Ikea Operations Management Essay

2827 Words Feb 13th, 2013 12 Pages
Operations Management:IKEA

IKEA’s BUSINESS IDEA (www.ikea.com): “We shall offer a wide range of well-designed, functional home furnishing products at prices so low that as many people as possible will be able to afford them."

Introduction

At the outset, it may be useful to characterise IKEA in terms of the characteristics of demand (also known as the four Vs, see Slack et al. p 20). First, IKEA is clearly a high volume operation – as indeed most international retailers are – which lends to systematising operations but which implies capital intensive processes and therefore cost considerations will be crucial. Second, IKEA offers a large number of products (up to 14000 depending on the country/store) so there is high variety in the
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Speed

Availability is a clear competitive advantage of IKEA. Customers can take-away any of the products on display in the stores on the day itself. A stock control system, consisting of a simple re-order procedure with standard buffer and order quantities specified, works to prevent stock depleting. Interestingly this system links directly with the central warehouse in Stockholm from which replenishments are sent regularly (IKEA has 31 distribution centres in 16 countries). Indeed, there is currently not warehousing capacity in the UK. Usually, if changed sales patterns would lead to stock running out faster, the buffer and reorder quantities are reviewed.

For those customers visiting stores and wishing to cut time, various measures have been initiated such as clearly marking short-cuts across the exhibition spaces or express check-out counters (without cashiers) for those customers without trolleys.

IKEA also provides the option of shopping online and subsequently having purchases delivered to your doorstep either by parcel delivery or by truck delivery depending on the nature of the products ordered. IKEA commits to providing you with a confirmed delivery date within 72 hours of the order made. Delivery itself is foreseen either within 14 days or, in some cases, within 30 days. In any event, an elaborate order and delivery tracking system is available for customers.

More items are now being sourced in the UK, which now has about

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