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Unit 16 Operations and Project Management Assignment – IKEA
Diploma in Business
Unit Number and Title
Unit 16 Operations and Project Management – IKEA
Operation management is an area of management that is concerned with design, controlling and production as well as redesigning of the business operations of organization for manufacturing of goods and services. The term operation management is being majorly used for increasing the efficiency and effectiveness of planning the activities that have significant impact on the business process of organization. The Unit 16 Operations and Project Management Assignment IKEA will explain the importance of operation management for leading furniture company IKEA that is offering the high quality goods in wide range. Additionally, the report will discuss about the process model and information about the use of “Three Es” as well as the five performance objectives for managing the operations of IKEA. In the next part, report will explain the liner programming and analyze the critical path as well as the networking planning. IKEA is world largest furniture manufacturing and retailer organization that is operating business in different parts of world according to needs and demand of the customers. As of March 2016, IKEA owns 384 stores in 48 nations and offering more than 12000 products. In the next task report will produce the local area networking plan and identify the approaches that can be used for project management and quality control in sales, stock and purchase process.
Explanation about Operations management is important for IKEA Furniture
Importance of operation management can be understood by taking case on IKEA Furniture. IKEA is a Swedish Company which sells appliances, furniture, home accessories. The aim of IKEA is to reduce wastage, and enhance productivity with low cost. At the store, the organization wants to utilize their warehouse properly, taking details of customers and deliver product with shifting cost is low. IKEA business make successful by managing such operations effectively. Operation management controls business operation of system. It mainly deals with design, and improvement of overall system. It supports organization to improve its financial performance. In case of IKEA, operation management observes activities to ensure and sustain efficiency and effectiveness (Ivarsson and Alvstam, 2010). Efficiency is considered important to achieve primary object i.e. maximize profitability. For this purpose, it identifies expertise human resource and other technical resource that reduce cost of operations. IKEA reduces cost by discarding less profitable cost projects. It uses maximum resources to achieve maximum output. The effectiveness and efficiency leads to productivity yield and improve capacity by utilization of resources that improve quality. It has been identified that operation management is playing important role in IKEA Company. Its control and coordination range is broad which include product evaluation, advertising, promotion, product development and distribution, sales and service.
Operation management is considered important for manufacturing industry. This is because manufacturing industries take care about so many processes and operations involved in manufacturing. The organisations generally start process from obtaining raw materials and then process in order to create goods. Therefore, successful execution of operation needs to include operation management especially for manufacturing industry. Apart from this service industry also include various process like assessment of customer expectation, take feedback of service etc (Edvardsson and Enquist, 2011).
Analyse the operations functions of IKEA Furniture
The operation functions are series of process that are interdependent to each other and linked procedures. It consumes one or more resource as input at each stage. Operation functions depend on decisions and result. Strategic plans are designed according to future condition and demand. The operation functions of IKEA furniture are explained below:
- Design process and identify requirement: This function describes a planning stage. Operational manager identify process and mechanism of their execution. This would identify number of human resource and technical tools required. The operation manger also has knowledge to handle such process effectively. In case of IKEA Furniture, this operation function estimate about list of raw materials, technical tools and human resource. All such needs are consider as input for next stage (Hill and Hill, 2012). These are collected in sufficient number so that next stage would not suffer from lack of any resource.
- Process activities: Process stage is considered most important function. Here the expectation is high as the organisation aims to produce goods of quality. For Example- IKEA is including production processes which can be operate safely, give results on time, best quality in output with low cost. All these objectives should be fulfilled at the process stage. It includes all the activities that must be executed one by one. The activities include sufficient number of input also (Slack.et.al.2010).
- Monitor and Reviewing: Operational manger need to perform monitoring function at time of processing of activity. Monitoring involve cost and quality of product. In case of IKEA- product quality is monitored and if it does not meet the quality standard then current process rejects the product and is sent back to manufacturing for correction. The organisation wants to minimise cost of process. Therefore, operational managers are required to keep the cost under control. The output from process function is evaluated and finally quality department reviews the manufactured products to assess the product quality (Li.et.al.2011). This review defines quality and cost of developed of product. The reviewing is beneficial to set cost for sale goods so that company get profits.
