IKEA: A Case Study in Operations Management

INTRODUCTION

“Operations management is an area of business that is concerned with the production of goods and services, and involves the responsibility of ensuring that business operations are efficient and effective. IKEA is a privately-owned company founded in Sweden by Ingvar Kamprad. He first started to sell pens, wallets, picture frames, table runners, jewellery and nylon stockings and decided to add furniture in 1947. IKEA has now around 260 stores, much of which are located in Europe, the United States, Australia and Asia.

Nowadays IKEA is known for selling modern and utilitarian furniture at low prices their vision is “To create a better everyday life for the many people”. IKEA motto is “Affordable Solutions for Better Living”. Their operations management are strongly focused on achieving this goal; they use their resources effectively to gain profit by developing a more economic way for the production of their wide range of service. This has involved them in working closely with their suppliers in order to control aspects of their business from the production line.

Unlike most furniture stores, IKEA sells goods which need to be assembled by the consumer; this has enabled them to use space more efficiently in their warehouse. The company has developed methods to satisfy customers with their Unique Selling Point (show room, children’ area) and a wise use of technology (stock control, internet). IKEA’s operations include the way they manage the processes, this includes the way they run their business-“culture”-, their norms and procedures- values-, decision making and strategic planning, and the qualitative and quantitative control of their resources- people, stock.

To enable IKEA to maximise efficiency and minimise costs they need to review or maintain the processes of their operations which include the planning and control, their supply networking and the use of technology. IKEA has managed to develop effectiveness by understanding the needs of their stakeholders and incorporate them into their agenda. Scenario 1: Visit a furniture store (other than IKEA) and observe how the shop operates, for example, where customers go, how they interact with them, how big it is, how the shop has chosen to use its space, what variety of products it offers, and so on. )

HOW IS THE SHOP SIMILAR TO IKEA, AND HOW DOES IT DEFFER?

“Furniture to go UK” is a furniture store located in Enfield, Brimsdown. They started as a family business nearly 20 years ago. This business operates on a much smaller scale than IKEA and only has one store. However, the company has managed to create customer loyalty thanks to the simplicity of their layout and good distribution operations. The way they control and managed their resources differ from IKEA. The following table represent the similarities and differences between IKEA and Furniture to go UK:

They have included kitchen, bathroom and home improvement items such as bedding covers, curtains, etc whereas Furniture to go UK only sells furniture such as bed, cupboard and sofas. Unlike Furniture to go UK and most other stores, IKEA has found an effective way to use space efficiently by selling flat packs; most of their products need to be assembled by the consumers which may facilitate the transport of goods. On the other hand Furniture to go UK sells already assembled items but offers free delivery services. Another difference is that IKEA has a catalogue and a website on which it offers more than 12,000 products.

Their catalogue is available at the point of entrance for customers to see a brief representation of IKEA’s products. Location Both stores need large display areas for their products; because of the high price of land in the city centres both companies have chosen to be based on the outskirts of town. Strategic location is also used as an advantage for their distribution operations as the circulation of goods is facilitated by the proximity of the motorway. Facilities In order to facilitate the loading of furniture IKEA and Furniture to go UK have large exit areas and large parking areas.

However the facilities incorporated within the stores differ: IKEA had to take on board the fact that some customers spend more than two hours within their stores and therefore decided to install areas to make their customers’ shopping more convenient; e. g. a creche where customers can leave their children supervised whilst shopping, toilets and a small cafeteria. IKEA has made an efficient use of the space within their stores in order to optimise the quality of their stores and services. Layout and Shopping experience The layout within “Furniture to go UK” is very much straight forward.

Unlike IKEA, there are not any show rooms. Furniture are displayed into three main departments (sofas, studying areas, bedroom) and similar items are placed together for customers to make comparisons. Customers can ask for assistance to collect any goods they would like to purchase (or placed orders when necessary) and go to checkouts to make payments. IKEA also have some areas where similar items are displayed together; however the layout of their stores encourages customers to take a specific route to view items; taking customers from room setting/show room, warehouse to checkout.

