Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
ESHANK GARG_J8806167_100272311_KUKL00370_OM
Page 1
ESHANK GARG_J8806167_100272311_KUKL00370_OM
Page 2
EXECUTIVE SUMMARY
ESHANK GARG_J8806167_100272311_KUKL00370_OM
Page 3
ESHANK GARG_J8806167_100272311_KUKL00370_OM
Page 4
ESHANK GARG_J8806167_100272311_KUKL00370_OM
Page 5
25
LIST OF APPENDIX 29
APPENDIX 1 29
APPENDIX 2 30
APPENDIX 3.31
ESHANK GARG_J8806167_100272311_KUKL00370_OM
Page 6
1.0 INTRODUCTION
Every business is managed through two types of managers one are line managers and others
are staff managers. Line managers like Financial, Marketing and Operational managers.
These three line managers report directly to the president or CEO of the company and other
functions like accounting, purchasing, human resource and engineering, support these three
line management functions. Financial is responsible for managing cash-flow, Marketing is
responsible for sales and meeting customers demands, but what does Operational
Management do.
Operational Management can be defined as the management of the conversion processes,
which convert land, labour, capital and management inputs into desired outputs of goods and
services. It is also concerned with the design and the operation of system for manufacture,
transport, supply or service (Roy N R 2005).
Operations Management is the management of the resources a business uses to create value.
Value creation from resources lays at the heart of all business- those that make consumer
products, products for other business, or consumer or commercial services. Without resources
management, value is never formed, products and services are never sold, there is no profit,
and the business fails (Finch J B 2008).
Operations management refers to the administration of business practices to create the highest
level of efficiency possible within an organisation. Operations Management has been
described as a business function, analogous to accounting, marketing and finance for
operations management to be successful, it must add value during the transformation process,
the term Value added, operations describes the net increase between the final value of the
product and the value of all input. In addition to value added, operations must be efficient,
efficiency means being able to perform activities well and at lowest possible cost. An
important role of operations is to analyze all activities, increase competitiveness by
improving value added and efficiency (Reid D R and Sanders R N 2010).
The aim of paper is to analyse the effectiveness and success of IKEAs operational
management and to find out the factors that affects the company business process. IKEA is
very much concern about their operational policies in order to retain their products last long.
ESHANK GARG_J8806167_100272311_KUKL00370_OM
Page 7
2.1 Background
The concept of IKEA comes in 1943, from the initials of founder Ingvar Kamprad, plus the
initials Elmtaryd and Agunnaryd, farm and village where he grew up. In 1951, Ingvar focuses
on furniture. Then IKEA began to think about designing furniture to be flat packed. In 1956,
IKEA began testing the concept of flat pack to reduce costs through reduced transportation
expenses, lowered storage space requirements, decreased transportation damage and
reductions in labour costs. (IKEA Fans 2009).
The first full IKEA store opened in Almhult in 1958, it was the largest furniture display in all
of Scandinavia. In 1973, the first store outside Scandinavia was opened near Zurich,
Switzerland, followed by rapid growth in Germany starting with IKEA Munich in
1974. IKEA US opened its first store in 1985, and IKEA UK first opened in 1987. In 2008,
IKEA boasts 285 stores in 36 countries, with an additional 26 stores to be opened in 2009 and
is the world's largest furniture manufacturer (Kippenberger 1997).
ESHANK GARG_J8806167_100272311_KUKL00370_OM
Page 8
Process design is concerned with conceiving the overall shape of processes and their detailed
workings. The first of these tasks can be approached by positioning the process in terms of its
volume and variety characteristics. The second task is more concerned with the detailed
analysis of the objectives, capacity and variability of the process (Slack et al 2006).
In operations the design of the process is categorised into types for manufacturing and
services. The choice of process design is most dependent on the volume and variety of the
product or service that an organisation offers (Greasley 2008).
ESHANK GARG_J8806167_100272311_KUKL00370_OM
Page 9
ESHANK GARG_J8806167_100272311_KUKL00370_OM
Page 10
JOB
SHOP
JOBBING
BATCH
VOLUME HIGH
VOLUME LOW
MASS
CONTINUOUS
VARIETY LOW
Characteristics
Mass production is used under the following circumstances:
Standardisation of product and process sequence, dedicated special purpose machines having
higher production capacities and output rates, large volume of products, shorter cycle time of
production, lower in process inventory, perfectly balanced production lines, flow of materials,
components and parts is continuous and without any back tracking, production planning and
control is easy, Material handling can be completely automatic.
Advantages
ESHANK GARG_J8806167_100272311_KUKL00370_OM
Page 11
Aside from advantages mass production has some disadvantages too, large mass production
give more and large amount of output which tend to warehouses, inventory which increases
high inventory control investment of the company (Berger A, 2011).
IKEA is such a giant company; they get their wood from a variety of suppliers. They are not
responsible for the actual cutting down of trees, but rely on other companies to provide the
wood for their products. According to Ellen Ruppel Shell, IKEA is the third-largest consumer
of wood in the world and most of the wood comes from Eastern Europe and Russia, where
wages are low and a large amount of logging is done illegally, which leads to socio economic
factor of mass production (Wiki 2010).
