Concept of production efficiency

What is the production efficiency?

１．Activities to expand quantitative：
① Activity to improve efficiency of the equipment ・・・ Increase the volume per unit time
② Activities Improve efficiency of human ・・・Increase productivity by jig, and tool
③Up The management efficiency · · · production plan, parts tune up, improve of logistics

２． Activities to expand the qualitative ：
① activities to Improve the quality ・・・Increase the volume to reduce the failure rate
② Efforts to increase unmanning ・・・Study of conditions for unmanned operation

 

large loss to inhibit efficiency
①Shutdown②Product|on adlustment③Equapment fa|lure④Process fanlure⑤Normal productnon⑥Abnormal productlon⑦Ouallty defect⑧Reprocessmg

Seven large loss of equipment

①Equipment failure②Set-up & adjustment③Cutting blade change④Start-up⑤Minor stoppage & idling⑥Speed⑦Deiects

Sudden loss and chronic loss

Sudden loss correspond restore
chronic loss correspond Breakthrough

2.5 Restoration
Before restore　then Improve

Literally, the action taken to restore to the original correct condition. Every piece at equipment changes slowly along with the lapse at time, making it necessary to detect such changes and restore the equipment to the original, correct state. Equipment changes unavoidably occur, although there may be differences in the manner at their occurrence; some occur rapidly after a certain period
at time; others occur slowly. This depends on the characteristics of equipment or its constituent parts.
it is important to specify how to measure deterioration, what is the degree at deterioration, to be considered, what is the original, correct state, etc.

Cleaning is inspection

Cleaning is very effective as a means to check the deterioration of the equipment

 Equipment　 Ideal

Vision of equipment conditions/Equipment as Vision of equipment conditions are the requirements to be met to put the functions and performance of equipment into full play or to maintain them at the highest level. The functions and performance of equipment can be shown and maintained at 100% and for a long time, only if the functions of the units and parts that compose the equipment are kept at desirable states from the viewpoint of engineering principles and rules.
Vision of equipment conditions represent “sufficient conditions,” whose existence would be more desirable. Even if the conditions are not met, the equipment operation is possible unlike absolute necessity (conditions). it does not necessarily mean that each and any condition is required.
Although “necessary conditions” are maintained, “sufficient conditions” are liable to be disregarded. To reduce seven major losses, satisfaction of the sufficient conditions is absolutely necessary, but vision of equipment conditions are not clear — in most cases they are not set. it is necessary to study each of parts, assembly parts, and portions of equipment from the following eight viewpoints:

[1] Usage-condition-related viewpoint (processing conditions, operating conditions, etc.)
[2] installation precision-related viewpoint (vibration, level, etc.)
[3] Assembling precision-related viewpoint (backlash/precision, etc., as composite body)
[4] Functional viewpoint (appropriate usage range, and the like)
[5] Environmental viewpoint (dust, heat, and others)
[6] External shape-related view (stains, flaws, biased wear, etc.)
[7] Dimensional precision-related viewpoint (required precision, surface roughness, etc.)
[8] Material/strength-related viewpoint (strength, rigidity, etc.)
 

Minor defects

Minor shortcomings and symptoms considered to only slightly affect　results (defects, failures, minor stoppages). in conventional views, such　defects as dust, stains, backlash, etc, have been considered negligible.
When any one of these effects occurs singly, for example, it usually has　little effect, but when many of them occur at the same time, they can result　in multiple effects, bringing about various consequences such as defects,failures, and minor stoppages.

 PM analysis

PM analysis as “a way to look into chronic malfunction phenomena by physically analyzing such phenomena based on rules



PM in this case is different from PM referring to preventive maintenance or production aintenance. Here, P has the dual meanings of phenomenon and physical, while M represents mechanism, machine, man, material, and method.
PM analysis was developed by Kunio Shirose of JIPM. He defines PM analysis as “a way to look into chronic malfunction phenomena by physically analyzing such phenomena based on rules and principles thereby making clear the mechanism of such phenomena.“
In effect, PM analysis is an attempt to physically analyze chronic malfunction phenomena, such as chronic defects and chronic failures, based on rules and principles; to make clear the mechanism of such phenomena; and to list all the factors that are logically considered to affect the mechanism, taking into account equipment structure, human beings,materials, and methods.
Conventional factor analysis (characteristic factor diagram), while being beneficial because of the case with which anyone can apply, nevertheless has tended itself to the insufficient analysis of phenomena; in other words,it tends to lead to arbitrary conclusions, making it difficult to achieve zero chronic losses. To attain zero chronic losses, PM analysis is by far more effective.