Items are associated to reference number that indicate their location within the warehouse as can only be picked up in the warehouse – excluding the majority of small items-. Physical environment and Customer services IKEA goods are well displayed; the design of their “room setting”/show rooms is rather attractive and should give suggestions on how customers could improve their living space at home. This often leads to impulsive buying. IKEA’s core competency is their Unique Selling Point – their physical environment- which gives a good reason for customers to keep coming back to their stores.

Unlike “Furniture to go UK”, IKEA are self-service stores however there are several information desks in stores where customers can ask for directions and assistance. It is a part of their commitment to offer outstanding customer service/help and assistance; on the other hand “Furniture to go UK” has fewer members of staff whom provide advice on products.

CHANGES IN THE BUSINESS ENVIRONMENT ARE SHAPING A NEW OPERATIONS AGENDA. WHAT CHANGES IN THE BUSINESS ENVIRONMENT COULD SHAPE A NEW OPERATIONS AGENDA AT IKEA?

Though changes are constantly happening within the business environment they can be difficult to forecast. They affect the organisation and its operations at all levels.

ENVIRONMENT ENVIRONMENT

Competition Because IKEA operates within a competitive market, it is essential to monitor competition and keep developing more ideas an products and services. According to Porters’ Five Forces, competition creates threats:

• Threat of new entrants/substitute good
• Bargaining power or customers
• Bargaining power of suppliers
• Threats of substitute products
• Rivalry among existing firms

Customers are constantly seeking for better services and lower prices and are likely to switch from IKEA to any other furniture store. Competition and high customer expectation forces IKEA to keep developing ideas and minimise costs to satisfy customer needs. There is a constant threat of new businesses, new products; the biggest competitors of IKEA in England are Dfs, Furniture Village, Homebase or even Argos which offers similar items at low prices. For this reason IKEA need to follow trends and need to respond to consumers’ tastes by developing the range of their products by improving/maintaining their supply networking and evolving their USP (show rooms) . Economic factors

The volume of the demand can sometimes vary from one month/week/year to another in IKEA stores; therefore operations managers often need to take on new agendas to “control” the demand and supply. Directors at IKEA will try to take power over a low or high demand by undertaking appropriate decision making regarding their stock, staff, technology, facility and promotion. At a strategic level, the board of directors will need to take into consideration the interest rate and the funds needed for investments, expansion and market entry. Technology factors

IKEA relies on new technology to remain competitive; however, the cost of new technology needs to be planned. It can sometimes cut cost in a long-term. New technology and software have helped IKEA to cut cost on labour by substituting some of the work force by technology/machines. New technologies have change the way most customers shop and therefore way companies operate. Customers seek for more convenience; nowadays more and more consumers are finding convenience of online shopping; the integration of online-based company create competition that IKEA needs to tackle. Environmental factors

Recent environmental are forcing IKEA to reduce the amount of waste generated by their activities (transport of goods, packaging, recycling) and keep finding new ways to do so, there are charges for the disposal of waste that IKEA constantly tries to minimise. Legal factors Due to the desire of companies to make profits, child labour has been used by multinationals for several years, to respond to this problem Governments of various countries have forbidden child labour and implemented other regulations to improve working condition e. g. : increase the minimum wages and limitation on working hours.

New laws are forcing IKEA to implement new regulations and code of practise to avoid being penalised or fined by the Government. Recently, regulation on the emission of carbon dioxide has been implemented, which might not affect IKEA too much, as it is a part of their business culture to reduce their emission of CO2.

WHAT RESPONSES MIGHT BE PROMPTED IN OPERATIONS MANAGEMENT FOR EACH OF THE CHANGES IDENTIFIED?

Operation Management is mainly focused on resolving short and medium-term operational planning; they have to remain flexible towards changes whenever they occur. Benchmarking IKEA needs to monitor their competitors (e. . : Dfs, Furniture Village, etc). They need to adapt their operations to provide better products and services and develop intellectual property. IKEA USP is their Swedish shops and show rooms and that is what makes them stand up against their competitors. At the strategic level of the operation, IKEA has to plan investment towards the improvement of their stores, their market entry and product/service development, the training of staff or even the implementation of new technology and IT systems to beat competition. Effective market research and forecasting helps IKEA to respond to new trends and customers’ tastes.

