MANAGING BUSINESS OPERATIONS Management Coursework

MANAGING BUSINESS OPERATIONS
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Table of Contents TOC \o "1-3" \h \z \u 1.0 Introduction PAGEREF _Toc53733473 \h 22.0 An analysis of the IKEA operations PAGEREF _Toc53733474 \h 22.1 Process Management PAGEREF _Toc53733475 \h 42.2 The nature of the transformation process PAGEREF _Toc53733476 \h 42.3 The 4 V’s PAGEREF _Toc53733477 \h 42.4 Performance Objectives and current performance PAGEREF _Toc53733478 \h 53.0 The identification of the major strengths and weaknesses of the operation PAGEREF _Toc53733479 \h 63.1 Strengths PAGEREF _Toc53733480 \h 63.2 Weaknesses PAGEREF _Toc53733481 \h 84.0 Location and layout PAGEREF _Toc53733482 \h 84.1 Capacity management PAGEREF _Toc53733483 \h 85.0 Conclusion and Recommendations PAGEREF _Toc53733484 \h 9
Managing Business Operations
OPERATIONS MANAGEMENT AT IKEA – ANALYSIS AND EVALUATION
1.0 Introduction
IKEA is a furniture retail company established in 1943 in Sweden with headquarters in the Netherlands (Torekull, 2011). It is a multinational group that is responsible for designing as well as the sale of ready-to-assemble furniture, kitchen appliances, as well as home accessories. The company has branches in over 45 countries globally with close to 145 stores. The company currently deals with furniture such as beds, bookshelves, sofas, tables, kitchen utensils, and bathroom articles. There are various departments within the company that are responsible for the effective and efficient management of the organization. Some departments include the Human Resource (HR) department, Retail, and the Finance department (IKEA, 2012).
IKEA experiences some strategic challenges in its quest to expand within different regions. Currently, the organization operates its stores in Europe, the United States, China, and parts of Asia. One of IKEA's main problems concerns the fact that their prices are considerably low in Europe and North America while it is higher in the Chinese market (Torekull, 2011). In China, local stores' various prices seem lower due to their access to cheap labor alongside raw materials and the availability of no costs on designs. This shows that high prices in some regions as China presented the biggest barriers to purchasing IKEA products. IKEA's unique selling point is its ability to provide a down-turn and low pricing strategy in marketing. However, there is high competition in the industry since many high street retailers adopt a similar approach towards marketing their products (furniture and fittings), seriously threatening IKEA’s market share.
This study identifies operations management as one of the key functions of a business organization (Laurin and Fantazy, 2017). IKEA is one of the leading furniture retail companies on a global scale. The study brings to understanding the various operations management concepts and their impact on other company departments and their role in efficiently producing goods and services crucial for ultimate success (IKEA, 2012).
2.0 An analysis of the IKEA operations
The operations management is essential for IKEA since it maximizes the organization’s efficiency through the production of goods and services to customers. In this case, operations management plays an essential role in accomplishing the organization’s management strategies. Some of the operations management decisions involved with IKEA include purchasing wood and fabric, hiring workers, planning the factory’s layout, and purchasing cutting tools alongside other fabrication equipment. Such operations management decisions are necessary for providing affordable, quality, and attractive furniture. In this case, some of the primary areas of focus of operation management include supply chain and cost management, and quality management (Sandybayev, 2017).
Cost presents one of the key areas of operations management since effective management of costs ensures the minimum cost of production. In this case, IKEA focuses on low manufacturing costs capable of meeting the requirements for function, efficiency, quality, environmental impact, and distribution. IKEA utilizes sustainable and recycled products that produce valuable functionalities, creative designs, and quality at an affordable price (IKEA, 2012).
At IKEA, the self-service model is preferable in place of sales-people attending to customers. Simultaneously, the focus is also on low-cost, modular, alongside ready-to-assemble furniture. The company usually provides products to clients in a packed form. The flat-packed form of the products helps improve the supply chain of the organization due to their portable nature that makes them easy to carry. The flat-package strategy helps in the reduction of storage, shipping, assembly as well as construction costs. Such mode also assists in the provision of greater transportation reprieve, including the warehouse space. This makes it easier for the organization to set prices of their products considerably lower than that of other organizations. The analysis of the market strategies and new designs implemented by competitors helps the organization produce its own modified designs at much lower prices that act as the main center of customers' attraction. In this case, the production of ready assembled furniture as dome by other organizations increases the cost of transportation (Akçalı and Çetinkaya, 2011).