Case of ＰＭ Analysis

Analysis to component level the cause of the failure

Example ＰＭ Analysis

・・・Measures poor Outer diameter of cylindrical grinding machine
Drawing and understand the principles

ＰＭ Analysis Table

Create judgment reference and inspect

Maintenance skills

Solve the problem at the site and then
aintenance activities for the prevention of recurrences.

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Basic education of TPM

TPM definition

・ Establishing a corporate culture that will maximize production system effectiveness,
・ Organizing a practical shop-floor system to prevent losses before they occur throughout the entire production system life cycle, with aview to achieving zero accidents, zero defects and zero breakdowns,
・Involving all the functions of an organization including production,development, sales and management
・ Involving every employee, from top management down to front-line operators, and
・ Achieving zero losses through the activities of “overlapping small groups.

ＴＰＭ Philosophy

QC：Activities to reduce the loss
→can not be zero
Waiting activities ・・・
From the occurrence of failure then analysis, measures,improvement.
TPM：Activities to prevent loss
Activity before the occurrence of the failure
→can be a zero.
Proactive improvement activities ・・・ Analysis before failure occurs, measures, improvement

 TPM Essence

Improvement lead to real benefits

Case of small amount of work

ＴＰＭ organization

TPM History

The TPM’s definition was established in 1971 as TPM was first introduced in industry. The initial emphasis of TPM was primarily on the production floor, but as the focus shifted to the company-wide implementation, a new TPM definition was introduced in 1989. While the new definition emphasizes “company-wide TPM,” the old definition focused on “TPM for the production sector. TPM stands for total productive maintenance. It was first advocated by the Japan Institute of Plant Engineering (JIPE), the forerunner of the present Japan Institute oi Plant Maintenance (JIPM). TPM has been developed into the overall, total-company plant maintenance, unique to Japan, based on productive maintenance (PM), introduced from the U.S. At the initial stage of TPM advocacy, TPM centered on the production sector.

TQC and TPM

 
 

 Step 12 of The TPM program

 
 


TPM is implemented through 12 steps, and these programs are called “TPM implementation program.“ The TPM implementation program can be divided as follows:
– Preparatory stage for introduction — Steps l to 5
– introduction stage —— Step 6: Kickoff ot TPM
– Execution stage — Steps 7 to 11
– Penetration stage —— Step 12
The period for the preparatory stage for introduction varies in accordance with the corporate scale, but generally it is executed for about six months, by providing introductory training and setting targets thoroughly. Subsequently, a kickoff meeting —— Step 6 ~ is held on a big scale.
The execution stage addresses the execution of the “eight pillars for of TPM implementation.”
At the penetration stage, “TPM award” screening is applied. Generally, about three years elapse between the kickoff and the undergoing of “TPM award examination.”

8 main pillars of TPM

 

Participation of all employees

TPM Promotion Organization

 

Case of TPM Promotion organization

TPM basic policy and Goal

Quote From ：TPM Deployment program
TPM encyclopedia Keyword Book
（Japan Institute of Plant Maintenance)

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The input–transformation–output process

All operations produce products and services by changing inputs into outputs using an ‘input-transformation-output’ process. Figure 1.3 shows this general transformation process model. Put simply, operations are processes that take in a set of input resources which are used to transform something, or are transformed themselves, into outputs of products and services. And although all operations conform to this general input–transformation–output model, they differ in the nature of their specific inputs and outputs. For example, if you stand far enough away from a hospital or a car plant, they might look very similar, but move closer and clear differences do start to emerge. One is a manufacturing operation producing ‘products’, and the other is a service operation producing ‘services’ that change the physiological or psychological condition of patients. What is inside each operation will also be different. 

The motor vehicle plant contains metal-forming machinery and assembly processes, whereas the hospital contains diagnostic, care and therapeutic processes. Perhaps the most important difference between the two operations, however, is the nature of their inputs. The vehicle plant transforms steel, plastic, cloth, tyres and other materials into vehicles. The hospital transforms the customers themselves. The patients form part of the input to, and the output from, the operation. This has important implications for how the operation needs to be managed.