Competition is forcing IKEA to maintain low prices; IKEA outsource production in countries where labour is cheaper (Asia, Eastern Europe). Economic factors The variability of supply and demand has introduced the need of new measures. IKEA needs to make profit by selling their goods and trying to transform a low demand of their products into a high demand. They can increase the demand by lowering their prices (tactical level), or merchandising their products differently.

On the other hand, they need to respond to a high demand by providing customers with the right amount of stock. Just-in-Time” is considered as being the most cost-efficient system when dealing with stock. However, there are different ways to control the fluctuation of stock, MRP, MRP2, Kanban which will be explained in more details in question 6. To add on to the above, the fluctuation of the demand needs to be supported by the recruitment of new staff. Other economic factors such as interest rates have to be considered for investment and development. Software and Internet To add on, stock control can be supported by software: CRM software (e. g. : IKEA store card) and Transaction Process System (TPS).

In 2005, IKEA improved their website which now contains more than 12,000 products enable customers to view an overall outlet of IKEA products. Online shopping allows IKEA to reach a wider audience and compete with other companies. Environmental factors and social responsibilities IKEA is finding new ways to reduce the carbon dioxide emissions foot print of their products and services; IKEA’s suppliers have to respect the “IWAY” code of conducts to preventing wastage and pollution. IKEA environmental responsibilities involve:

• Smart packaging which reduces transport emissions
• Prevent the damage of products
• Production of recyclable goods
• Using energy efficient lighting in stores
• Reduce emission to air, ground and water
• Recycling and reusing large quantity of materials
• Use woof from managed area
• Waste sorting
• Free shuttle buses at IKEA stores to reduce traffic jam.

Legal factors and social responsibilities IKEA has implemented a code of conducts in order to respect legislation and their code of ethics from the production processes. “IKEA expects its suppliers to respect fundamental human rights, to treat their workers fairly and with respect. (IKEA Corporate Responsibilities Report 2005). Suppliers should enhance their working environment and respect laws on working conditions (minimum wages, overtime, forbid child labour, etc).

DESCRIBE THE STRATEGIC OBJECTIVES THAT IKEA SHOULD ADOPT TO MEET THE NEEDS OF ITS STAKEHOLDER GROUP?

Stakeholders are group of people who have interest in the company. IKEA needs to know and understand the needs of its stakeholders. The strategic objectives that IKEA should adopt to meet its stakeholders’ needs have to be balanced between the needs of the company and its takeholders. At the strategic level, IKEA has to plan the use of their resources to achieve TQM, flexibility, speed, an effective code of conduct and communication, an efficient stock control and reduce costs. Total Quality Management (TQM): The simple objective of TQM is to “Do the right things, right the first time, every time”. TQM involves a continuous improvement of the production of goods and services and seeks to integrate all organisational functions to focus on meeting customer expectations needs and organisational objectives.

IKEA needs to analyse their processes through a customer’s point of view and need to incorporate them in decision making. The Zero default culture can be implemented to meet customers’ expectations, it involves a good relationship suppliers whom need manufacture reliable and error free products; errors cost money and need to be avoided. The main aspects of TQM are the needs of suppliers networking and continuous improvement. Reliability Reliability needs to be created between stakeholders and IKEA, therefore IKEA needs to follow a code of ethics as well as producing mistake free products.

Suppliers rely on IKEA’s loyalty while IKEA rely on their suppliers adapt their production by follow their code of conduct:

• The IKEA Way on Purchasing Home Furnishing Products
• The IKEA Way on Preventing Child Labour
• The IWAY Standard.

This code of conduct implies that suppliers should produce goods efficiently by minimising waste, respecting timeliness, care for the environment and comply with the legislation in regard to working conditions. Speed Speed includes the order-lead time, customer processing times and the frequency of deliveries.

