Business operations can be defined as different ways through which the business is able to create optimal outputs from the various available inputs; this can be offering services or manufacturing physical products (Hill & Hill, 2012). An operation can also process a customer surrogate, for instance, dress to be dry cleaned, and this is similar to the processing of information. Management is defined in the English dictionary as the process of controlling or dealing with people or thing (Slack and Lewis, 2015). In the organization context, management involves the interlocking of functions to create business policies, planning, organizing, directing and controlling the available resource with the aim of achieving the objectives on the organization in line with the stipulated policies. It is the process that combines and transforms various inputs in a controlled way as per the organization policies (Hill & Hill, 2012).
Operation management entails the organizing, planning and supervising business processes coupled with appropriate improvements for higher profitability. Daily operations in the business have to be adjusted regularly so as to support the strategic goal of the company and should be preceded by careful evaluation and deep analysis of the current processes. Operations management is a term with a long historical background. Production management was the earlier term used for operations management showing its origins in the manufacturing industry. According to (Balogun et al, 2016) operations management is concerned basically with the change of state or manufacturing of physical goods.
Another study (Slack and Lewis, 2015), argues that operations management is merely about the efficient and effective management of any type of operations regardless of it being a physical good or service good. According to (Slack et al, 2004) operation management is that section of a company which deals with the transformation of a wide range of inputs to the desired output or services with the needed level of quality and standard. In modern business operations, operation management has taken a totally new turn as compared to years back in history. It is seen as a bunch of activities which cause careful planning, leading, controlling and organizing the organization operations. This dictates the contribution of operation management to the profitability or downfall of the organizations (Balogun et al, 2016).
To further explain the real world application of the concepts and literature around operation management, this report uses IKEA Company for the assignment. This paper presents how IKEA Company is able to establish and handle its customer requirements. The report also indicates the operations and management of the inventories, product scheduling in the organization. Relevant theories and principles have also been used to create an understanding of the company operations.
IKEA is a privately owned company in the retail industry. The multinational company designs and sells home furniture, accessories, and kitchen appliances among others. IKEA has been able to expand its operations in not less than 300 stores around the globe. The company is known for its specialty in the production and sales of low priced goods inform of flat pacts for indoor assembly by the customers. The history of its foundation dates back to 1943 in Sweden. It was started by Ingvar Kamprad, who was then 17 years old. The young man took the initials of his own name, the family farm (Elmtaryd) and the Agunnaryd, home village and formed the IKEA as the company name. The store initially started with small sales of lighters and pens before it started selling furniture in the year 1948. Five years later, Kamprad opened a showroom in Almhult where customers checked the displays and made orders. It was not until 1958 when the founder opened the first retail store (Kristoffersson, 2014).
In order to reduce the cost of doing business for the company, flat packing was initiated in 1956 and this had a tremendous effect on the profits of the small company. During this period, the company was facing stiff and unfair competitions from other companies in Sweden to a point that they cut off some of the suppliers of the company (Kristoffersson, 2014). In response, IKEA undertook its own design work and contracted supplier outside Sweden such as Poland and Denmark. Furthermore, the company set up its own manufacturing subsidiary by the name Swedwood (Jacobs et al, 2014).
IKEA started its international business retailing business by opening its first store in 1963 at Norway. This trend continued with more store being set up in Switzerland, France, Australia, United States of America, Russia, the United Kingdom, China, and Germany (Jacobs et al, 2014). By the 90s, the company became oriented to designs and yet still maintained is a vision of keeping the price low for its customers. In the year 1997, IKEA focused on meeting the needs of kids. During this time, several products and design were developed for the kids. Through its donations, the company has helped set up the Kamprad House which basically serves cancer patients. Generally, the company store is large enough to cover an area of 17,280 square meters. Due to high Swedish taxation, the company is not owned by shareholders but it’s rather run by nonprofit foundations, holding companies and operating organizations (Kristoffersson, 2014).
IKEA Company the vision of offering a wide range of good designed, operational home furniture products prices suitable for the majority of the people. The company way of doing business in all the 355 stores spread in 29 nations has made the company the largest home furnishing retailer in the world. The organization has maintained its large number of consumers due to its ability to provide unique services, inventory management techniques and a supply chain that has remained strong among its competitors (Porter, 2004; Jacobs et al, 2014).
The workforce for IKEA is currently staggering at 208, 000 employees who manage the large furniture stores of the company. The management of these individuals is complicated can easily lead it problems if not handled well (Hill & Hill, 2012). It is a challenge for the managers to keep track of a large number of employees during working hours. This challenge was evidenced in 2013 when the company sales increased by a mere 3 % as compared to the previous year when the sales had increased by 9.5%. This shows that a drop in the performance of the employees can easily impact the sales (Hill & Hill, 2012).