Inputs to the process
One set of inputs to any operation’s processes are transformed resources. These are the resources that are treated, transformed or converted in the process. They are usually a mixture of the following:

● Materials – operations which process materials could do so to transform their physical properties (shape or composition, for example). Most manufacturing operations are like this. Other operations process materials to change their location (parcel delivery companies, for example). Some, like retail operations, do so to change the possession of the materials. Finally, some operations store materials, such as in warehouses.

● Information – operations which process information could do so to transform their informational properties (that is the purpose or form of the information); accountants do this. Some change the possession of the information, for example market research companies sell information. Some store the information, for example archives and libraries. Finally, some operations, such as telecommunication companies, change the location of the information.

● Customers – operations which process customers might change their physical properties in a similar way to materials processors: for example, hairdressers or cosmetic surgeons. Some store (or more politely accommodate) customers: hotels, for example. Airlines, mass rapid transport systems and bus companies transform the location of their customers, while hospitals transform their physiological state. Some are concerned with transforming their psychological state, for example most entertainment services such as music, theatre, television, radio and theme parks. 

Often one of these is dominant in an operation. For example, a bank devotes part of its energies to producing printed statements of accounts for its customers. In doing so, it is processing inputs of material but no one would claim that a bank is a printer. The bank is also concerned with processing inputs of customers. It gives them advice regarding their financial affairs, cashes their cheques, deposits their cash, and has direct contact with them. However, most of the bank’s activities are concerned with processing inputs of information about its customers’ financial affairs. As customers, we may be unhappy with badly printed statements and we may be unhappy if we are not treated appropriately in the bank. But if the bank makes errors in our financial transactions, we suffer in a far more fundamental way. Table 1.3 gives examples of operations with their dominant transformed resources.

The other set of inputs to any operations process are transforming resources. These are the resources which act upon the transformed resources. There are two types which form the ‘building blocks’ of all operations:
● facilities – the buildings, equipment, plant and process technology of the operation;
● staff – the people who operate, maintain, plan and manage the operation. (Note that we use the term ‘staff ’ to describe all the people in the operation, at any level.)

The exact nature of both facilities and staff will differ between operations. To a five-star hotel, its facilities consist mainly of ‘low-tech’ buildings, furniture and fittings. To a nuclearpowered aircraft carrier, its facilities are ‘high-tech’ nuclear generators and sophisticated electronic equipment. Staff will also differ between operations. Most staff employed in a factory assembling domestic refrigerators may not need a very high level of technical skill. In contrast, most staff employed by an accounting company are, hopefully, highly skilled in their own particular ‘technical’ skill (accounting). Yet although skills vary, all staff can make a contribution. An assembly worker who consistently misassembles refrigerators will dissatisfy customers and increase costs just as surely as an accountant who cannot add up. The balance between facilities and staff also varies. A computer chip manufacturing company, such as Intel, will have significant investment in physical facilities. A single chip fabrication plant can cost in excess of $4 billion, so operations managers will spend a lot of their time managing their facilities. Conversely, a management consultancy firm depends largely on the quality of its staff. Here operations management is largely concerned with the development and deployment of consultant skills and knowledge.

Outputs from the process
Although products and services are different, the distinction can be subtle. Perhaps the most obvious difference is in their respective tangibility. Products are usually tangible. You can physically touch a television set or a newspaper. Services are usually intangible. You cannot touch consultancy advice or a haircut (although you can often see or feel the results of these services). Also, services may have a shorter stored life. Products can usually be stored, at least for a time. The life of a service is often much shorter. For example, the service of ‘accommodation in a hotel room for tonight’ will perish if it is not sold before tonight – accommodation in the same room tomorrow is a different service.