ESHANK GARG_J8806167_100272311_KUKL00370_OM
Page 12
ESHANK GARG_J8806167_100272311_KUKL00370_OM
Page 13
ESHANK GARG_J8806167_100272311_KUKL00370_OM
Page 14
Lean operation is a flow of products and services always deliver exactly what customers want
(perfect quality), in exact quantity (neither too much nor too little), exactly when needed (not
too early nor too late), and exactly where required (not to the wrong location). (Slack et al,
2010).
Lean operations are business practices that use a little time, inventory, and supplies and work
as possible to create a dependable product or service. It helps business save money. Lean
operation / Lean manufacturing is the process , techniques, strategies, and initiatives being
implemented by companies around the world that aim to reduce unnecessary and
unproductive tasks, activities and behaviour in the work environment (Grooms D, 2007).
Lean manufacturing is now the name used for a collection of business performance
improvement tools and concepts that focus on enhancing Quality, Cost, Delivery and Peoples
contributions through the application of world class manufacturing principles, the elimination
of waste and continual improvement in workspace safety (Hutschins D ).
ESHANK GARG_J8806167_100272311_KUKL00370_OM
Page 15
IKEA had developed its own global distribution network. By utilizing control points in the
distribution cycle and control waste, the firm is able to insure timely delivery of products to
retail stores all over the world.
ESHANK GARG_J8806167_100272311_KUKL00370_OM
Page 16
ESHANK GARG_J8806167_100272311_KUKL00370_OM
Page 17
IKEA knows this concept and Good Quality is fundamental at IKEA, thats why it is so
important that ambition to offer products for sale at lower price never compromises with
commitment to provide the right quality. To make sure that all products meet the expectations
and requirements of customers, as well as mandatory standards, the products are tested at
IKEA Test Laboratory with ISO Standardisation.
LEVEL 1
QMUST
LEVEL 2
QWAY
LEVEL 3
4SIP
ESHANK GARG_J8806167_100272311_KUKL00370_OM
LEVEL 4
ISO + 4SIP
Page 18
LEVEL 1 QMUST
Before 1st delivery, The IKEA Supplier must implement and comply with the entry-level
requirements Final Inspection, Test-status Summary and Process Control.
LEVEL 2 - QWAY
IKEA supplier shall, from 1st delivery date and within an agreed time frame, implement and
comply with the minimum requirements Start-up Process, Receiving Inspection, Final
Inspection and Document and Sample Control.
LEVEL 3 4SIP
For supplier with the ambition to further develop its quality system. Related requirements are
stated in this standard and are marked with SIP (Supplier Inspection Program).
ESHANK GARG_J8806167_100272311_KUKL00370_OM
Page 19
Page 20
Legal Requirements
IKEA expects that suppliers must comply with national laws and regulations with
international conventions concerning social and working conditions, fundamental human
rights.
Suppliers must provide a safe and healthy working environments, pay proper wages and
compensation for overtime. Suppliers must not use of force or bounded labour, use of child
labour etc.
Environmental/ Forestry
IKEA always strives to minimise any possible damaging effect to the Environment. One of
IKEA's most weighty environmental issues is forestry, and in particular the impact of timber
extraction on ancient forests. At the end of the 1990s, pressure from Greenpeace and other
environmental groups led IKEA to introduce a policy prohibiting the use of wood from intact
natural forests, except those certified by the Forest Stewardship Council. This was formally
launched in November 1999.
'IKEA is joining the movement of responsible corporate consumers concerned about ancient
forests,' commented Green peaces forest campaigner (IISD, 2012). Therefore, IKEA stated
the Code of Conduct for all of suppliers to reduce the effect on environment,
Suppliers must: work to reduce waste and emissions to air, ground and water, handle
chemicals in an environmentally safe way, handle, store and dispose of hazardous waste in an
environmentally safe manner, contribute to the recycling and reuse of materials and products,
use wood from known areas and from sources that are well managed and preferably
independently certified as such.
