. Conclusion and Recommendations.
IKEA has been capable to accomplish all operations management high successfully. The external and internal clients are effective. As any organisation, Ikea has transformation process, inputs (raw materials, staff, etc…) and outputs (furniture, services, etc...) that processed. On the other hand, Customer satisfaction of IKEA ranked as high rate with 789 points out of 1000.The five performance objectives of IKEA have all of them in effective way, high quality of products with low cost comparing with the quality, speed is not the main issue to the customers at IKEA. However, they served within 2 hours. In addition, IKEA has a high flexibility and dependability. For operations strategy this report used wheelwright and Hayes's theory. For that IKEA located at stage 3 & 4 because it meets the client's needs in various operations' aspects. The process design and the goods & services design have been designed to meet the customer's needs, but they have to share the customer's idea in designing the service and goods to increase the customer satisfaction ,knowing that the volume effect on the variety and they have to find way to control that. For operations process, high volume reduce the furniture's cost , it has a high variety gives customers a lot of choices and low variation linked to the demand and low visibility of operations because the customer could not see the stages of the furniture production. For that, it has to increase the visibility to make customer knowing how the operations of production are ongoing. Finally, for capacity management, it used planning and controlling capacity to adapt the changes of demands and it has used the three stages to manage the capacity start with short term capacity and medium short capacity end with long term capacity.
Hence, it should be simply concluded that IKEA could be the greatest probable instance to comprehend the importance of the managing of operations processes
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