Logistic and Operational Management
Maintaining Logistic management for smooth operations flow
The major responsibility of logistics and operations management is to manufacture the goods and services which are in the right quality as well as quantity (Stevenson and Hojati, 2007). Logistic represent the flow of the goods as well as flow of information from one point to another point. It covers all the features of supply chain which starts from procuring the raw material to the production of final goods and their distribution. This report is based on the logistic and operational management which covers different prospects of the logistics and operations in IKEA furniture by analysis of components and their performance objectives (Van Mieghem, 2003).
There are several component activities of logistics and operational management of IKEA Company which are as follows.
Retail management: Olhager, Rudberg and Wikner, 2001 has stated that “retailing is related to business activities which involves the selling of goods and services to the consumers according to their requirements” (Olhager, Rudberg and Wikner, 2001). it covers all the aspects that are required to influence the customers to comes into the stores and buying the commodities as per their needs. So by considering the above statement, IKEA furniture group gives its complete focus on logistic and supply chain management, scheduling of operations, new product development, innovation etc (Harland, Brenchley and Walker, 2003). In addition to this, the supportive activities of company are store and inventory management, market research, demand forecasting, value chain analysis and other operations. On the other hand Gadde, Håkansson and Persson, 2010 has stated that “IKEA use the traditional marketing methods that increased the cost of the estimated budget and these methods are not such effective to attract the customers” (Gadde, Håkansson and Persson, 2010). So it is requires foe the company to give the more emphasize on formulating the right marketing strategies by involving the tradition as well as modern methods of advertising.
Warehouse management: From the name of warehouse, it is clearly understand that it is a place which is used for material handling. Frohlich and Westbrook, 2001 has asserted that “warehouses are the focal points for the company to share or transfer the information from one point to another point by using the source of supply” (Frohlich and Westbrook, 2001). It is a key part of supply chain and used to keep control on movement and storage of materials within the store. In addition to this, warehouse management includes the receiving, movement and store the goods in a particular location. In the context of IKEA, Foss and Knudsen, 2013 has stated that “company use retail warehouses which is used to store the furniture by classifying them according to the finished goods, semi-finish goods and raw materials” (Foss and Knudsen, 2013). But in the contrast of this thing, Davenport, 2013 has found that “some time the inappropriate management in warehouses must delay in the production of the goods which affects the distribution of the supply network of the firm” (Davenport, 2013). Therefore it is required for IKEA to focus on managing the warehouse activities.
Manufacturing: Plenert, 2002 has asserted that “manufacturing is a part of production which is used for preparing the goods and services by using the labours, machines, raw materials and other value added and non value added materials” (Plenert, 2002). This is one of the major activity of IKEA. Simmons Bland and Wojciechowski, 2012 has stated that “in IKEA, there are various stages that are used in manufacturing the furniture” (Simmons Bland and Wojciechowski, 2012). So manufacturing play an important role in IKEA. But on the other hand, Smith, Bruyns and Evans, 2011 has declared that “organization has to give the focus on effective manufacturing process so that they go for technological machines but this requires the huge investment from the firm” (Smith, Bruyns and Evans, 2011). So from this, it has concluded that manufacturing is a costly activities but it affects the performance and productivity of the firm.
Human resource management: Toni, 2012 has declared that “ for managing the different activities with in the organisation, it is required the human resources” (Toni, 2012). This is the second important component in IKEA. From the research of Anh and Matsui, 2011, it has found that “HRM is responsible for various activities like selection, recruitment, training, development, motivation, rewards, compensation etc” (Anh and Matsui, 2011). So it is essential for IKA to select the right person for the right post and motivate them so that it can gives its efforts for achieving the goals and objectives of the business. Bellgran and Safsten, 2009 has stated that “sometime the policies of the HRM does not give the satisfaction to the employees which results tom decline in performance of the workers” (Bellgran and Safsten, 2009).
Financial management: Bettley and et.al., 2005 has declared that “without any financial support it is not easy to run the business and producing the goods” (Bettley and et.al., 2005). So from this statement it is clear that financial resource are required for every company which supports the business activities. Boer, 2003 has stated that “in IKEA, the major responsibilities of financial department is arrangements of the funds, manage the working capital as well as cash flow with in the organisation” (Boer, 2003). From the analysis of the financial department of IKEA it is clear that firm use the short and long term loan to maintain the cash flow in the organisation. But on the other hand, company does not giving the more focus on bad debt and other investment. These all are affecting the financial performance of IKEA.
