2. 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.
3. 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
4. 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.
5. 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
6. 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
7. Capacity Planning Decisions
Three-step procedure for making capacity planning
decisions is:
Identify Capacity Requirements
Develop Capacity Alternatives
Evaluate Capacity Alternatives
8. 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.
9. 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
10. 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
11. 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
12. 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
13. 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
14. 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
15. 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
16. 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
17. 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
18. 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
20. 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
21. 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.asp
x
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.