The cost objective of an organization can be affected directly by the flexibility effectiveness, speed, dependability, and quality and hence it helps in achieving low-cost factor for a unit product. IKEA has a robust supply network which helps the organization in keeping inventory in good form such that extra products can be developed at low cost(Jacobs et al, 2014). The organization is, therefore, prevailing in developing furniture of the best quality and distributes the product at a competitive price. In addition, the company helps in maintaining market competitiveness. Also, the technology and the process sections of the company are very effective in the control of costs by lowering the cases of reworks and by doing a proper analysis of process variability which reduces the chances of the company incurring extra costs (Jacobs et al, 2014).
The company has a design department that helps in meeting the increasing costs. This department is tasked with the matching of up with the current trends in the furniture and fashion industry to keep customers entertained and attracted. The design department also aims at providing requisite ambiance inside the company stores to create a suitable buying environment for its customers. The company tries to lower the cost of producing designed products to all its customers. To tap optimally from this aspect, the company stores are designed in such a way that the products can be placed effectively and the consumers can choose the products as per their liking (Johnson & Clark, 2005).
Flexibility
Operations at IKEA are competent enough to be quickly changed as per the customer’s requirement. The flexibility benefits have helped the company for many years to incorporate new products and services. In addition, the global sourcing strategy applied by the company has helped it to be highly responsive to the end user requirements. The organization is also known to provide mix flexibility services when supplying products and services.
In addition, the company storage units offer great flexibility to house a wide range of sizes and dimensions of its products so that they can be availed to the end users at any point in time. IKEAs office furnishing stores give various kinds of services and the end users are given flexible paying choices. Common payment choices provided by the company include cash, cheque, debit or credit payment and the purchased goods are delivered without delay (Jacobs et al, 2014). The output level of the company also benefits from the volume flexibility of the organization. The unit store management teams are also efficient for the company to assess the stock levels of the products. Customers of the organizations also benefit from the flexibility since their products are delivered without delay.
The organization operations have been very successful in creating dependability to the IKEA through handling of activities in the right times. The company has scheduled conventional opening and closing hours hence operations are considered as the dependent. In addition, the organization has adopted easy reorder systems which aid in maintaining the share of product out of stock at the minimum level. Another aspect of dependability can be evidenced in the company’s culture of maintaining sound queuing times such that products are made available to the end users in short periods.
The organization success can also be attributed to the ability to establish customers’ requirements. This aspect has enabled the company to develop the right products that easily sell (Scholes, 2008). To achieve this, the organization has always provided its customers with questionnaires and conducted interviews. The task of establishing customer requirements or need is mainly in the docket of the marketing department of the organization and is also supplemented by the requirement cited from other departments.
As much as IKEA is making profits, there is room to make more and maintain good performance. The company should consider having skillful and efficient staff team so that only best services are delivered and reduce the wastage of company resources. The speed of operations in the company can be increased by using up to date process technologies so that the products can be stored in the right times and stimulate customer service.
In the incidences of dependability, the organization should always strive to deliver the products on the agreed times to maintain good customer relations (Johnson & Clark, 2005). Also, flexibility in the operations has to be handled efficiently to help in availing products in stores in the right times and in line with the requirements of the customers. Flat packing and automation can be utilized by the company in controlling the cost and provision of lower-priced products to the customers.
Conclusion
The literature provided in the report generally shows that operation management is a difficult task for a company to implement effectively. The company has to commit to setting the strategy in the right direction so that more benefits can be realized in forms of customer satisfaction and in sales. IKEA Company has to understand and implement the main pillars of operation management so that its trend of success and compatible advantage can last for years in the furniture business.
Reference List
Balogun, J., Hailey, V. H. and Johnson, G. (2016) Exploring Strategic Change FT Prentice Hall
Hill, A and Hill, T (2012) Operations Management Strategic Context and Managerial Analysis. Third Edition, Palgrave Macmillan
https://www.ikea.com/ Accessed last on 19th December, 2018.
Jacobs, F.R., Chase, R.B. and Lummus, R.R., 2014. Operations and supply chain management (pp. 533-535). New York, NY: McGraw-Hill/Irwin.
Johnson, R and Clark, G (2005) Service Operations Management (Improving Service Delivery). 2nd ed. FT Prentice Hall
Kristoffersson, S., 2014. Design by IKEA: a cultural history. Bloomsbury Publishing.
Lowson RH (2002) Strategic Operations Management The New Competitive Advantage. Routledge.
Porter, ME (2004) Competitive Strategies: Techniques for Analysing Industries and Competitors. Free Press
Scholes, K (2008) Exploring Corporate Strategy: Text and Cases FT Prentice Hall
Scholes, K, Johnson, G and Barney JB (2005) Exploring Corporate Strategy: Text Cases: With
Slack, N and Lewis, M (2015) Operations Strategy. FT Prentice Hall
Slack, N, Chambers, S and Johnson, R (2004) Operations Management 4th ed. FT Prentice Hall
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