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Introduction to Operations Management
Operations management is managing business practices and activities to generate optimistic level of efficiency and productivity in the corporation. It is considered for converting raw materials into furnished goods and services. This process also helps the corporation to earn highest profit in the market (Slack, 2015). IKEA is British manufacturing company which provides effective furniture products such as desks, chair as well as bed to its consumers in United Kingdom. The present file repersents product delivery of Enterprise. It also represents service delivery system of IKEA for London Branch. It reveals infrastructure of organization to arrange its service delivery system in the city. It analyses problems and its recommendations of IKEA Corporation to increase its performance and efficiency in furniture industry.
Describing the Background of organisation
IKEA is a multinational company which manufacture furniture like bed, chairs and desks in many countries. This organisation is the largest furniture retailer in the world. Firm was founded in the year 1943. The company is famous for its latest architectural designs for different kinds of appliances, furniture and its interior design work. IKEA organization manufactures Eco- friendly products for safety of environment in many countries. Further, enterprise concentrates on operational details, continuous product development and cost control which enable the organisation to keep lower prises. Corporation has big corporate structure in the world. Operations of of the company is controlled by many foundations which is situated in the Luxembourg, Liechtenstein as well as Netherlands. Main headquarter of IKEA is situated in Delft, Netherlands. Current chairman and CEO of this organisation is Peter Agnefjall. As per the report of 2015, corporation have 373 stores in 47 countries. There are 12000 product s which are sold by Ikea to its customers through internet This organisation is also responsible for 1 percent consumption of the wood in the world. In addition, Enterprise is holding approximate 147000 employees all over the world. IKEA has covered maximum continents like Europe, Asia, North America and Africa to sell its furniture products.
Defining the product delivery of IKEA
Product delivery of IKEA is not effective for its consumers in United Kingdom. Mainly, Organisation uses many modes for delivering products. In addition, corporation uses online and offline service for its consumers for purchasing furniture in the London.. Generally, enterprises also offer home delivery of furniture to its clients in the city (Hill and Hill, 2012). Management of IKEA uses enterprise resource planning (ERP) to manage its supply chain operations in the nation. This process provides huge reliability to manage its activities in the IKEA. ERP provides facilities to assess fast information and customer orders for service delivery in London. With the help of this tool, firm gives delivery of furniture to its customers in the market of United Kingdom. Management of IKEA takes customer address for product delivery. IKEA uses transportation facilities like trucks for furniture delivery at home. But these services do not provide effective consumer satisfaction in the country (Peng and Lai, 2012). On the other side, waiting time of product delivery of IKEA also frustrates its clients in London and its associated areas. This thing affects its operations of supply chain management in United Kingdom. These issues are creating problems for customers regarding product delivery.
Identification of customers and markets
Identification of customers
Organisation follows franchise and online systems to sell its furniture in the London branch. There are many customer of IKEA like, industrial consumers as well as retailers in the city. Mainly, the firm is also selling its products directly to its end customers through website in United Kingdom (Brown, Bessant and Lamming, 2013). Management of organisation sells its furniture with the help of dealers. Enterprise has appointed many dealers in many areas to increase its sales. So these dealers also purchase products directly from the company in the nation. This way, IKEA sells its material in United Kingdom. In this process, all customers are facing waiting time issue during product delivery in the nation. These issues also affect its sales in national and global areas. In addition, competitors of firm are also taking the advantages of this issue to earn profit in London (Gunasekaran and Ngai, 2012).
Management of IKEA is holding various markets to sell its furniture in the world. Organisation is covering is national and international markets to increase sales of products in the many countries. It covers many products like sofas, bed furniture and many other things to attract consumers in the many countries (Lewis and Brown, 2012). Generally, organisation is selling its material in 47 nations. It is expanding its operations to increase its revenue in the world.
Defining the Service delivery system
In the service delivery system, organisation is not focusing on aspects of service delivery system in the many nations.
Service culture- Management of IKEA has developed service culture on the basis of organisational norms, mission, vision and requirement of customers in the nations but organisation is facing many problems regarding service culture. These issues are affecting supply chain management operations in the London branch (Singhal and Singhal, 2012). Because of this, it has They increased waiting time of product delivery for consumers in various area of city.
Employee Engagement- IKEA organisation is retaining employees for better consumer service in the world. Due to higher sales and work load, management is unable to manage its service delivery system for furniture in the London. This thing is not satisfying its customers in the city (Brandon-Jones, Piercy and Slack, 2012).
Quality management- Management of IKEA has also set quality standards for service delivery system. They do not follow these rules and regulations due to higher work pressure and ineffective operations management in London Branch. These things are creating adverse impact on supply chain management operations of IKEA which are increasing waiting time of service delivery for customers (Key Elements of a Service Delivery System, 2015).