Performance objectives are generally used by the organizations to achieve goals and objectives of the business (Craighead and Meredith, 2008). Now, the performance objectives of each components activity is defined which are as follows:
Objectives of retail management :In the IKEA Company, the objectives of the business is based on the brining the innovations in the furnitures world as well improved the marketing strategies (Operations Strategy in Energy/Electricity Production, 2010). Here the objectives of the IKEA firm has divided into two parts one internal and second in external. The objectives of the company are as follows.
Objectives of warehouse management : It is required for IKEA to establish the objectives of the warehouses management. The first objective is space utilization in which company has to use different types of techniques to store the material and fully utilized the space (Functions of different departments, 2014). Second in equipments utilization it means optimum utilization of the material handling and other equipments that are helps in storing and transfer of goods from one point to another point in warehouse. Third is protection of material and goods in which company has to use the security equipments and methods for better security and preservation (Four Stages, 2013).
Objectives of manufacturing: The first objective of IKEA in the context of manufacturing is producing high quality furnitures so that its easy to retain the customers. Second objective is increase the productivity in which the some modifications can be made to enhance efficiency of the machines (Van Mieghem, 2003). Third objective in proper utilization of the labours. Fourth objective is bring the new ideas and innovation at the time of manufacturing of furnitures.
Objectives of HRM: In the IKEA, the first objective of HRM is organisational objectives which involves selection of the right people for the right job and give them training, utilization of the workforces etc (Harland, Brenchley and Walker, 2003). Second objective is functional objectives which is related to all the departments of the organisation. Third objective is personal objective in which HRM provide the employee satisfaction by giving the basic facilities.
Objectives of financial management: Financial department is a major department in IKEA and for this it is required to set some objectives that helps in achieving the goals and objectives of the business (Gadde, Håkansson and Persson, 2010). The first objective is maximize the wealth of the company by ensuring the availability of the funds, effective utilization of funds and ensure that investment gives the proper return. Second objective is profit maximisation by increasing the sales of the commodities.
Retail management : As per the research of Plenert, 2002, it is found that “the quality and features of IKEA products are good as compared to the other furniture suppliers” (Plenert, 2002). It increases the customer satisfaction level. Speed of production and capacity maintained by the firm. But on the other hand, Toni, 2012 has concluded that “company invest the more money on purchasing the different machines which is more than its estimated budget” (Toni, 2012). The process of manufacturing the furnitures are not flexible so that it takes more time to complete the goods.
Warehouse management : IKEA Furniture Company has store the inventory by using the horizontal method of storing. This helps the company to store more goods in one place. The second objective is also fulfilled by the company which is optimum utilization of the material handling equipments. But from the research of the Anh and Matsui (2011), it has found that “company is not using the proper security techniques tom protect the material so that it face the problem of stolen of furnitures” (Anh and Matsui, 2011).
Objective of manufacturing: Furnitures of the IKEA are good in quality so it helps the company to increase the footfall of the customer towards the stores for buying the products. As per the research Boer, 2003, it has found that “company brings the innovation and new ideas in the designing of the furnitures” (Boer, 2003). But on the other hand Bellgran and Safsten, 2009, it has found that “the company is not able to complete utilize the labour and with this results some time they are remain ideal”(Bellgran and Safsten, 2009).
Objectives of HRM: In the IKEA, company appoint the right the person at the right job because the recruitment is on the basis of the skills and knowledge of the applicants. But on the other hand Craighead and Meredith, 2008 has found that company is not able to provide the basic facilities to its employees and it creates the dissatisfaction in the staffs.
Objectives of financial management: IKEA is good in maximize the wealth of the company and able to mange the funds and cash flow of the firm (Smith, Bruyns and Evans, 2011). But it is not able to manage that how to maximize the profit and increase the sales of the furnitures.
To improve the process and performance of company, it is required to change or modify the existing process (Simmons Bland and Wojciechowski, 2012). Some recommendations which help IKEA Company in improving its performance are as follows.
Firm should use the workshop planning and layout method to arrange the machines in a proper way. It saves the time of company and in extra time, it will produce more units (Functions of different departments, 2014).
IKEA should appoint a responsible employee who can entertain the customers and solve the problems (Four Stages, 2013).
From the above report, it has concluded that logistics and operations management covers various aspects of the business. That features are designing, implementation and management of the distribution system for managing effective preparation of procurement of raw material and work in progress goods, finished goods and sharing the relative information regarding material. The given recommendations help IKEA Furniture Company to manage its operational and logistics system in an effective manner.
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