Ikea 2

IKEA Name

University

Quality and Statistical Quality Control

Techniques

IKEA’s main focus on their operations are:

Product Quality enhanced processing and compliance with required

specifications

Maintenance of low operational costs

Quick and increased responsiveness to customer’s demand

IMPACTS OF POOR QUALITY Reduction in sales revenue due to consumer dissatisfaction

Eventual loss in the share of the market held

The attitude of your brand by customers may become negative

There are costs associated with it such as warrant and returns costs.

Quality and Statistical Quality Control

Techniques –contd.

Statistical quality control (SQC) these are tools used by the organization to improve and measure products and services performance in the market .

IKEA has leveraged the global supply base of its products by enhancing low production costs as well as enhancing high quality products .

Quality may be compromised by the production process and costs incurred thereto. The more we manage costs and improve on quality the better.

For IKEA I would recommend a Control Chart because

It inspects the output of a production process

Quality requirements are identified and measurable

Assists to identify the input process and requirements

Control Chart – Evaluation of

Quality

Uses of control charts include monitoring, controlling and improving the entire manufacturing process

The limits for this kind of control are Upper Control Limit (UCL)

Central Line

Lower Control Limit (LCL)

Control limits indicate the limits of variability in a process under control (Wild & Seber, 2007)

They assist in identifying abnormalities in the graph investigating the cause of assignable variations .

The consumer imposes the product specifications limits externally

Mostly used control charts include

X bar

R charts

Major companies such as Toyota , General Motors have also been using control charts to handle their quality issues.

Work System – Importance in operations

strategy

The work system in any organization is

important in enabling the operations strategies

The important features of a work system are:

Job design

Work measurements

Worker compensation

Facility Location and Analysis

IKEA has 43 manufacturing units in 12 countries

With two warehouses in Shanghai for the support of operations in China .

Singapore’s facility caters for the Asian business of IKEA

China caters for over 22% of IKEA’s global business and over 300 suppliers of the company come from china .

In 2013 the store’s revenue growth rate in China was over 15% which accompanied for the entire 23% of the company’s growth.

The venturing by the company in the Indian market is a great move with anticipated accelerated growth especially due to the hosting by the Singapore facility

Capacity Planning Decisions

Three-step procedure for making capacity planning

decisions is:

Identify Capacity Requirements

Develop Capacity Alternatives

Evaluate Capacity Alternatives

Capacity Planning Decision at

IKEA

Capacity Requirements

Forecasted sales revenues growth for china are 15% CAGR in

the next five years

Production capacity annually in most of its facilities is 280,000.

This translates the Chinese capacity requirement to 563,180 .

Develop Capacity Alternatives

This makes china a viable market for IKEA.

Capacity Planning Decision at

IKEA contd.

Evaluate Capacity Alternatives

A plant in china can lower the production or logistics costs and

open a fast growing market .

It would be easier to manage the over 300 suppliers especially

with regard to quality.

Cheap and easily available labor is also an advantage in china

Low investment costs are also another advantage due to the

existence of the Chinese plant

Hence IKEA should open a new production facility in China

Job Design – Underlying factors

Job design is the measure of work or an activities

output.

The parameters include:

Technical feasibility –the ability of employees to do the job

mentally and physically

Economic feasibility – cost versus output analysis of the job

Behavioral feasibility – the inherent satisfaction of the job to the

employees

The specific needs of today’s employees:

Job enlargement

Job enrichment

Job rotation

Work Measurement

Work Measurement –Determination of the time taken to

averagely complete a job

Standard time: the length of time a qualified worker, using appropriate

processes and tools should take to complete a specific job, allowing time for

personal fatigue, and unavoidable delays

Normal time: time that a trained worker requires to perform the

specified task under defined workplace conditions

Time motion study – critical to understanding the

human angle of bottlenecks to efficiency and quality

Worker Compensation

There are two categories that is:

Time based plans – payment on the basis of actual number of

hours worked

Output based plans – payment on the basis of number of units

completed

Worker compensation system critical components:

Group incentive plans

Profit sharing

Gain sharing

Job design at IKEA

Job design They should emphasize on cultural fitness and also technical requirements

during recruitment.

