Opearation Managment Assignment help on : A Case Study on DFS and IKEA’s Operations Management
Executive Summary
IKEA is a privately held Sweden-based furniture manufacturer which specializes in making ready-to-assemble furniture like bed, chairs, sofa and international home products. It also happens to be the largest furniture retailer of the world. IKEA is renowned for its innovative architectural designs of its products and concentrate exclusively on eco-friendly interior design. With its inception in 1943, the firm has kept focusing extensively on reducing operational cost and provides superior products to its customers through continuous product development exercises. DFS, primarily known as Direct Furnishing Supplies is a British furniture supplier who runs its operations mainly in England and Ireland. DFS is a specialist in making sofas and soft furnishing items. This company was acquired by Graham Kirkham in 1983 who was the owner of Northern Upholstery, previously the biggest customer of DFS’s supplies. Meanwhile it became one of the largest furniture makers of England with the help of its sophisticated product designs and operational efficiency. For marketing campaigns, DFS has presented itself as ‘Deals for Sunday’.
In this case-study, we will analyze and compare the operational-management characteristics of IKEA and DFS.
Ques.1. How is the IKEA superstore design different from that of DFS stores?
Answer –
Many designing experts believe that IKEA stores are designed to have a psychological impact on consumers’ decision-making skills regarding purchasing its products. IKEA follows a ‘maze-like’ structure in its designing to part its customer from their cash so that a disoriented and lost customer while zigzagging through the mazes-trails of IKEA gets introduced to many other products of IKEA and feels compelled to buy some more furniture and accessories. This impulsive decision-making habit of a customer gets a boost from such an iconic designing layout of IKEA. IKEA follows the simple strategy to increase its sales which is try to hold back your customer as long as you can (James Tozer 2011).
While IKEA has made sure that customers find the short-cuts in case of a fire-emergency very easily, its labyrinth like store-structure confuses the customers in such a way that while trying to find exits, they fall for the staggering products IKEA offers and make some impulsive purchases in addition to what they actually wanted from IKEA. So in such a unique way, IKEA targets the psychology of its customer to push its sales record-high (James Tozer 2011).
On the other hand, DFS always had an image of having retail stores at the edge of the towns which had simple designs, lot of space, small walls and free-standing partitions. But as they grew in their size and scale and became Britain’s most favorite and biggest furniture retailer, they started re-structuring their store-plan. They hired a company named 20:20, which is a strategic designing consultancy for analyzing and overhauling their current store-plans. 20:20 designed a new store for DFS which is situated in the heart of Tottenham and increasing a lot of attention of customers for its spacious lay-out, simple short-cuts, half-a-mile spread of home delight furnishing products (Ebesco Host Connection 2012). This store is being treated as a furniture retail park and now DFS is trying to structure its every store on the basis of its Tottenham Superstore. There are pause-points in this store in the shape of information graphics, TV screens where you can opt for the color of your sofa on the swipe of your finger. So new DFS stores have come a long way as far as the designing of their superstores is concerned and they can compete now with any other reputed rival on this front (John Ryan 2012).
Ques.2. What do you think might be the major problem in running an operation like the IKEA superstore compared to DFS stores?
Answer – In order to manage a big furniture superstore like IKEA, a lot of workforce is required. So workforce management becomes a critical issue for IKEA. Also since maze-like structures of IKEA provide them with huge profits, this difficult lay-out could be a problem for customers in case of any unfortunate accident takes place at the store. Big furniture stores also house a lot of products like chair, beds, sofas etc. With the time passing and in a situation of ‘no-sales’, these products can become dirty and non-usable if proper maintenance activities are not in the right place (Furniture World 2012).
In case of a small store, however, problems will be lesser. The main concern regarding a store like DFS could be the accessibility as their many stores are still not situated at the centre of the towns. DFS could be at a loss if its management doesn’t take care of their strategic locations in relation to their competitors. At the same time, since DFS stores are known for its compact size (as compared to IKEA) and unbelievable product lines traditionally, there could be an issue of space-management for DFS.
