Operations management entails controlling, designing and supervision the production process as well as the redesign of business operations associated with the production of services or goods (Meredith & Shafer, 2010). In addition, operations management places emphasis on the efficiency of business operations with regard to the utilization of resources and effectiveness in meeting the customer requirements. To this end, operations management is mainly concerned with the management of processes associated with the conversion of inputs (energy, labour and materials) into outputs (services or goods). Some of the aspects of operations management include materials planning, cost control, productivity analysis, systems analysis, maintenance of equipment, factory management and production control among others. Part 1 of this project is concerned with investigating and analyzing the use of operations management based principles in IKEA and EF Language School. This involves analyzing how the selected organizations are using the concepts of six sigma, lean management and process re-engineering. In addition, the paper reviews the tools and techniques that these organizations use in the design, organization, capacity, processing, problem solving and control strategies as well as how the organizations address internal and external customers, customer satisfaction targets, core competencies, competitiveness and total workforce contribution.
Use of Operations Management Based Concepts at IKEA
IKEA is a private global corporation that specializes in retailing home products including flat pack furniture, kitchen and bathroom items, and accessories using their own retail stores that have been established globally (Chopra, 2009). IKEA is the largest furniture retailer globally and is considered the pioneer of affordable flat pack design furniture. Formed in 1943 in Sweden by Ingvar Kamprad, the firm has grown to increase its global presence and dominance in the retail furniture industry. As of 2011, the company owned and operated 332 retail stores distributed in 38 nations. Its product portfolio comprises of more than 12,000 products. With this global scale of operations and a large product portfolio, there is no doubt that operations management is vital in ensuring the success of the company (Gibson, 2012). The company also relies significantly on a complex suppliers’ network comprising of 1300 direct suppliers, 26 centers for distribution, and 10,000 sub suppliers. Besides, the firm relies significantly on its supply chain, which entails a range of processes from raw materials acquisition to the delivery of their products to their customers. The key operational processes are managed and controlled at the firm’s head quarters in Almhult, Sweden. Nevertheless, there are some operational problems that have been reported at the organization including customers’ frustrations because of overcrowding in its retails stores and product availability and wait times. Some of the measures that IKEA has implemented to address these operational problems include establishment of checkouts for customers with small items and increasing the number of employees to provide assistance at key points. System and operations management based principles are utilized in the organizations for several processes such as the store arrangement and layout in order to facilitate a smooth flow of customers; stylish design of products in order to enable flat packing; effective job design in order for the staff to contribute to the store effectiveness and efficiency; placing the retail stores in the right places in order to develop an effective supply chain; guaranteeing on-shelf availability by using inventory management systems; and monitoring and measuring the quality of its products by use of effective quality control systems in order to ensure high quality service for its customers (Gibson, 2012).
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Application of Six Sigma at IKEA
Six sigma refers to a metric used for measuring defects as well as improving quality. In addition, Meredith & Shafer (2010) asserts that the sex sigma is a methodology that is deployed to lessen the defect levels to less than 3.4 defects per million opportunities. As Meredith & Shafer (2010) explain, the six sigma concept has the primary objective of identifying and eliminating the potential causes of errors as well reducing the chances of variability in business processes and manufacturing. Six sigma deploys a number a quality management methods such as statistical methods. In addition, six sigma projects undertaken in any corporation follows a clearly defined series of steps characterized by quantified value targets such as profit increase, cost reduction, pollution reduction, customer satisfaction, and process cycle time reduction. Since IKEA is a manufacturing company, the six sigma concept is an ideal quality management tool that the organization can use to ensure that it provides goods with consistent quality to its customers. IKEA uses the six sigma as a quality control and improvement tool; specifically, IKEA uses the DMAIC (define, measure, analyze, improve and control) methodology as a practical implementation of the six sigma approach to facilitate product improvement process (Chopra, 2009). In addition, IKEA has undertaken a number of six sigma projects, with a recent example being the “IKEA Group and SSD Global, Inc Lean Six Sigma Project”, which was implemented during September 15, 2010, which was undertaken with the main objective of improving the process of online customer experience. Another pointer that IKEA uses six sigma to facilitate quality and process improvement is the fact that people within the organization have been grouped as champions, yellow belts and green belts. Other attributes of six sigma at IKEA include product improvement and development that is consumer driven, optimization of the manufacturing and design goals, using technical innovation for price innovation, a series of lean six sigma projects, emphasis on shorter lead times achieved through reduced product development cycles and product life cycle management (Gibson, 2012).