To improve speed, IKEA depends on their distribution system to maintain the right amount of available stock in their warehouse. In addition, IKEA needs to improve their till and warehouse systems to reducing the time between the demand of product and the purchase. Dependability Dependability is related to the speed of IKEA suppliers to respond to orders; IKEA relies on their suppliers to adhere their schedule by providing products at the right time. The best practise to do so is “Just-In-Time” (JIT) which will be explained in question 6. Flexibility

IKEA has to adapt their planning to the market environment and the needs of their stakeholders. This includes the ability to adapt their volume and timing to the Demand, adapt their products and service to the new trends and so forth. This will enable them to cope with the variation and the variety of the Demand. They have to be able to change their products and services when necessary as well as responding to the fluctuation of the Demand. The best approach is for IKEA to remain proactive rather than reactive to the changes. Their “flat pack” has enabled them to achieve flexibility of the available space for stocking.

Cost In this case, IKEA needs to balance costs against budget; their suppliers need to minimise the cost of the production of goods by eliminating waste… Products need to be produced at a cost that permits IKEA to sell products at competitive prices and yet make profit. Maintaining good relationships Recently, IKEA has launched a store card which enables them to gather and analyse their customers’ behaviours; these needs should be achievable through with the support with suppliers to keep meeting some of their customer expectations.

IKEA has created a Business-2-Business loyalty and long-term relationships with their suppliers. Good relationship with employees is vital for IKEA to operate; according to Maslow’s theory effectiveness can be achieved by fulfilling the needs of employees who may be directly affected from the decisions taken by the organisation. IKEA needs to fulfil, which are as follows: psychological, safety, belonging, esteem and self-actualisation.

HOW DO IKEA’S OPEARATIONS ENABLE THE COMPANY TO MAXIMISE EFFICIENCY AND MINIMISE COSTS?

This question involved the analysis of the 4 E’s at IKEA: L IKEA is constantly seeking for new ways to improve the efficiency of their operations. “Flat packs” Smart packaging is the most effective weapon of IKEA, it has helped them to reducing the cost of transport as well as its environmental impact. Their Clever design and flatter packaging permits to squeeze more products into load-carrying unit and warehouses. IKEA can stock more goods more efficiently; it is their major asset for running their business the way they do from stock control to warehouses and show rooms.

Flat packs” has developed a collaborative CRM as customers play their role of keeping prices low by assembling products themselves. Quality Management As mentioned above IKEA works closely with their suppliers in producing quality and doing the right thing, products need to be error free and up against standards (ISO). Preventing errors has helped IKEA to minimise the cost of error and the recall or return of goods. Stock controlDistribution systems IKEA has to respond to the Demand and the fluctuation of the Demand therefore they work closely with their suppliers who provide stock at the right time.

They have developed different ways of distributing goods (rail, road, sea). The support of Transaction Process System support their decision making in ordering goods at the right time, as it enables them to measure the number of remaining goods in warehouses (RFID). In addition to the above their code of conduct involves their suppliers to respect timescale and minimise the cost of production. Economies of scale are advantages for IKEA for the scale of operation, its larger size is an advantage to compete and minimise the unit costs and improve productive efficiency.

Reusing and recycling IKEA is focused to find cheap solutions to run their business and produce product in a more economic way; the reuse and recycling of their products has reduced the cost of manufacturing by limiting the purchase of raw material. IKEA products are also environmental friendly and recyclable, whenever their products reach their end of life they are turned into raw materials for the production of new goods. Internet “In 2005 IKEA reported over 275 million visitors to their websites” (http://en. wikipedia. org/ wiki/IKEA).

Their website is a tool for reducing the costs of labour and stores; it offers convenience to customers and minimise the cost of customer service. Internet allows IKEA to reach a wider audience and therefore enhance effectiveness by increasing profits. However, the internet is forcing IKEA to constantly improve their distribution and delivery operations. Their catalogue and website are a good representation of their products and provide information to customers whom can make decision of their future purchases. “The IKEA catalogue is one of the cornerstones of the IKEA Concept.