Flexibility in work design for a comfortable working life

high value addition and cost competitiveness in their operations should be facilitated through Global Supplier program and local employment policies –to ensure High economic feasibility

Utilization of surveys such as VOICE and IKEA Leadership Index should assist in understanding the challenges and reasons of employee dissatisfaction

Job rotation should be promoted especially enforcing management rotation program

For innovative product designs specialized labor is required – Medium technical feasibility

Employee training programs like Before the Floor training and After the floor training to facilitate skill development and promotion – job enlargement and job enrichment –High Behavioral feasibility

Worker Compensation at IKEA

Worker Compensation IKEA follows time based compensation policy

IKEA has several employee benefits schemes and policies

Flextime policies, Medical policies, 401K plans, paid-time off and other benefits

The company has implemented several profit sharing and rewards programs (Miller, 2013)

TACK (Swedish word for thank you) – Annual bonus contribution to employee’s retirement account

One IKEA bonus program – Performance driven bonus system for hourly and salaried part-time and full time workers

Special Bonus –Entire day’s sales revenue pledged to employees

Role of Human Resources in

building competitive advantages

HR today has evolved its role from a strategic partner role to

transforming and enabling business growth .

HRM policies and managers help in building competitive

organization through

Management of strategic human resources

Management of business transformation and change

Management of employee contribution/productivity

Management of firm infrastructure

Challenges at IKEA

The increased global footprint of IKEA has resulted in

unique challenges :

Required Increase in knowledge sharing and corporation in job

roles and responsibilities

Instilling an innovative , equal, diverse work culture

Integration and management challenges with respect to the

global workforce with varying cultural orientation, work ethics and

beliefs

streamlined workflow and processes

human capital development and retention

Focus is emphasized on work performance

Used to analyze

Movement of individuals or material

Flow diagrams

Activities of human and machine and crew activity

Activity charts

Body movement

Micro-motion charts

Methods Analysis

Underlying Principle of High

Performance Work Systems

Success of any organization today depends on the following

parameters

Information sharing

Knowledge development and management

Performance and reward linkage

Social and work place equality

High Performance Work systems ensures that the business

strategy of the organization is enabled by the internal policies,

people and system resulting in Employee Benefits

Have more involvement in the organization.

Experience growth and satisfaction, and become more valuable as

contributors.

Organizational Benefits High productivity

Quality

Flexibility

Customer satisfaction.

Linkages

to

Strategy

Principles of

High

Involvement

OUTCOMES

• Organizational

• Employee

System Design

• Work flow

• HRM practices

• Support technology

Implementation

Process

Developing a High Performance Work

Systems

PERT Diagram for HPWS

implementation

Assess

current

systems in

place

Conduct focus

group surveys

Perform industry

benchmark on

HRM practices

Document

Findings and

Recommenda

tions

Design the

competency

profile to support

strategy

Evaluate

Workflow

productivity

Develop

Job design

& reward

strategies

Design

improved

workflow

Evaluate

Knowledge

Management

Systems

Implement

Knowledge

Management

Systems

Roll-out new

workflow

Train

employees

in new

workflow

Train employees

in new

Knowledge

Management

Systems

4 weeks

2 weeks

2 weeks

1 week 3 weeks

3 weeks

2 weeks

2 weeks3 weeks3 weeks2 weeks4 weeks4 weeks

References

Wild, C. J., & Seber, G. A. F. (2007). Control charts.Chance Encounters

The xbar and r control chart. (2013). Retrieved from http://thequalityweb.com/control.html

Fangfang, L. (2013, August 29). Ikea builds on success in jiangsu. Retrieved from http://usa.chinadaily.com.cn/business/2013-08/29/content_16929111.htm

NatGeo. (2014, March 08). Mega factories: Ikea. Retrieved from http://natgeotv.com/ca/megafactories/ikea-facts

ABB. (2013, Jan 14). furniture maker ikea boosts production capacity with industrial robots. Retrieved from http://www.abb.com/cawp/seitp202/016d3e870f8e6e50c1257ae900352a19.aspx

Singh, A. (2012, May 15). Innovative hr practices at ikea. Retrieved from http://www.slideshare.net/adi5500/innovative-hr-practices-at-ikea

Miller, S. (2013, December 23). Ikea initiates annual 401(k) profit-sharing bonuses. Retrieved from http://www.shrm.org/hrdisciplines/benefits/Articles/Pages/Ikea-401k-Profit-Sharing.aspx

Heneman, R. (2012). Implementing total rewards strategies.