Ikea Strategic Operation
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Introduction:
IKEA Furniture Retailer:
Whether you accept it or not, IKEA is one of the successful furniture retailers ever. The organization has 276 stores in 36 countries; the company manage to develop its own unique way of selling furniture. IKEA which has started in the year 1950s in Sweden by Ingvar Kamprad, who has built a showroom on the suburbs of Stockholm where the land was inexpensive and simply displayed suppliers furniture as it would be in a home setting. IKEA stores are designed to facilitate the smooth flow of customers, from parking, moving through the stores to place the order and pick the goods. IKEA Company has a huge number of suppliers network i.e. 1300 direct suppliers; wholesaler and transport operations include 26 distribution centres.
The following presentation will draw the details of IKEAs Operation Management and also cover the different aspects of IKEAs process designs.
The Process of Transformation of Inputs to Outputs
Process and Product designs
Supply Chain Network
Location, Layout and Flow procedure.
Operation Management and its core function:
Operation Management is one of the important activities of any organization where the resources are managed to produce and deliver products and services. The Operation function is the part of the organization that is responsible for this activity.
Three Core Functions:
Marketing Function: One of the responsible department and function who communicates the organizations products and services to market.
Product/Service development function: Responsible for creating a new and modified products and services in order to generate future customer requests.
Operation Function: Responsible for fulfilling customer requests for services through the production and delivery of products and services.
Transformational Process Model: (Input-Transform-Output)
“All operations produce products and services by changing inputs into outputs using an input-transformation-output process” (Slack et al, 2006). Although every operation has conformed this model however they differ in the nature of their specific input and output depends on the nature of the businesses too.
Example: A ford car plant and NHS hospital might look similar if you see from far away but as you come closer you will notice that one is manufacturing operation producing product and the other is a service operation and the nature of their input is also different to each other. The vehicle plant transforms steel, plastic, cloths into the vehicles whereas the hospital transforms the customers themselves
In IKEA, the input include employees hard work, smooth facilities, stylish furniture which all assembled and transformed in to the customers satisfaction and companys goodwill.
The important aspect of this Transformational Process Model is Design, the better you design your product, process or supply chain the best you get the results.
Design Skills:
“Design in our view is the purposive application of creativity to all the activities necessary to bring ideas into use either as product/services or process innovations (Bruce and Bessant 2001)”. Generally every Operation manager is designer because design is the process of satisfying peoples requirements through shaping or configuring products, services and processes. It is a conceptual exercise and should be deliver a solution that will work in practise. Designing is an activity which can be approached at different levels of details.
Product Design: “Products are often the first thing that customers see of a company. Good design products always create a significant impact on customers and satisfy them. The design of the product itself communicates the purpose of the product to its market and brings financial rewards to the business. It also enhances the competitiveness of the organization” (Slack, et al, 2006)
A key to Organization Success: A good product design helps businesses to relate strongly with their customers. In one of the UK Design Council survey reveals that 90% of businesses growing rapidly say design is significant to them. A thoughtful design reduces costs by making processes more efficient. It can also reduce the time to market for new products and services. Several organizations performances have reached to 200% better than their previous performances.
IKEA, which is one of the best furniture dealers, is also one of the best product designers too. It is certainly not easy to combine good design and good function with the right quality, top of it in affordable prices. But in IKEA working together with the skilled manufacturers, the designers find ways to get the most out of a raw material. In IKEA product design is as stylish as anyone can imagine. No matter what style one prefers, there is something for everyone.
Strategy led Product Design: “Innovative product design is fluid and intuitive. It not only spans generations, it evolves with the times”. Strategy led product design merged with idea generation, industrial design and innovation with in-depth research and analysis is always bring the organizations product in market in a way that produces measurable results and exceeds expectations.
IKEA who deals on their supplier products had decided to manufacture their own furnitures with great innovation in their operation which dramatically reduced their selling costs. The idea of selling product as self assembly flat packs and their concept of “Showroom-warehouse” where the customer can pick their own designers self assemble furniture has reduced their production and transport cost as well as retailing cost too.
Process Design: “The whole idea of process design is to make sure that the performance of the process is appropriate for whatever it is trying to achieve. Its a known fact that Process Design and Product/Service design are interrelated” (Slack et al, 2006). Processes should be designed in such a way so that they can create all products and services which the operation is likely to introduce. In many cases the product designer who design the product are also testing the products capability too to reduce the overall process time and also the other aspects.