It is distributed to more than 100 million households in more than 30 countries, and printed in 116 million copies ». (IKEA Corporate Responsibility Report, 2005). The layout of their stores IKEA stores offer a wide range of products and services (Swedish shop, etc) because they have managed to create en efficient use of their space by stocking goods (flat packs) in their warehouses. The layout of their stores encourages customers to take a specific route to view items; taking customers from room setting/show room, warehouse to checkout. To add to the above their location in the town outskirts reduces the cost of rent. )

EXPLAIN HOW IKEA SHOULD COPE WITH FLUCTATIONS OF DEMAND OVER THE DAY, WEEK, MONTH OR YEAR?

IKEA’ s Operations management have to plan and control the input resources to meet the Demand, this area has the monitor the timing, quantity and quality of the input resources (raw materials) to meet the demand of products and services (outputs). This can be a hard task as the demand constantly varies on a daily, weekly, monthly and yearly basis due to external changes (economy, competition, seasons-Christmas-, etc). Planning and control Planning is based on forecasting an expected demand.

IKEA is committed in to cope with the future fluctuations, however unexpected demand can occur and thus planning needs to be supported by control to make the necessary changes to meet customers’ demand. There are three levels of capacity control (level capacity, chase demand plan and manage demand) which are more or less reactive or proactive in regards to the fluctuation of the demand. Anticipation IKEA should assess the demand against their capacity levels; the two major assets of IKEA is their marketing tools which can influence the demand and their “flat packs” which enable them to use space more efficiently in their warehouses.

Flat packs” should help them in stocking safety stock for unexpected growth in demand, however stock cost money and should be available when needed. IKEA should anticipate the demand by analysing historical data against the previous year and trends (customers’ tastes, competition). In the long term, IKEA needs to forecast necessary investments to meet an expected demand, e. g. : if the business had been successful they may need to open new stores, employ more people and use new technology to increase production or if sales (market entry, product development, number of employees, etc).

In the medium term (monthly), IKEA needs to increase the level of their capacity control by managing and taking control over the demand with the use of promotional tools (e. g. : discount and merchandising). On the other hand, the short-term planning and control is to do with weekly and daily operations to meet the demand, this involves the scheduling of reordering systems and displaying goods. Inventory control After analysing the demand IKEA should plan and control their inventory/stock. Inventory planning and control at IKEA is supported by RFID which gives information on the remaining available stock.

This software support decision making for ordering stock. IKEA uses a large number of Management Information Systems and (MIS) and Decision Support Systems (DSS) for Material Requirement Planning (MRP). MRP is to help IKEA decide on the quantity, timing and priorities for ordering stock. It gives them information on the revenue made for each department of the organisation. However, pilferage needs to be taken into consideration therefore stock is being counted manually four times a year to estimate the pilferage rate and get an accurate idea on the inventory level.

Planning control necessitates networking and information sharing between IKEA and its suppliers, IKEA relies on their suppliers to provide the right products at the right and thus IKEA need to take on board the timing of deliveries when reordering stock. There are two main approaches to cope with the fluctuation of demand: pull systems and push systems which are illustrated in the table below: Push Systems Pull Systems Complementary All Time Buy Replacement Consignment stocks Project Manufacturing

Pull systems are reactive approaches to the fluctuation of demand while push systems are proactive. Just-In-Time (JIT) “The aim of a JIT approach is to produce goods and services exactly when they are needed, with perfect quality and no waste, and is a philosophy of manufacturing embodying a collection of tools and techniques. IT is a technique associated with large industries, but it has also been usefully applied to smaller-scale, low-volume organisation as well. ” (Johnston, 2003). There are three JIT techniques: Kanban control, levelled scheduling and synchronisation.