ESHANK GARG_J8806167_100272311_KUKL00370_OM
Page 21
Page 22
Factor 2
Factor 3
9.0
FACTORS
THAT
ENCOURAGE CHANGES
The scope of Operations Management (MO) has changed significantly in the last several
decades. Starting from Re-order point (ROP) to Enterprise Resource Planning (ERP) and
Supple Chain Management (SCM), OM has gone through a long way in term of scope and
techniques being used. JIT philosophy, Lean production and agile manufacturing have
significantly changed the way how design and analyze the operations. Recently, OM and
logistic fields get closer, since there is no way to separate those functions any longer from the
operational process perspectives (Bayraktar E). Operation Management is a set of activities
that create goods and services through the transformation of inputs into outputs (Heizer et al,
1999). Operation Management has extended from a function of the organisation to an
enterprise wide process and even crossing the border of the enterprise to the all supply chain
ESHANK GARG_J8806167_100272311_KUKL00370_OM
Page 23
CONCLUSION
ESHANK GARG_J8806167_100272311_KUKL00370_OM
Page 24
LIST OF FIGURES
FIGURE 1
Schematic Production System..09
FIGURE 2
Manufacturing process Matrix10
FIGURE 3
(a) Traditional and (b) lean synchronized flow stages14
ESHANK GARG_J8806167_100272311_KUKL00370_OM
Page 25
FIGURE4
Magnitude Gap between customer perception and expectation16
FIGURE 5
IKEA Quality Staircase Model17
LIST OF REFERENCES
Book
Berger, A 2011, Process Design Operations Management: IKEA, 1st edn, Grin Publication,
Germany, pp. 13-14
Finch, JB 2008, Operations Now, 3rd edn, McGraw-Hill Irwin, New York
Greasley, A 2008), Operations Process Types , Operations Management, 1st edn, British
Library Cataloguing in Publication Data, London, pp.pp. 22-27
Heizer, J & Render, B 1999, Principles of Operations Management, 3rd edn, Prentice Hall,
England
ESHANK GARG_J8806167_100272311_KUKL00370_OM
Page 26
Electronic
Article base 2011, The Implications of ERP Implementation at IKEA, Dubai, [ONLINE]
Available at: http://www.articlesbase.com/business-opportunities-articles/the-implications-oferp-implementation-at-ikea-dubai-4861472.html. [Last Accessed July 24 2012].
Bergmark, T 2005, The IKEA Way on Purchasing Marketing Products & Services, [ONLINE]
Available at:
http://www.ikea.com/ms/en_CA/about_ikea/pdf/IWAY_marketing_products.pdf. [Last
Accessed July 30 2012].
Bayraktar, E, 2007, New challenges & opportunities for operations practioners in the new
millennium, [ONLINE] Available at:
http://www.opf.slu.cz/vvr/akce/turecko/pdf/Bayraktar.pdf. [Last Accessed August 30 2012].
ESHANK GARG_J8806167_100272311_KUKL00370_OM
Page 27
Available
at:
Hellas A (n.d.), IKEA Receives Certificate of Compliance for food safety, [ONLINE]
Available at: http://www.tuev.at/start/browse/Webseiten/TUV%20Austria
%20Holding/News/ikea-certification-of-compliance-for-food-management-system-tuvaustria-hellas-en.xdoc. [Last Accessed July 28 2012].
IKEA Fans 2009, IKEA History, [ONLINE] Available at: http://www.ikeafans.com/ikea/ikeahistory/ikea-history.html. [Last Accessed July 20 2012].
IKEA 2011, Annual Report, [ONLINE] Available at: http://populationaction.org/wpcontent/uploads/2012/06/PAI%202011%20Annual%20Report.pdf. [Last Accessed July 21
2012].
IKEA 2010, Yearly Summary FY10 IKEA Group, [ONLINE] Available at:
http://www.ikea.com/ms/zh_CN/pdf/yearly_summary/Welcome_inside_2010_update.pdf.
[Last Accessed July 21 2012].
IKEA 2006, IKEA Supplier Quality Assurance Program, [ONLINE] Available at:
http://www.tyfountex.com/pdf/Routine%201(1)%20ISQAP%20standard%20Ed%201.pdf.
[Last Accessed July 28 2012].
IKEA 2003, The right quality for IKEA products, [ONLINE] Available at:
http://www.ikea.com/ms/en_GB/about_ikea/press_room/rightquality.pdf. [Last Accessed July
28 2012].
IISD 2012, The IKEA code of conduct for suppliers, [ONLINE] Available at:
http://www.iisd.org/business/viewcasestudy.asp?id=119. [Last Accessed July 30 2012].
ESHANK GARG_J8806167_100272311_KUKL00370_OM
Page 28
[Last
ESHANK GARG_J8806167_100272311_KUKL00370_OM
Page 29
Journel
Bayraktar, E, Jothishankar, MC, Tatoglu, E & Wu, T 2007, Evolution of operations
management: past, present and future, Management Research News, vol. 30, no. 11, pp.843871
Kippenberger, T 1997, The story of IKEA, Antidote, Vol. 2, no. 5, pp.33 34
Zwass, V 2011, Electronic Business, e-commerce businesses, International Journal of
Electronic Commerce Studies, vol.2, no. 7
LIST OF APPENDIX
APPENDIX 1
The Model for calculating Capacity Planning in cubic meter
ESHANK GARG_J8806167_100272311_KUKL00370_OM
Page 30
APPENDIX 2
(OEE MODEL OF CAPACITY PLANNING)
ESHANK GARG_J8806167_100272311_KUKL00370_OM
Page 31
APPENDIX 3
IKEA SUSTAINABILITY
ESHANK GARG_J8806167_100272311_KUKL00370_OM
Page 32
ESHANK GARG_J8806167_100272311_KUKL00370_OM
Page 33