Operations Management At IKEA: Critical Success Factors, Quality Management Strategies - Essay.

Questions:

1.Identify IKEA’s Critical Success Factors.

2.Disuss the Importance of IKEA Operation Management to IKEA.

3Discuss about the IKEA's Quality Management and Strategies.

IKEA is a popular name, which is known as largest furniture retailer in the world. It is a multinational company, which was established in Sweden and headquartered in Netherlands. The company manufactures and sells ready to assemble furniture, home accessories and kitchen appliances. It was founded in the year 1943 by a 17 year old person, Ingvar Kamprad. Now, it is having its business operations on international level. It is operating its 410 stores in 49 countries all over the world. The vision of IKEA is to create and provide a better and relaxed life to its potential customers across the globe (Chase, 2007). The company has developed the idea of offering variety of low costs and well-designed furniture and home appliances to its customers. This report includes various aspects of operations management at IKEA by analyzing the given case study. The company is implementing effective operation management practices to offer the quality products to customers. This report defines the critical success factors of IKEA along with its operations management. At the end, it discusses quality management and strategies of IKEA.

IKEA as a largest furniture retailer in the world has enjoyed an excessive success in several countries. At any organization, excellent performance derives from its effective leadership and management of personnel and careful balancing of international integration of its operations and processes by responding to the domestic tastes and preferences. The company is attaining a great success in this industry. It has impressed not only its customers with better quality and affordable furniture but also its competitors with its inventory management and supply chain techniques (Chopra, 2009). There are many success factors, which assisted IKEA to succeed in furniture industry. Some of the major factors are stated below;

Low-cost functional Structure

It is the major success factor at IKEA that it is adopting a low cost functional policy. Under this structure, the company is offering furniture with better quality at affordable prices. To approach its low cost strategy, the company always focuses on balancing the cost effective labor with the quality standards of its products and services. The company is emphasizing on developing better relationships with the suppliers in developing nations to save funds on production and labor. Due to this, company is able to offer the furniture and other home accessories on lower prices than its competitors. At IKEA, the furniture is designed to ship stripped, and all products are delivered flat. This flat packaging makes it easy for the people to transport the products home and it assists them in saving the money on shipping process. Thus, it is the major factor behind the success of IKEA in today’s competitive business environment (Dale, 2015).  

Factors Contributing to the Success of IKEA

Unique distribution system

To compete with the leading players in the industry, IKEA is adopting a unique distribution system. There are different distribution channels, such as; IKEA Super store, IKEA catalogs, IKEA store websites and IKEA family e-mail subscription, which are used by the company to approach its potential customers. The distribution system of the company is very exclusive, as it delivers the furniture unassembled in flat boxes to decrease the costs on shipping. It assists the customers in saving money and delivery time. Flat packaging reduces the labor costs, damage of furniture in transportation, space for storage and costs on shipping. By doing this, the company can offer the products on the price at 30% to 40% less than its competitors, to the customers, who are desired to assemble their furniture and home accessories by themselves (Forno, & Graziano, 2014).

Effective Operations Management

Operations Management is a significant part of the success of IKEA. The company is incorporating various processes in its operations management to make production and delivery smoother. Offering great shopping experience is one of the major parts of its operations management. They have set up the stores and settle their catalogues with the themes of kitchens, bedrooms and bathrooms etc. which entice the customers. It is providing different facilities, like; it has provided supervised play area for the children, small cinema and baby and parent room, so parents can leave their kids in supervised play area, when they do shopping at IKEA stores. It understands the needs and expectations of customers before manufacturing the products. The operations strategy of IKEA includes store’s layout, designing styles furniture, and store location, effective delivery of products, inventory management, and effective supply chain and developing the products with higher quality standards (Gibson, 2012).

Thus, these are the major factors, which are contributing to the success of IKEA.

The given case study indicates the how the operation management is significant for the success of IKEA. It shows that IKEA is the best example to explain the importance of operation management for all types of businesses. In the production and manufacturing stage, the organization aims to decrease the wastages and enhance the resources and time management and productivity for ensuring that production cost is comparatively lower. At its retail stores, IKEA aims to ensure that its warehouses are used properly. All the details are explained to the customers and finally the furniture is delivered without any issue, so that it can lower the shifting cost. The retail stores have to handle the sales and marketing that includes their own procedure. It shows that there will be set of operations regardless of what sector the business is in. This company is becoming successful because it is managing its operations efficiently and effectively (Goetsch and Davis, 2014). Operations management is important for IKEA, as it is enhancing its delivery and distribution system. By adopting an effective operations management, company is improving its business operations and processes.