The other area of operations management crucial for the organization includes supply chain management, whereby IKEA utilizes the global supply chain management system. The organization produces low-cost quality products within the same sector in comparison to others. The current design of the IKEA Supply chain management system allows for controlling and handling the organization’s own designs, manufacturing, and warehousing. The supply chain management for IKEA spread globally, capturing sales and purchasing within major regions. Importantly, the supply chain management within IKEA entails three sectors that include primary, secondary, and tertiary sectors. The sectors entail raw materials required to manufacture products, their distribution, and retail sales (Akçalı and Çetinkaya, 2011).
Quality management also presents one of IKEA's key focus areas since it provides the organization with the opportunity to increase the level of effectiveness and productivity. The sector ensures maintenance of quality products and services for satisfying customer needs, therefore, providing benefits to the stakeholders. Such a process on quality management is performed by using teams alongside quality circles as instituted by IKEA.
The quality assurance program ensures that all suppliers follow the quality standards set by the organization. Such an aspect calls for all suppliers to commit towards embracing the IKEA quality staircase model. Such a model is a clear representation of the top management’s commitment to the value of Total Quality Management (TQM). The aspect of becoming an IKEA supplier calls for interested parties to implement quality compliance standards (Laurin and Fantazy, 2017).
2.1 Process Management
The process analysis at IKEA appears in three sectors, including the primary, secondary, and tertiary sectors. IKEA ensures that quality is highly maintained across these three sectors, ensuring that the products meet the functional, qualitative, and effective distribution of the organization’s requirements (Laurin and Fantazy, 2017).
The organization reduces the level of wood consumption by focusing on developing a design solution that also entails the application and use of recycled plastic. Importantly, the concept of involving effective communication between the organization and the suppliers provides one of the critical factors that ensure the organization’s success. Moreover, the organization ensures that the least amount of resources is utilized in the process of manufacturing the best quality products (Laurin and Fantazy, 2017).
Figure 1: Operations management
2.2 The nature of the transformation process
The operations within any organization result in products and services whereby the inputs are changed into outputs through an input-transformation-output process. At IKEA, the input aspect entails the nature of hard-work from workers, the present smooth facilities, quality, and stylish furniture transformed into the customer’s satisfaction (Slack et al., 2016).
There is a need for the organization to transform its business by implementing new product procedures alongside the development of advanced analytic capabilities. Such an aspect would enable the company to institute more efficiently within its end-to-end processes. The possibility of implementing strategies capable of shortening the distance between suppliers and customers is necessary for ensuring excellence is achievable (Laurin and Fantazy, 2017).
2.3 The 4 V’s
The analysis of operations management entails the constituents of the 4V’s, which are volume, variety, variation, and visibility. Undertaking these processes demands that ownership changes hands, while the location also shifts from IKEA stores to the customer’s location.
IKEA is identified by a high volume of products within its stores with a different line of products such as chairs, beds, sofas, amongst other products. However, there is the danger of losing exclusivity amidst the high production of goods, which calls for innovation. Achieving competitive advantage requires that the organization uses a specialist and appropriate machinery (Slack et al., 2016).
Variety focuses on the aspect of maintaining a variety of product offers from the organization. A huge product line with varieties could easily result in business complexity since every customer’s expectations should be met. IKEA has taken care of these complexities by ensuring that each store is provided with assistance from specialists (Slack et al., 2016).
Concerning variation, IKEA products such as furniture are considered one of the basic household needs that the company caters to adequately. The marketers are specialist that have first-hand knowledge of the demand for IKEA products. Such a perspective makes it easier for the marketer to command the processes (Slack et al., 2016).
The visibility aspect focuses on the appearance of the end-product. In such a case, consumers pay less attention to the efforts involved in the process of making the product. In this case, retailers such as IKEA tend to answer direct questions from customers since manufacturers are invisible. IKEA marketers are well aware of their products’ features, including their shortcomings, to maintain go...