JIT is a pull system, which involves flexibility from IKEA’s suppliers to producing the right products (design, standards) and deliver goods when needed. JIT is a reactive approach toward the demand; it attempts to match production closely to the demand by adopting the right flow for production and delivery. According to IKEA’s code of conduct, suppliers should be committed in reducing waste and work accordingly to their schedule. IKEA should balance reactive and proactive strategies to run their business; in the long term they should forecast the fluctuation of demand by undertaking strategic planning (e. . : expansion) but, IKEA should remain flexible in the medium and short term to match production to the unexpected fluctuations of demand. They should use software accordingly and share information (RIPD, MPR) with their suppliers to achieve a successful JIT schedule by balancing planning and control.

WHAT ARE THE INPUTS? TRANSFORMATION PROCESSES AND OUTPUTS FROM THE PROCESSES DESCRIBED IN THE IKEA CASE?

The graph above demonstrates how resources are transformed into IKEA stores in order to achieve the goals and objectives of the company (outputs). The resources inputs are divided into two categories: transformed resources and transforming resources. Transformed resources are the ones that can be converted via the transforming resources; transformed resources include information, customers and raw materials whereas transforming resources include the resources used upon them. Operations management intervene to obtain efficiency of the use of resources and the transformation processes. The resources outputs are the final result of the operation management.

In this case, IKEA is managing its resources to acquire profit, convenience and value for money to customers. Scenario 2: Write down two different services that have consumed in the last 12 months.

DESIGN AND DESCRIBE THE ORGANISATION OF THE OPERATION PROCESS OF EACH OF THE TWO SERVICES YOU HAVE USED?

Service1: Fitness First The above table represent the operations processes and transformation system of Fitness First, Walworth road which is a health and fitness club. Their services are described as the transforming resources which include: equipments, sauna, spa, steam rooms, changing rooms and so forth.

The transforming processes underline the action taken by the members of staff to satisfy their clientele which involve the booking of personal trainings, health checks and the cleanliness of their equipment. These operations processes need to be monitored in order for them to create customer loyalty and maintain members within their gym. As a result of an effective control of their resources the outputs are customer satisfaction and profit for the organisation. Service 2: Yan’s kitchen This table represents the operations processes of Yan’s kitchen is restaurant specialised in Portuguese food.

The role of this organisation is to provide quick services and respond to the needs of their customers; the input resources include the members of staff: waiters, chefs and the facilities: toilets, dining areas. The main operations processes of Yan’s kitchen are to serve food and beverage to customers. The way they operate their business is different to most restaurants. Once customers are welcomed at the point of entrance they either have the choice to eat in or order to take away, yet if they decide to eat in they will need to queue up an order at the till and pay at front, then wait to be served at their table.

The transformation processes can therefore lead customers to have to go through long queues and waiting time, but on the other hand the quality of their food and the friendliness of staff can encourage customers to come back.

DID THE SERVICE MEET YOUR EXPECTATIONS? IF SO, WHAT DID THE MANAGEMENT OF SERVICE HAVE TO DO WELL IN ORDER TO SATISFY YOUR EXPECTATIONS? IF NOT, WHERE DID THEY FAIL? WHY MIGHT THEY HAVE FAILED?

Service 1: Fitness First As a member of Fitness First I expect the company to offer convenience, good equipments and cleanliness. I have been a member of Fitness First for a year and staff has always been welcoming and helpful. I value their services due to the flexibility of staff to respond to my needs; the changing rooms are always clean, staff is always available and equipments are up to date and operational. They exceeded my expectations by providing a wide range of products and services such as steam room, sauna, massages, beauty salon, studio classes, juice bar area, sunbeds, free health check and DVD’s rental. They offer value for money and different types of membership at competitive prices e. g. weekend membership-from Friday 4pm to Sunday included- for 19. 95 per month.

Service 2: Yan’s kitchen Yan’s kitchen is restaurant specialised in Portuguese food and grilled chicken. The majority of their clientele is between 20 and 30 year-old. I have been to their restaurant in Stratford and left quite unimpressed of the way they run their business. They did not meet my expectations mostly because of the standardisation of their products and services and the lack of services and flexibility. Though they offer quality and tasty food there are not enough dishes on the menu: the only meat available on their menu is hicken and they lack of flexibility to respond to everyone’s tastes and expectations. Another example is the restricted choice of desserts, they only have four flavours of ice creams and it is not possible to mix them as they come in individual box. The quality of their food is rather good but cannot respond to everyone’s needs. Yan’s kitchen is a self-service restaurant whereby customers need pick up their plates, cutlery and sauces from the counters as well as ordering their food at the till, which I find inconvenient when dinning out with friends and family.