Most operations produce both products and services
Some operations produce just products and others just services, but most operations produce a mixture of the two. Figure 1.4 shows a number of operations (including some described as examples in this chapter) positioned in a spectrum from ‘pure’ product producers to ‘pure’ service producers. Crude oil producers are concerned almost exclusively with the product which comes from their oil wells. So are aluminium smelters, but they might also produce some services such as technical advice. Services produced in these circumstances are called facilitating services. To an even greater extent, machine tool manufacturers produce facilitating services such as technical advice and applications engineering. The services produced by a restaurant are an essential part of what the customer is paying for. It is both a manufacturing operation which produces meals and a provider of service in the advice, ambience and service of the food. An information systems provider may produce software ‘products’, but primarily it is providing a service to its customers, with facilitating products. Certainly, a management consultancy, although it produces reports and documents, would see itself primarily as a service provider. Finally, pure services produce no products, a psychotherapy clinic, for example. Of the short cases and examples in this chapter, Acme Whistles is primarily a product producer, although it can give advice or it can even design products for individual customers. Pret A Manger both manufactures and serves its sandwiches to customers. IKEA subcontracts the manufacturing of its products before selling them, and also offers some design services. It therefore has an even higher service content.

Formule 1 and the safari park (see later) are close to being pure services, although they both have some tangible elements such as food. 

Services and products are merging 

Increasingly the distinction between services and products is both difficult to define and not particularly useful. Information and communications technologies are even overcoming some of the consequences of the intangibility of services. Internet-based retailers, for example, are increasingly ‘transporting’ a larger proportion of their services into customers’ homes. Even the official statistics compiled by governments have difficulty in separating products and services. Software sold on a disc is classified as a product. The same software sold over the Internet is a service. Some authorities see the essential purpose of all businesses, and therefore operations processes, as being to ‘service customers’. Therefore, they argue,
all operations are service providers which may produce products as a part of serving their customers. Our approach in this book is close to this. We treat operations management as being important for all organizations. Whether they see themselves as manufacturers or service providers is very much a secondary issue.

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Operations Management is Important in all Types of Organization

In some types of organization it is relatively easy to visualize the operations function and what it does, even if we have never seen it. For example, most people have seen images of automobile assembly. But what about an advertising agency? We know vaguely what they do – they produce the advertisements that we see in magazines and on television – but what is their operations function? The clue lies in the word ‘produce’. Any business that produces something, whether tangible or not, must use resources to do so, and so must have an operations activity. Also the automobile plant and the advertising agency do have one important element in common: both have a higher objective – to make a profit from producing their products or services. Yet not-for-profit organizations also use their resources to produce services, not to make a profit, but to serve society in some way. Look at the following examples of what operations management does in five very different organizations and
some common themes emerge.

1. Automobile assembly factory – Operations management uses machines to efficiently assemble products that satisfy current customer demands

2. Physician (general practitioner) – Operations management uses knowledge to effectively diagnose conditions in order to treat real and perceived patient concerns

3. Management consultant – Operations management uses people to effectively create the services that will address current and potential client needs

4. Disaster relief charity – Operations management uses our and our partners’ resources to speedily provide the supplies and services that relieve community suffering

5. Advertising agency – Operations management uses our staff ’s knowledge and experience to creatively present ideas that delight clients and address their real needs

Start with the statement from the ‘easy to visualize’ automobile plant. Its summary of what operations management did was that . . . ‘Operations management uses machines to efficiently assemble products that satisfy current customer demands.’ The statements from the other organizations were similar, but used slightly different language. Operations management used, not just machines but also . . . ‘knowledge, people, “our and our partners’ resources” ’ and ‘our staff ’s experience and knowledge’, to efficiently (or effectively, or creatively) assemble (or produce, change, sell, move, cure, shape, etc.) products (or services or ideas) that satisfy (or match or exceed or delight) customers’ (or clients’ or citizens’ or society’s) demands (or needs or concerns or even dreams). So whatever terminology is used there is a common theme and a common purpose to how we can visualize the operations activity in any type of organization: small or large, manufacturing or service, public or private, profit or not-for-profit. Operations management uses resources to appropriately create outputs that fulfil defined market requirements. See Figure 1.2. However, although the essential nature and purpose of operations management is the same in every type of organization, there are some special issues to consider, particularly in smaller organizations and those whose purpose is to maximize something other than profit.

