Ikea Operations Management

2832 Words Feb 18th, 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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The company offers value for money furnishing with a wide range of choice. Many of its products are designed to be modular / stackable which assists in multi-usage and personalisation of its products.

Clearly its product offering is “no frills”. In line with the Scandinavian idea of minimalism, IKEA seeks to eliminate the unnecessary in its prouducts but it makes a point out of not compromising on function or technical quality. IKEA focuses on the use of raw materials but much of its product range uses board-on-frame construction - layering of sheets of wood over a honeycomb core that gives a strong, lightweight structure with a minimal wood content.

The IKEA website sets out a principled approach in terms of product safety, in particular in relation to the use of chemicals and other potentially hazardous substances. Particular attention is placed on children’s products which IKEA holds to a “particularly high quality and safety requirements”. Products are tested at various accredited laboratories across the world while children’s products are submitted to testing at an IKEA third-party accredited test laboratory in Almhult, Sweden.

While IKEA states not to compromise on technical quality, clearly their focus is not on using top of the range materials, e.g. high quality solid wood. This allows the company to present its value proposition of affordable design products. Quality is not a factor on which IKEA aims to be market leader. Customers are

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