I had to queue up twice, once for to order my main course and a second time to order the dessert; they do not take orders from the table but yet serve and bring to food to tables. Some customers are not familiar with their set menu and need assistance for choosing what they would like to eat which can result in long queues and waiting time. I also felt that the members of staff were rather cold and unfriendly and there was no one to greet customers at the point of entrance. Prices are rather low in comparison to most restaurants, you can have a main course for around ?  however the portions of food are small and the lack of flexibility can force customers to buy different set menu to get exactly what they want.

IF YOU WERE IN CHARGE OF MANAGING THE DELIVERY OF THESE SERVICES WHAT CHANGES WOULD YOU MAKE TO IMPROVE THE SERVICES?

Yan’s kitchen restaurant has responsibilities towards the quality of their services and therefore should provide excellence in services and be customer oriented. In my opinion, the major problem is the queues and standardisation of their products and services.

As a manager I would try to create effective operations to reducing queues as well as a personalised and friendly environment. Necessary improvements and developments are listed below: Reducing queues Yan’s kitchen should be focused on reducing queues, and improving customer services. Queues can be easily avoided by taken customers’ orders from their tables. I understand the issue of people leaving without paying therefore I would suggest that payments should be made after customers have placed their orders and customers should be able to cash or credit card from their table.

Improving customer services Tables should be set up before customers arrive and cleaned straight after they leave. To improve their customer services by employing the right people who should be friendly and welcoming. Each customer should be greeted at their point of entry and directed to their table. More choice There is a variety of Portuguese specialities and Yan’s kitchen should create more choice in their menu, this will probably attract more customers to their restaurant.

They should include a wider variety of dishes into their menu such as fish dishes, red meat and more healthy options (salad, vegetable) to respond to customers’ tastes. Yan’s kitchen also needs to be more flexible to the demand and be able to personalise some of their dishes-as mentioned in question 9, they were not able to mix different ice cream flavours- most restaurants would prepare the ice cream and mix flavour if necessary and this should be implemented by Yan’s kitchen. Take away

Offering take away would help Yan’s kitchen to generate more revenue and remain more competitive as more of their local competitors offer this option. Training To respond to the above changes, Yan’s kitchen will need to train their staff to improve customer services, greetings, etc. Yan’s kitchen might need to recruit new waiter/waitress to better services (taking orders), train chefs to create new dishes. In addition, take away will require the company to take phone orders. Continuous improvement

To keep seeking for improvement of the way Yan’s kitchen is running their operations by encouraging feedbacks from customers and employees to develop new ideas and monitoring their local competition. CONCLUSION After answering the questions it becomes clear that Operation Management is a customer oriented process focused on the organisation of the different operations of the company. Operations Management is an important functional area because it plays a fundamental role in achieving customers’ expectation by analysing and control resources and external factors.

The role of the operations manager is to plan and control the operations processes in order to meet the business goal (profit) through providing the right product at the right time to customers. There are different theories on how to achieve an effective management of resources, but they all involved close relationships between suppliers, the business and customers and flexibility from suppliers to match the need of customers. The ultimate goal of IKEA is to increase customers’ demand, however because of increasing competition IKEA needs to adapt their products, pricing by seeking continuous improvement and develop Unique Selling Points.

IKEA has managed to offer competitive prices to their customers by running the business efficiently (flat pack, timing) and minimising costs (waste). Customer Relationship Management, Material Requirement Planning and other software help to support organisation in planning and controlling their resources as their monitor customers’ behaviour towards sales.

BIBLIOGRAPHY

1. Book Johnston Robert, 1993, 2003, Cases in Operation Management, Prentice Hall, Essex, ISBN: 0-273-65531-0
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