BB215010S Systems and Operations
Management
Workshop 1: Introduction to Systems and
Operations Management
INTRODUCTION TO SYSTEMS AND OPERATIONS MANAGEMENT: IKEA CASE STUDY
Love it or hate it, IKEA is the most successful
furniture retailer, with 276 stores in 36 countries.
Ingvar Kamprad set up the business is the 1950s in
Sweden, he went for an out of town location so it
would be bigger and cheaper. He came up with
special selling techniques which include the design
of the store layout – the stores have the furniture
organised as if it is in a home. The result is that
customers are encouraged to spend a long time in
the store and want to recreate the look. IKEA started
out selling suppliers’ products, but soon moved on
to design and sell its own products with suppliers
manufacturing them and packing them into their
flat-packs.
information desk to find out how they can collect
that item. Before leaving customers pay for their
items at a checkout, this is similar to those in
supermarkets but the conveyor belt is larger.
Customers then make their way to their cars with
their products and load them into their vehicles.
IKEA rely on a complex network of suppliers, 1,300
direct suppliers; about 10,000 sub-suppliers and 26
distribution centres (DCs). IKEA rely heavily on their
supply chain: from purchasing of raw materials to
products arriving at customers’ homes. They closely
control and manage these key operational processes
from their headquarters in Älmhult, Sweden.
On the downside, there are some problems; some
customers get frustrated with the overcrowding in
stores; waiting times and product availability. IKEA
has undertaken programmes to improve the flow
through the store, including checkouts for just small
items; more staff available to help at key points;
redesigning the car park; etc. IKEA use systems and
operations management for many things:
• Store layout and arrangement so customers flow
smoothly through the operational processes
• Products designed to be stylish and be able to be
flat-packed
• Staff contributing to the process by effective job
design
• Locating stores in the right places to create an
effective supply chain
• Arranging the delivery of goods to the stores
across the supply chain using appropriate
information systems
• Maintaining cleanliness and safety in the stores
and storage areas to prevent failures
• Ensuring on-shelf availability (not running out of
stock) through effective inventory management
systems
• Measuring and monitoring product quality using
effective systems and quality of service for the
customers
• Improving operations continuously.
The flat-pack design and the layout of the store
meant that IKEA could dramatically cut costs. The
flat pack design removed the cost of assembly and
delivery, as the customers do that themselves. The
store became a combination of showroom and
warehouse where the customer would pick the
items out themselves. The store design had to
ensure smooth flow from parking; moving around
the store, ordering and picking up goods and finally
paying for their goods. Many facilities have been
added to encourage customers to stay, including:
supervised children’s play area; small cinema; baby
and parent room; restaurant and café.
Customers largely serve themselves and there are
few sales people in the showroom. There are
information points for customers to ask staff
questions. Smaller items customers pick up as they
walk around. Medium-sized items are labelled with
the product code and its location in the self-serve
warehouse, customers have to note down the
location and pick the goods up themselves. Heavier
or larger items customers have to go to the
N.B. This is not your assignment case – your assignment case is
Atokowa Organisation (starting on page 8 in your module guide)
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BB215010S Systems and Operations
Management
Workshop 1: Introduction to Systems and
Operations Management
TODAY’S TASKS
1.
2.
3.
Summarise the Input-Process-Output model for Ikea by creating a table in word (see 1a for Word 2003 or 1b
for Word 2007 if you are unsure how to create a table):
- What are the inputs?
- What processes take place in the store?
- What are the outputs?
What is the role of the customer in the process whilst in the store and at home? Type a short answer in Word.
Apply the 4 Vs typology to Ikea, i.e. explain where they fall in terms of high-low volume; high-low variety; highlow variation of demand and high-low visibility. Create a diagram in Word (see 3a for Word 2003 or 3b for
Word 2007 if you are unsure how to create a diagram)
TASK 1 – INPUT-PROCESS-OUTPUT
Set your table up in word:
1a) Creating tables in Word 2003
1. Create a table to do this, from Table/Insert Table:
2. Insert a table that has 3 columns and 2 rows (you
can add rows later using the Tab key, for each row
you wish to create).
1b) Creating tables in Word 2007/2010
1. Create a table to do this, Click on the Insert tab and
then click on Table:
2. Insert a table that has 5 columns and 2 rows (by
dragging across 5 and down 2)
Here is the basic layout of the table; you need to fill in the boxes – this is the most important thing, not just
creating a table!
Complete the boxes of the table
– What are the inputs? – include transforming and transformed
– What processes take place in the store? – include the ones staff do and customers
– What are the outputs?
TASK 2 – THE ROLE OF THE CUSTOMER
Participate in the class discussion and then type up a summary in Word.
TASK 3 – 4 V’S TYPOLOGY
Create a diagram of the 4 V’s in Word and indicate on it where Ikea is positioned.
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BB215010S Systems and Operations
Management
Workshop 1: Introduction to Systems and
Operations Management
3a) Creating diagrams in Word 2003
1. Make sure the Drawing tool bar is open (Go to
View/Toolbars and make sure Drawing is ticked).
The drawing toolbar appears along the bottom of
your screen:
2.
3b) Creating diagrams in Word 2007
1. Click on the Insert tab and then click on the arrow
that is underneath Shapes.
Create four horizontal arrows, by clicking on
Autoshapes/Block Arrows and then click on LeftRight Arrow:
Select
this one!
3.
Insert some text boxes so you can label each end of
the arrows High” and “Low”. Click on the text box
icon and draw the text boxes on each side of the
arrow.
4.
Label each arrow: Volume; Variety; Variation in
Demand and Visibility.
5.
To change the colours of any drawing shape, click
on the arrow next to the fill and line icons:
2.
Create four horizontal arrows, by clicking on the
Left-Right Arrow.
3.
Insert some text boxes so you can label each end of
the arrows High” and “Low”. Click on the Insert tab,
click on the arrow underneath Shapes and select
the text box.
4.
Label each arrow: Volume; Variety; Variation in
Demand and Visibility.
5.
To change the colours of any drawing shape, you
need to click on the shape so that blue squares
outline it. Then you can pick the colour from the
ribbon.
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BB215010S Systems and Operations
Management
Workshop 1: Introduction to Systems and
Operations Management
Here is the basic diagram, you should draw this in Word and then indicate by drawing a line on it where IKEA falls
on it, in terms of high-low volume; high-low variety; high-low variation of demand and high-low visibility.
HOMEWORK
i) Complete today’s workshop tutorial task.
ii) Read Chapter 1 – Operations Management of Slack, N., Brandon-Jones, A. and Johnston, R. 2011.
Essentials of Operations Management with MyOMLab, Harlow: Financial Times/ Prentice Hall.
OR Chapter 1 – Operations Management of Slack, N., Chambers, S., Johnston, R., 2010. Operations
Management. 6th ed. Harlow :Financial Times Prentice Hall
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