Three E’s of business-Economy, effectiveness and efficiency
Operational tasks of a business can be carried out easily with the proper balancing among 3E’s. Three E’s are- economy, efficiency and effectiveness.
- Economy: Economy means to perform a task in cost effective manner. This factor of business describes the optimum use of resources to accomplish a task. Only the required amount of human resource, capital and time is expected to be invested in order to achieve specific goal. IKEA furniture analyses the exact need of resources required to complete a task. Thus, proper number of resources like furniture, material and human power can be used to reduce the cost in manufacturing (Berger-Walliser and Shrivastava, 2014). Organisation eliminates unnecessary activities to reduce the cost. Product also will be cost-effective for customers.
- Efficiency: Efficiency means to complete a task with minimum efforts. IKEA analyses solutions and selects the most efficient way to perform the task. Organisation also provides equipments and training to accomplish the task easily. Efficiency is required in organisation to deliver the orders within time period. It also helps to save precious business time and resources so that organisation can increase productivity with efficiency. However, efficiency should not affect the economy badly. Proper balance is required to achieve more benefits.
- Effectiveness: Effectiveness is related to perform a task in better way as it can be. Efficiency may lead to reduce effort but it may be lengthy process to achieve goal. Effectiveness helps to find optimized way to achieve goal. IKEA is using e-business strategies to attract more customers. Organisation is giving discounts and offers to online buyers. This can be said an effective way to sale out more goods (Naik, 2014). Implementation of efficient and effective methods in business may not be economic in initial state but future can be predicted smooth and managed. So business needs to consider three E’s to make processing easy, effective and cost-effective.
Evaluation of operation management in IKEA
Operation management can be defined as the process to design and manage the production of new products and restructure the business operations to meet requirements. Operation management includes four basic steps: inputs, transformation process, output and feedback. Operations carried out by IKEA to produce products are given to illustrate operation management of company.
- Inputs: Input may be raw material and resources to design a new product or service. According to use, inputs can be categorized in two types.
- Transformed resources: This type of inputs is used as the raw material to develop a product from them. IKEA uses glue, plywood, frames and iron nails as input to transform.
- Transforming resources: This type of resources is not used as raw material and only helps to achieve desired products. Transforming inputs used by IKEA company are: machines, human efforts and capital (Slack, 2015).
- Transformation process: This is the actual processing where raw material of IKEA takes the form of output. Input may be either in form of information, human power or physical requirements to build output. For instance, to create new Sofa, company’s described transformed input will be processed with the help of transforming resources. Plywood, glues and iron nails will be used in a proper manner to create the output. Thus, the manner of treating inputs for an output is transformation process.
- Output: Result of transformation process is the output. Transformation process may produce some undesirable outputs. IKEA company checks the outputs whether they are meeting the quality standard of organisation or not. A damaged or poor quality product cannot be sold and is a loss for the organisation. Producing higher number of poor quality products leads to operational failure and poor financial performance (Krajewski.et.al.2013).
- Feedback: Feedback is the suggestions to improve the output. If the production processes can be modified or improved to solve the issues, than a better quality product can be expected from output. IKEA uses feedback to eliminate production mistakes.
Tension between cost minimisation and quality maximisation
This is the biggest challenge for IKEA Furniture to minimize cost and maximize quality also. IKEA wants to include such procedures and resources that minimize the cost of operation but does not decrease quality of goods. However, the achievement of double goals simultaneously is difficult task. Quality is the vital parameter for IKEA in order to sustain at the present position. But it has been analyzed that quality sustainability increase cost and time also. The quality of output expected by customers may result in increased expenses. On the other hand, some time cost minimization suffers from quality degradation. Lower quality of goods affects the brand image. It can decrease selling of goods also (Hirschey, 2016). Therefore it is very critical to handle both the parameters together- cost minimization and quality maximization. Although cost minimization is necessary to gain more profit on sales. It is also required to compete with other brands.