Ques.3. What do you identify as the main aim of the ‘operations function’ within the IKEAsuperstore? What are the two main sets of sub-operations in the superstore? Are they different from the ‘sales function’ in the store? Discuss in comparison to the ‘operations function’ within the DFS store.
Answer – Operations functions of an organization could be defined as an arrangement of resources which are dedicated for the production of its good and services. In case of IKEA, the main objective of the operations function is to provide IKEA with a competitive advantage at the marketplace. In IKEA superstores, the importance of operations function reflects in the fact that IKEA is committed to provide its customer with hassle-free environment and superior products. Two main sets of sub-operations of IKEA are warehousing and interior designing (IKEA 2012). Warehousing enables IKEA having large stocks of furniture in the stores while interior designing is responsible for giving every IKEA store a distinct and fantastic look. Sales function is a whole new vertical for IKEA and it’s completely different from warehousing and interior designing. DFS operations also focus on the same objectives as IKEA. DFS heavily relies on superior customer service whereas its products target high-end customers. IKEA’s core policies are based on the concept of thrift, so they provide high quality furniture for cheap prices so that even a person with little disposable income can afford their product. So their operations function differs because of their ideologies. Both want to achieve customer satisfaction and goodwill but their customer segments are different.
Ques.4. List the main processes (and major activities if possible), for every identified sub-operation from question 3 above, and classify them according to what is being transformed in the process and what property changes (shape, location, ownership, physiological, psychological state, etc.). You can use diagrams to describe the flow of resources in both IKEA and DFS stores.
Answer- For completing the warehousing activities, the main activities needed to be carried out are –
a) Receiving and replenishment – For ensuring high availability of products at any given point of time, the efficient flow of goods is very important. It is also important for high sales. Similarly, replenishment must be performed if any particular product is out of stock.
b) Managing Logistics – Since IKEA stores hold a lot of products, keeping an account of volume of goods coming-in and coming-out is very hectic and important task. Every cubic meter of the space must be exploited in order to position the furniture. High level of cooperation between sales and logistics department is extremely important for this process.
c) Stock Controlling – A Stock controller restricts the overflow of products and covers the deficit of them effectively. To keep the logistics cost down, an updated routine regarding the products inflow and outflow is pretty important and a stock-controller keeps track of this responsibility (IKEA 2012).
For interior designing, following actions must be performed –
a) Graphic design – IKEA has its very well defined and strong graphics language. Its only because of this language that customers roam freely around IKEA stores without asking for directions. Graphics language rounds off all the communication needs of the organization.
b) Store design – Store designers are responsible for giving IKEA a look so authentic and in tune with the current fashion trends that it can attract the customers instantaneously. They provide the stores with requisite ambience which gives customers a sound environment to shop.
c) Merchandising – Merchandisers work closely with sales staff and logistics department to come up with efficient and commercial solutions. Their main objective is to provide customers the best shopping experience with as little efforts as possible (IKEA 2012).
In carrying out these processes, ownership changes hands from IKEA to final customer. Also location changes from IKEA stores to customer’s place. Psychologically, consumers as well as seller at the closure of deal become happy.
Ques.5. What is the position of the IKEA superstore operation on the four dimensions against that of the DFS (4-V analysis)?
Answer – The 4-V analysis of operations management focuses on the constituent V’s. The 4-Vs which are part of this framework are-
a) Volume
b) Variety
c) Variation
d) Visibility
In carrying out these processes, ownership changes hands from IKEA to final customer. Also location changes from IKEA stores to customer’s place. Psychologically, consumers as well as seller at the closure of deal become happy.
Ques.5. What is the position of the IKEA superstore operation on the four dimensions against that of the DFS (4-V analysis)?