Customer experience- Organisation is using various tools for feedback of consumers and their reviews in the nation Due to many operational problems, IKEA is unable to implement these methods in proper way for better service delivery system in the nation. So, corporation is not focusing on these problems regarding improving supply chain management in London (Hazlett, McAdam and Walker, 2013).
Infrastructure to manage service delivery system
Infrastructure can greatly help the management of IKEA to manage service delivery system in the world. Current infrastructure of organisation is not appropriate to manage its operations in the nation. Although IKEA is using Enterprise resources planning (ERP) and consumer relationship model (CRM) to manage its service delivery system in London. These tools are not properly implemented due to higher work load and shortage of IT experts in the organisation. There is one more problem in this software Data traffic is highly increased due to storage of lot of data on servers (Phan and Chambers, 2013). This thing has also slowed down the processing of information access for employees in the IKEA. Management of organization is not getting proper information on the right time Because of these issues, employees and managers of IKEA are not able to take any type of operational decision in London Branch. This process is highly affecting supply chain management of IKEA in United Kingdom. In addition, waiting time of service delivery has been increased due to these problems in the city. Consumers are affected because of poor service delivery management system in London (Holmström and Romme, 2012). So these current infrastructure issues are affecting service delivery system of IKEA which is increasing its complexities in the city.
Importance and support of SDS and infrastructure
Importance and support of service delivery system plays essential role for IKEA to improve overall supply chain management operations in London branch. This way, corporation can serve market in an appropriate manner. This process can also help the enterprise to improve service for consumers in the city. In addition, IKEA can reduce its waiting time for delivery (Brown, Bessant and Lamming, 2013). This way the organisation can improve its supply chain management system in the city. Effective service delivery system can also help the firm to increase sales of the organisation in London. Further, Infrastructure can contribute effective role for IKEA to serve the market effectively. Better infrastructure facilities can help the organisation to improve its supply chain operations as well delivery of furniture to clients in London branch. In addition, organisation can get huge help to serve customer by reducing waiting time of delivery in the city in an appropriate manner. This way, IKEA can increase its revenues by giving effective facilities to clients in London (Infrastructure Managed Services, 2015). With the help of these things, management of corporation can increase its customer satisfaction which helps to create positive impact on customers.
Problem which may improve to lie
Management of IKEA is also suffering with higher waiting time problem of furniture delivery to customers in London city. There are many causes for these issues in the Organization. In the operation department, employees are facing many problems like lack of training, lack of guidance, Information technology problems as well as shortage of staff members in the IKEA. These things are increasing work pressure on employees in London branch. These complexities are affecting operations of supply chain management in the city (Lewis and Brown, 2012). In addition, this has decreased the efficiency and performance of the enterprise. This is creating negative impact on consumers in the United Kingdom. They are reducing the furniture sales of IKEA in the London. So these issues also need improvement in reducing waiting time of service delivery for consumers in the city.
Analysis of the service delivery problem
The major issue faced by IKEA is service delivery problem because every nation has different culture. It has increased the dissatisfaction level within customers as well as it has also affected the productivity of employees in a negative manner (Azhashemi, 2012). It is important to analyse issue to determine cause and impacts on operations of the company. After the identification of the major critical areas, it can be easy to find out the new ways and strategies to resolve the problem of IKEA. There are some theories which are applied analyse the issue which are as follows.
Impacts of poor delivery services
In the present time, service delivery is still an issue for all manufacturing and service delivery companies. In the case of IKEA, presently company has faced poor delivery service issues which cause long waiting time for delivering the product at the customer door (Hajmohammad and et.al., 2013). The impacts of these issues are as follows.
Company image: The increase in waiting time has affected image of the firm as well as sales because when the customers discusses bad experience with the other people, it spreads in the market with high speed (Rogers, 2011). If this thing happens with IKEA then it will affect the goodwill of the firm as well as brand image in the market. For example, word of mouth publicity has spread the news regarding the poor delivery services of IKEA in the market. It has affected the brand image of the firm in negative manner and customers will not buy the commodities from IKEA (Stefanuk and Zhozhikashvili, 2002).
Market share: It has taken long time to gain a high market share but when the company loss his goodwill in the market, the market shares have not taken a single day to fall. The poor delivery service of IKEA affects the market share in the most negative manner (Wright, 2011). The result of this is that the investors and the other business partners will pull out their investment from the company. For instance, the unpleasant experience of the customers while receiving the product from the company side has increased the dissatisfaction level (Akintunde, 2008). Due to this, the services users will switch to other brand to get the products within a particular time.