Lean Operations at IKEA
Lean production, lean enterprise or lean manufacturing, sometimes referred to as lean, is a form of a production practice that places emphasis on achieving the maximum customer value while reducing waste. Essentially, being lean implies that creating more customer value using fewer resources. An organization that is lean has an understanding of the customer value and places emphasis on its key processes in order to continuously improve customer value. The primary goal of lean tactics is to offer the perfect customer value using a value creation process characterized by a zero waste. In the context of IKEA, Chopra (2009) asserts that lean operations and tight control have played a pivotal role in the company’s success since its establishment. According to Chopra (2009) the lean production process is part of the company’s business model, which has the main objective of optimizing the business operations of the firm ranging from the acquisition of raw materials to the delivery of the flat-packed furniture to customers. The concept of lean operations is applied in almost every process of product development as well as other business operations at IKEA. In the context of the manufacturing industry, product assembly and decomposition play a significant role in influencing its cost. Standardized production is a precursor to product decomposition whereas the assembling standardized parts influence marketing and logistics. Costs can be cut by controlling the processes of product decomposition and assembly. In order to achieve this, IKEA makes use of the conventional principle of design for manufacturability (DFM) and design for logistics (DFL) by taking into consideration the variables for manufacturability, product function, and the convenience of product assembly, transport and packaging; these are what constitutes lean operations during product development at IKEA (Gibson, 2012). In addition, lean operations at IKEA facilitated through the concept of customer self-service, whereby the customers themselves are engaged in the collection, transportation and assembly of the furniture bought. Through combining careful design decomposition, working with cheapest suppliers of raw materials and customer self-service, IKEA benefits from lean operations through significant cost savings, which are then transferred to customers through competitive price offerings, which creates value to customers while at the same time boosting the firm’s profitability. Management operations at IKEA are also lean, whereby IKEA uses a flat organizational structure. The IKEA model for lean operations is shown in the figure below (Gibson, 2012).
Process Re-Engineering at IKEA
Process re-engineering involves the design and analysis of processes and workflows within a firm. It is undertaken with the aim of helping a firm to rethink how they undertake their business operations in order to enhance customer service, become competitive and reduce operational costs. According to Meredith & Shafer (2010), process re-engineering ensures that the business processes of an organization are fragmented further in sub-tasks and sub-processes that are undertaken by numerous functional units found within the organization. Since its establishment, IKEA has been at the forefront in transforming its operations in order to optimize business performance. For instance, IKEA has introduced an online platform whereby customers can make inquiries about available products as well as make purchases; this is an improvement from the conventional method whereby customers had to walk in their retail stores in order to make purchases and inquiries about product offerings (Gibson, 2012). The use of Enterprise Resource Planning (ERP) is also another practical example of the use of process re-engineering at IKEA. Essentially, IKEA is embarking on coming up with ways to continuously improve the effectiveness and efficiency of its business processes as well as its performance. IKEA uses the Lawson Opportunity Analyzer to recognize the most crucial opportunities to improve business processes as well as develop strategic goals; this has been helpful enhancing product availability, reducing customer complains, and reducing the order processing time. Technology development is also another way that the company uses to improve its products. In this regard, the firm focuses on quality and price, function and design, and health and environment during the product design and development phase (Gibson, 2012).
IKEA Core Competencies and Competitiveness
IKEA has a number of core competencies including low pricing, flat packaging, excellent quality and diverse functionality. The low cost business model used by IKEA provides it with a competitive advantage since it enables the firm to offer flat packaged furniture at relatively lower prices when compared to its competitors.
Facility Location Planning and Layout
According to Meredith & Shafer (2010), the ideal location for a warehouse or a retail store plays a pivotal role in the commercial success of any firm as well as the development of a sustainable competitive advantage. In this regard, IKEA places a lot of emphasis on its customers’ convenience, who are mostly young adults living in cities; as a result, most of IKEA stores are often located at the heart of a city to facilitate accessibility using public transport because the customer may not be owning a car and that IKEA focuses on environmental conservation. In addition, the store location is often found in the middle of several apartments and condominium communities and surrounded by shopping centers (Gibson, 2012). In addition, each store takes a sizable land with the packing space designed to accommodate several moving tracks. IKEA stores combine both a warehouse and a showroom. In addition, the store is designed in a manner that it facilitates smooth flow from the parking, walking in the store, placing an order, picking the goods, and lastly making payments. In addition, a number of facilities have been integrated within IKEA stores in order to persuade consumers to stay longer; for instance, there is a children’s play area that is supervised, a parent and baby room, small cinemas, and cafes and restaurants.
Overall Assessment of IKEA’s use of Operational Management Concepts
It is evident from the above discussion that IKEA places a lot of emphasis on efficiency and effectiveness of business operations; as a result, the company has integrated operations management concepts in almost every business process and operation in order to sustain the low cost model. It can be argued that IKEA is a prime example of a corporation that relies significantly on effective operations management.