In order to provide more benefits to customers on sales and to sustain in market, company may balance the product cost and quality management in business where it can. IKEA needs to finds new ways to reduce the manufacturing cost of products. For that, company can buy a lot raw material with discounts to reduce the cost per product. To sustain the desired quality, supplementary inputs like human efforts can be replaced somewhat with electronic machines to reduce overall cost (Ajodhia, 2010). Management in company can find new places to develop and outsource the business so that cost in transportation and supply can be reduced. The effect of all activities will be reflected on products as minimization in cost with same quality. This would reduce tension at some extent.
Evaluation of significance of the performance objectives
For furniture organization, it is essential to have the knowledge about the performance objectives of operation management that would help manager to analyze the effectiveness of operations to meet the desired outcome:
- Dependability: The major focus of the organization would be on the availability of resources as well the tools that have been used for design and development of the furniture products and services.
- Cost: For any type of work and operational activity the cost plays critical role as IKEA always focus on the minimization of cost and maximization of quality which could be vary according to needs of customers (Moghaddam.et.al. 2011). The performance of organization also been considered according to investment and gain from the business.
- Flexibility: In operation management and production process of IKEA flexibility in the planning and execution is important as it helps to meet the time frame of completing the task as well manage the human resource planning.
- Quality: IKEA is one of the biggest brands in the furniture industry and the customers trust the organization considering the quality that have been produce and offered to them. The organization has most numbers of satisfied customers in terms of quality of furniture across the globe.
- Speed: In order to meet the deadline of completing the tasks speed of manufacturing need to be good in terms of managing the resources, utilization and scheduling of the activities (Niknam.et.al. 2011). If IKEA management is able to maintain the proper communication among the departments than it will influence the performance.
Linear programming and how it adds value to production process
Linear programming is the process that involve process and planning of managing the operations and make decision for establishing the tools and equipments according to needs and activities of organization. This process involves the mathematical concept for developing the plan. The management of IKEA could use this method for achieving the best outcome to maximize the profit by increasing the efficiency. This method adds value to the operational activities of IKEA by helping in determining the network flow; defining the engineering process and calculating the price and cost of each unit to make the decision for implementing the changes in the existing process (Mohammadi.et.al. 2014). In addition to this, to make the decision like purchasing of raw material the organization would use the linear programming which will help to forecast the production cost as well help to identify the areas of monitoring that minimize the cost and encourage the production of furniture.
Apart from that, linear programming will help the IKEA management to analyze the variation in the production process which will support to maintain the effectiveness in operational activities.
Critical path analysis and network planning
Critical path analysis is majorly used tool for operation and project management that helps to analysis of network and handle the complex and time-sensitive operations of organization. IKEA management could user the critical path analysis for following processes:
- Define the tasks and put down them in an order for manufacturing of furniture.
- Develop the flowchart to evaluate the relation in operations of production of furniture.
- Identification of critical and non-critical paths.
- Determination of expected time of competing tasks.
- Use of alternative options for most critical paths.
Network planning: This is an iterative process, encompassing topological design, network-synthesis and network realization that plays significant role to make decision for operational activities and utilization and arrangement of resources to achieve the goals and objectives (Akkerman.et.al. 2010). The management of IKEA could use the network planning tools for defining the problems in production and deigning of the furniture products and services according to needs of target customers. In addition to this, manager will perform the data acquisition, choice of forecasting and analysis of methods that could be beneficial for encourage the operational quality and minimization of cost. In addition to this, network planning includes the proper documentation of whole activities and results for monitoring.
Need of operational planning and control
For IKEA furniture, operational planning and control is important to maintain the balance between the market requirement and analysis of existing resources to meet the objectives. The operational planning and control activities of furniture organization helps to develop the system, procedure and decision that aid to bring various aspects of demand and supply together according to objective of IKEA (Niknam.et.al. 2011). Moreover, operational planning and control involve the scheduling of the tasks control on the activities of labour, capital input, use of resources and material to produce the desired quality as well quantity of furniture goods. For IKEA, operational planning and control is needed for forecasting the demand of particular as well various design of furniture in different category to maintain the activities. Apart from that operational planning involve the analysis of market trends, development of new design in furniture products to gain the competitive advantage as well minimization of cost to increase the profits. In this process short and long term both types of decision have been made by the project manager considering the capability and demand of goods and services.