Answer – The 4-V analysis of operations management focuses on the constituent V’s. The 4-Vs which are part of this framework are-
a) Volume
b) Variety
c) Variation
d) Visibility
We will discuss these V’s one-by-one and compare the IKEA’s operations against that of DFS’s.
a) Volume – IKEA is known for maintaining high volume of stocks in its stores. It has various product lines for chairs, sofas, beds, lighting etc. In producing high volumes, the repeatability of the product starts and exclusivity gets completely lost between two varieties of a single product. So IKEA should encourage innovation in its products. IKEA could still achieve competitive advantage by hiring specialist staff and machinery. On the other hand, DFS is specialized in making sofas, though it offers other products also. So in order to cater to a single product, it can offer a lot of varieties in Sofas to cement its reputation even further in the market while maintaining low volumes in the stores (Grae Laws 2012).
b) Variety – Second V tells us about maintaining variety in product offerings. If a marketer depends upon a huge product line having various varieties, it’ll further lead to business complexity as he will have to cater to every customer’s expectations. IKEA experiences the same thing but for the last 69 years, they have taken care of these complexities fantastically well. However maintaining various varieties in your stores costs you a lot of money. For DFS which specializes in Sofa-making, maintaining varieties is very easy as it only caters to sofas. So if a consumer has to make a choice between IKEA and DFS, he could go to DFS because they are the specialist in that field.
c) Variation – When a marketer has the first-hand knowledge of its products’ demand, commanding the processes becomes very easy but if the demands are very unpredictable, processes can become a subject of marketing dilemma. But in the case of both IKEA and DFS, variation doesn’t poses a problem as the furniture is one of the basic needs for a house and both these companies cater to it. However in a crunch economic situation, DFS could be more vulnerable as compared to IKEA as it caters to high-end customers and doesn’t compromise on price (The Economist 2011).
d) Visibility – A customer usually doesn’t notice the efforts which go into making a product. In a business like retailing, consumer only focuses on the end-products. That clears the picture regarding fourth V. A retailer should always need to be on his toes in case of a customer query which can come at any moment but a manufacturer doesn’t need to get worried because he is not visible to customer. In this way, a retailer like IKEA or DFS should be very much aware of their product’s features and their shortcomings (if there are any) in order to look respectable at customer’s face (Grae Laws 2012).
Ques.5. Discuss the relative priority of the five operations performance objectives (quality, speed, dependability, flexibility and cost) of IKEA and DFS and which ones, in your opinion, are the most important to build into the design of the IKEA’s or DFS’s operations respectively.
Answer –
IKEA & DFS’ operations against five designated performance objectives-
a) Cost – Cost is the most important consideration as far as the operations of IKEA is concerned. IKEA management works on ‘zero-waste’ policy very strictly and targets those customers who want high-class furniture at cheap prices. DFS is totally opposite this idea and since they dominantly cater to sofa-market, they target targets with high disposable income and belongs to premium class (The Economist 2011).
b) Quality – Quality is the second most important consideration for IKEA while it is the topmost criteria for DFS for product management.
c) Dependability – Since both these brands are two of the most reputed furniture retailers of Europe, their products must be showing some durability to achieve such an iconic status. So dependability becomes their third topmost criteria.
d) Speed – Both these retailers house a significant amount of products in their stores, so speed of service delivery automatically becomes a significant objective to achieve for both of them as it ensures higher customer turnout and satisfaction resulting in repeat sales.
e) Flexibility – Flexibility in product offering is a very important criterion to get fulfilled for achieving superior customer satisfaction. This feature enables a customer to choose products among a lot of options. When we talk about all these objectives, this objective comes at the last place for both IKEA and DFS, though they offer a number of choices to their customers
If you want operation Management Assignment Help study samples to help you write professional custom essay’s and essay writing help.
Receive assured help from our talented and expert writers! Did you buy assignment and assignment writing services from our experts in a very affordable price.
To get more information, please contact us or visit www.myassignmenthelp.Com