Use of Operations Management Based Concepts at EF (Education First) Language Schools
EF is a global educational corporation that focuses on providing language training, cultural exchange, educational degree program and educational travel. EF was established in 1965, has its headquarters in Lucerne, Switzerland, and is privately owned by the Hult family. The company has at least 400 schools, making it the largest privately owned education provider globally (English First, 2013). The company has about 34,000 employees in its subsidiaries as well as non-profit organizations located in 50 countries globally. The company was involved with providing language training services during the 2008 Olympic Games held in Beijing. It is still the language training services provider for 2014 winter Olympics to be held in Sochi. Over 70,000 tourist sector workers, volunteers and Olympic staff are currently being trained using the company’s online English training platform (English First, 2013). Given the scope and magnitude of its operations, there is no doubt that the firm requires apt operations management approaches to be successful.
Lean Operations at EF language Schools
As aforementioned, lean operations places emphases on creating more customer value using fewer resources (Chase, 2007). In the service sector, the main service wastes are derived from delay, duplication, unnecessary movement, unclear communication, incorrect inventory, a lost opportunity to win or retain customers, and errors during the service transaction. Delays can result from longer waiting times for service delivery and response to queries (Mishra, 2009). Duplication involves aspects such as data re-entry, and duplicate details filled on forms among others. Unnecessary movement entails aspects such as poor ergonomics at the point of customer contact and multiple queuing. Unclear communication entails wastes associated with the need to seek clarification, and confusion as regards the service use. Incorrect inventory entails aspects such as the organization lacking adequate stock and the inability to offer what the customer wants. EF has devised methods to eliminate these wastes in order to ensure that they offer lean language training services. For instance, the use of an online training platform eliminates all these wastes, which in turn guarantees lean service operations as well as customer value. An online training platform also helps in reducing operational costs such as the need to build learning rooms, which is consistent with the principles of lean production. Essentially, the online platform for delivering language training services eliminates several aspects associated with the conventional approach to managing schools (Chase, 2007).
Lean Six Sigma at EF Language Schools
Lean six sigma is an operations management concept that seeks to assist organizations become competitive through becoming more cost effective, better and faster. Lean plays a pivotal role in identifying and removing waste as well as enhancing the overall speed and efficiency for service delivery. Six sigma helps in identifying and preventing errors and ensuring that processes have the capability of delivering outputs in accordance with the requirements of customers. EF language schools use lean six sigma in various organizational processes and have reported significant value in almost all projects undertaken by the EF language schools, especially when playing its role as the official language trainer for the Olympics (English First, 2013). Lean six sigma in EF language schools is evident through a number of activities, which include online delivery of language training services (reduces operational costs); language travels have to be efficient and cost effective; and that language course training contents have to be free of errors. All these applications show the significant role that lean six sigma plays in ensuring the success of the EF language school as a global language training services provider.
Operations Scheduling
Operations scheduling and planning involves the effective allocation of resources depending on the delivery dates and priority (Chase, 2007). EF language schools is involved in numerous activities including organization language travel and trips, managing the workforce, online language training services, running international private high schools, university preparation services, and language solutions for corporations among others. Effective execution of these organizational activities requires effective operations scheduling and planning. To this end, EF has categorized its customers into individuals and corporations, and that individuals are further classified into different age groups including (13-18, 18-25 and 25+); this helps in smoothening the operations associated with providing language training services. Customers can also make online bookings for various services provided by the company, which include language courses abroad, university preparation, junior courses, customized language courses and corporate language learning. In addition, activities such as cultural exchange and educational travel are organized in such a manner that they do not conflict with courses training requirements. As part of its operational scheduling, EF language school is collaborating with higher learning institutions such as the University of Cambridge in order to improve the students’ language learning experience. Other collaborations aimed at improving the quality of the language training services undertaken by EF include AISEC, Asian Games (EF was the official language training services provider for the 16th Asian Games in China), Hostelling International (which provides discounts on EF students and staff globally) and the Olympics (English First, 2013). All these partnerships have the main goal of ensuring that EF operations are executed smoothly. Some of the operations scheduling tools deployed at EF language schools include cycle time analysis, specialized scheduling software applications, and other tools such as Gantt charts; all these effective in ensuring that operations are scheduled effectively.
Overall Assessment of EF’s Use of Operations Management Concepts
EF is a global corporation, which implies that its operations ought to be coordinated effectively if the company is to report significant success. To this end, there is no doubt that the company has relied significantly on the concepts of operations management outlined above to ensure that its operations are implemented and executed effectively.
References
Chase, R. (2007). Operations managemen. New York: McGraw-Hill.
Chopra, R. (2009). IKEA case study. International Bulletin of Business Administration , 12 (31), 34-43.
English First. (2013). Retrieved September 15, 2013, from EF Language School: http://www.ef.com/about-ef/company/partnership/
Gibson, J. (2012). The Case of IKEA’s Entry Into China. Journal of Applied Management And Entrepreneurship , 17 (2), 1077-1158 .
Meredith, J., & Shafer, S. (2010). Operations Management for MBAs. New York: Wiley and Sons.
Mishra, D. (2009). Operations management : Critical perspectives on business. New Delhi: Global India Publications.