Design of possible layouts for producing the furniture and operational outcome
For managing the operations and activities for production of furniture products and services the management of IKEA would use the following layout that will be helpful for managing the outcome and maintain the effectiveness of activities (Anderson.et.al. 2015). By using this design the manager of IKEA will able to analyze and monitor the specific process for developing and designing of dressing tables produced by the organization.
The proposed design has been developed using the Graph theory that helps to establish the relation and determination of process that would be used for producing the dressing tables in different range but in specific design. The layout of design will help to compare the actual and desired output for product and services as well manage the activities (Moghaddam.et.al. 2011). This design will support to optimize the sequence and make effective use of resources to meet the operational outcome. By including the comparison and monitoring of the tasks the IKEA manager will able to meet the outcome in efficient manner for development of dressing table.
Network plan and critical path for IKEA
In order to develop the furniture goods the management of IKEA could use the following network plan that will help to meet the deadline with the consideration of quality and design specification proposed according to international ISO standard (Ipeirotis.et.al. 2010). For producing the furniture product the organization will include the following activities:
- A- Planning of activities
- B- Analysis of alternative
- C- Design evaluation
- D- Inventory of raw material
- E- Allocation of resources
- F- Production method
- G- Quality control
- H- Production control
The estimated time of each tasks would be depend on the other operations, following table will show the estimated time for each activity
Table 1: Network activities
Order to complete
Estimated time (Days)
Should be done first
Only start if A is completed
Could be initiate if A is done
Should be start if B and C is completed
Would be done as A is completed
Would be initiate if D and E are done
After completion of F
Can only start if G is done
Approaches would be used for quality control
Quality control and management is process by which organization identify the areas of lacking and issues that affecting the standard of production, sales and other activities. IKEA management could use the Total quality control and Six sigma approaches for managing and controlling the quality of furniture production. According to Total quality control process the each department of organization measure the utilization of resources and improve the control over the process (Ho.et.al. 2010). Total quality control is continues process that has been followed in each stage of furniture design and development.
From the above Unit 16 Operations and Project Management Assignment IKEA it is been considered that operation management is important approach and tool that helps to manage the organizational activities more efficient and controlled manners. Report has analyzed the functions of IKEA and evaluated the approach of company using the process model to understand the operational activity of organization. In the next part report has evaluated the significance of performance objectives for IKEA and explained the linear programming for planning and controlling of design and development process of furniture organization. Moreover, report has design and discussed the possible layouts.
Books and journals
Ajodhia, V., 2010. Integrated cost and quality benchmarking for electricity distribution using DEA. International Journal of Energy Sector Management,4(3), pp.417-433.
Akkerman, R., Farahani, P. and Grunow, M., 2010. Quality, safety and sustainability in food distribution: a review of quantitative operations management approaches and challenges. Or Spectrum, 32(4), pp.863-904.
Anderson, D.R., Sweeney, D.J., Williams, T.A., Camm, J.D. and Cochran, J.J., 2015. An introduction to management science: quantitative approaches to decision making. Cengage learning.
Berger-Walliser, G. and Shrivastava, P., 2014. Beyond Compliance: Sustainable Development, Business, and Proactive Law. Geo. J. Int'l L., 46, p.417.
Edvardsson, B. and Enquist, B., 2011. The service excellence and innovation model: lessons from IKEA and other service frontiers. Total Quality Management & Business Excellence, 22(5), pp.535-551.
Hill, A. and Hill, T., 2012. Operations management. Palgrave Macmillan.
Hirschey, M., 2016. Managerial Economics. Cengage Learning.
Ho, W., Xu, X. and Dey, P.K., 2010. Multi-criteria decision making approaches for supplier evaluation and selection: A literature review.European Journal of Operational Research, 202(1), pp.16-24.
Ipeirotis, P.G., Provost, F. and Wang, J., 2010, July. Quality management on amazon mechanical turk. In Proceedings of the ACM SIGKDD workshop on human computation (pp. 64-67). ACM.
Ivarsson, I. and Alvstam, C.G., 2010. Supplier upgrading in the home-furnishing value chain: an empirical study of IKEA’s sourcing in China and South East Asia. World Development, 38(11), pp.1575-1587.
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