Revenue: Decrease in market share and loss of customers have reduced the profit of IKEA which has affected the stock value (Ashby, Leat and Hudson-Smith, 2012). In this regards, to maintain the market share, company can take various steps such as reduce costs of the products, use t new strategies to attract the customers etc. For saving the money, firm will further cut the cost over training and will buy low quality raw material at the lower cost. It will again affect the business and it will become more challenging to survive in the market for long time (Bahmani-Firouzi and Azizipanah-Abarghooee, 2014).
Employee confidence: The delay in the delivery of the product has also affected the confidence level of the staff members of IKEA. For example, if the business of IKEA is unable to meet the financial demands then it will start to cut down the jobs of the employees (Bamford and Forrester, 2010). It will directly affect the moral of the workers and their confidence level will decrease. They will start to feel lack of job security within the firm and it will leads to shifted their attention from the work. Their productivity will also side down and the errors as well as defects in the products will increase (Raza, 2014).
Appropriate recommendation to improve performance
As per the analysis of the service delivery system, problem of IKEA has reflected that company is facing different issues such as high waiting time for customers, overcrowding, late delivery of products, poor customer service, damaged goods and services and late delivery of damaged products. These issues can affect overall financial and operational performance of the company in a negative manner. Along with this, all these issues can also affect different departments and management functions of the firm (Lind, Marchal and Wathen, 2005). So, for improving performance and resolving this service delivery system, company needs to adopt the following strategies:
Queuing theory: IKEA should apply the principles of Queuing theory at the time of developing service delivery system for customers. These principles include three major components; how customers arrive, way to offer services to customers and the condition of the exiting the delivery system of organization. It will help in managing customers which will reduce the situation of overcrowding. Further, evaluating the problem which has reflected that if waiting time of each customer is high than, for reducing this time company needs to apply waiting line models and equation in its delivery system (Queuing Theory and Practice: A Source of Competitive Advantage, 2015). Multiple channel single phased system will be the most appropriate model for IKEA because it will help in increasing number of channels for providing services to every customer. Using this model, the company can serve multiple customers by which waiting time for every customer will also decline. It will help in improving service delivery system of IKEA (Miski, 2014).
Route planning: As per the analysis of the problem, IKEA is also facing a critical issue related to late delivery of products to number of retailers. Major reason behind this problem is inappropriate root planning for delivering products and services to clients (Ikea: Why is it so bad at delivery, 2013). So, for resolving this problem organization is required to focus on improving root planning and implementing software of root planning. It helps in managing distribution budget of the company as well as also plays important role in calculating shortest distance, driving time for completing delivery of products and services to clients.
Training of employees: Sometimes due to untrained and inexperienced employees IKEA faces problem regarding service delivery issues. These employees cannot provide suitable products for satisfying needs and requirements of customers on time. So, for overcoming this problem, IKEA should arrange suitable training and development program for personnel as per this needs and requirements (Jankowicz, 2005). It will help in improving employee engagement and their skills and knowledge for dealing with customers. Along with this, it will also assist in reducing time for providing appropriate products to customers as per their expectations. Overall, this strategy will also aid in improving service delivery system of IKEA.
Communication: Sometimes due to the communication barriers such as differences in culture and language employees of the company etc, firm has not capable to make effective communication with customers (Greasley, 2007). It creates confusion about delivery of products and services. It can also create situation of late delivery of products. Therefore, for resolving these issues IKEA needs to assure about appropriate communication with customers using different methods such as calls, messages, emails and video conferencing, etc. these methods will help in reducing communication problem and improving the timely delivery of products and services to every customers. Therefore, communication tools are the most appropriate method for improving service delivery system of IKEA.
Overall, using all the above discussed models and methods IKEA can improve service delivery system of IKEA as well as reduce waiting time and other problems of the delivery system of company (Akpolat and Pitinanondha, 2009).
From the above research, it has been found that Product delivery system of IKEA is not appropriate in the London Branch. Retailers and end users render effective sales in the city. Management of firm is also covering global and national markets for selling products to consumers. Current infrastructure of organisation is not appropriate which is affecting supply chain operations of firm in the London. In addition, IKEA has faced poor delivery issue. The analysis of the following problem has been done with the help of cause and effect diagram. With the help of the assessment, the various causes and their effects have found. The impact of the issue has put negatively affected the company such as lack of confidence level in the customers, decreasing market share and profit etc. Along with this, project has suggested that IKEA should adopt some appropriate strategies for improving service delivery system such as application of Queuing theory, Route planning, training of employees and strong Communication with customers. All these strategies will help in overcoming the issues of IKEA and assist in improving the service delivery system.
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