Operations Management at IKEA

Operation management is assisting the organization in ensuring that the quality of products and services is managed always and operations are executed effectively to save the resources, so that it may have its advantages. Like other functions, operation management is equally important for the growth and success of an organization’s business (Hatton, 2013). IKEA is placing operational processes and systems to satisfy the needs and requirements of its potential customers. It is very important for the long-term survival of company and its business. It includes all the process, like; product designing, manufacturing and delivering, which fulfill the requirements of market. The importance of operation management at IKEA can be understood by looking at its growth and success (Hultman, et al, 2012). In this way, operations management plays an important role to IKEA in managing the process, making decisions, taking challenges and guiding other practices to perform in same manner.

The mission and vision of IKEA is very much clear. As discussed above, the company is making focus on producing better quality products, which are affordable to the population. To attain this, company has implemented various methods. From them, Six Sigma method is the major approach, in which the company designs and synthesizes the products with the objective of producing huge amounts of products without any defect (Byun, 2011). IKEA is the best example because it strives to fulfill the requirements of customers by instructing the available resources to attain this impact. Under the total quality management process, the company does a laboratory test of the products and services to make sure that they fulfill the needed specifications. On domestic and international level, several products are tested to make sure that company has attained the quality. Quality management is an important approach at IKEA, which assists the organization in attaining its overall objective by implementing different strategies and techniques of total quality management. For improving the quality of its products, IKEA is taking feedback from its regular and existing customers, so that it can understand the shortcomings in its products and services (Oakland, 2014).

The company is using various techniques of total quality management, like; through implementation of quality circles, IKEA is having benefits of quality and productivity and enhance the morale of employees (Slack, Chambers & Johnston, 2010). The has created a quality circle organization structure, which includes, the coordinator, steering committee, facilitator, circle members and circle leader. The company designs a training program for the employees for changing the attitudes of employees, improvement, self-development etc. Another strategy of quality management is benchmarking that is used to measuring the internal processes against different divisions in the business, competitors and implement effective practices. IKEA is implementing benchmarking to identify that how well the company is in comparison to other companies. This strategy is giving IKEA different processes to attain a Total Quality Management culture (Oak &John, 2010). This is the major technique that is helping the organization in understanding about the doings of other competitors. These are the strategies, which are assisting IKEA in providing quality products to its customers and creating a large customer base.

Conclusion 

From the above case study analysis, it can be stated that IKEA is the best example of effective operation management. The company is using effective operation strategies and processes to manufacture the products according to the needs and expectations of customers and enhancing service delivery process. There are various factors at IKEA, which contribute to the growth and success of organization. It is emphasizing on manufacturing the quality products on lower prices than its competitors. For maintaining and improving the quality, firm is implementing different strategies, which assist the organization in increasing its customer base

References

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Dale, B., 2015. Total quality management. John Wiley & Sons, Ltd.

Forno, F., & Graziano, P.R., 2014, Sustainable community movement organisations. Journal of Consumer Culture, 14, 139–157

Gibson, J., 2012, The Case of IKEA’s Entry Into China. Journal of Applied Management And Entrepreneurship , 17 (2), 1077-1158.

Goetsch, D.L. and Davis, S.B., 2014. Quality management for organizational excellence. Upper Saddle River, NJ: pearson.

Hatton, C., 2013, Ikea in China: Store or theme park, Retrieved from https://www.bbc.com/news/world-asia-china-24769669.

Hultman, J., Johnsen, T., Johnsen, R., & Hertz, S., 2012, An interaction approach to global sourcing: A case study of IKEA. Journal Of Purchasing And Supply Management, 18(1), 9-21.

Oak l.  &John S, 2010, Total Quality Management and Operational Excellence: text and cases Routledge 4th Ed.

Oakland, J.S., 2014. Total quality management and operational excellence: text with cases. Routledge.

Slack, N., Chambers, S., & Johnston, R., 2010, Operations management. Harlow, England: Financial Times Prentice Hall.