 

Operations management in the smaller organization

Operations management is just as important in small organizations as it is in large ones. Irrespective of their size, all companies need to produce and deliver their products and services efficiently and effectively. However, in practice, managing operations in a small or medium-size organization has its own set of problems. Large companies may have the resources to dedicate individuals to specialized tasks but smaller companies often cannot, so people may have to do different jobs as the need arises. Such an informal structure can allow the company to respond quickly as opportunities or problems present themselves. But decision making can also become confused as individuals’ roles overlap. Small companies may have exactly the same operations management issues as large ones but they can be more difficult to separate from the mass of other issues in the organization. However, small operations can also have significant advantages; the short case on Acme Whistles illustrates this. 

Operations management in not-for-profit organizations

Terms such as competitive advantage, markets and business, which are used in this book, are usually associated with companies in the for-profit sector. Yet operations management is also relevant to organizations whose purpose is not primarily to earn profits. Managing the operations in an animal welfare charity, hospital, research organization or government department is essentially the same as in commercial organizations. Operations have to take the same decisions – how to produce products and services, invest in technology, contract out some of their activities, devise performance measures, and improve their operations performance and so on. However, the strategic objectives of not-for-profit organizations may be more complex and involve a mixture of political, economic, social and environmental objectives. Because of this there may be a greater chance of operations decisions being made under conditions of conflicting objectives. So, for example, it is the operations staff in a children’s welfare department who have to face the conflict between the cost of providing extra social workers and the risk of a child not receiving adequate protection. Nevertheless the vast majority of the topics covered in this book have relevance to all types of organization, including non-profit, even if the context is different and some terms may have to be adapted.

The new operations agenda

The business environment has a significant impact on what is expected from operations management. In recent years there have been new pressures for which the operations function has needed to develop responses. Table 1.2 lists some of these business pressures and the operations responses to them. These operations responses form a major part of a new agenda for operations. Parts of this agenda are trends which have always existed but have accelerated, such as globalization and increased cost pressures. Part of the agenda involves seeking ways to exploit new technologies, most notably the Internet. Of course, the list in Table 1.2 is not comprehensive, nor is it universal. But very few businesses will be unaffected by at least some of these concerns. When businesses have to cope with a more challenging environment, they look to their operations function to help them respond.

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What is Operations Management?

Operations management is the activity of managing the resources which produce and deliver products and services. The operations function is the part of the organization that is responsible for this activity. Every organization has an operations function because every organization produces some type of products and/or services. However, not all types of organization will necessarily call the operations function by this name. (Note that we also use the shorter terms ‘the operation’ and ‘operations’ interchangeably with the ‘operations function’). Operations managers are the people who have particular responsibility for managing some, or all, of the resources which compose the operations function. Again, in some organizations the operations manager could be called by some other name. For example, he or she might be called the ‘fleet manager’ in a distribution company, the ‘administrative manager’ in a hospital, or the ‘store manager’ in a supermarket.

Operations in the organization
The operations function is central to the organization because it produces the goods and services which are its reason for existing, but it is not the only function. It is, however, one of the three core functions of any organization. These are: 

● the marketing (including sales) function – which is responsible for communicating the organization’s products and services to its markets in order to generate customer requests for service

● the product/service development function – which is responsible for creating new and modified products and services in order to generate future customer requests for service; 

● the operations function – which is responsible for fulfilling customer requests for service through the production and delivery of products and services.

In addition, there are the support functions which enable the core functions to operate effectively. These include, for example:
● the accounting and finance function – which provides the information to help economic
decision-making and manages the financial resources of the organization;
● the human resources function – which recruits and develops the organization’s staff as
well as looking after their welfare.

Remember that different organizations will call their various functions by different names and will have a different set of support functions. Almost all organizations, however, will have the three core functions, because all organizations have a fundamental need to sell their services, satisfy their customers and create the means to satisfy customers in the future. Table 1.1 shows the activities of the three core functions for a sample of organizations. In practice, there is not always a clear division between the three core functions or between core and support functions. This leads to some confusion over where the boundaries of the operations function should be drawn. In this book we use a relatively broad definition of operations. We treat much of the product/service development, technical and information systems activities and some of the human resource, marketing, and accounting and finance activities as coming within the sphere of operations management. We view the operations function as comprising all the activities necessary for the day-to-day fulfilment of customer requests. This includes sourcing products and services from suppliers and transporting products and services to customers. 

Working effectively with the other parts of the organization is one of the most important responsibilities of operations management. It is a fundamental of modern management that functional boundaries should not hinder efficient internal processes. Figure 1.1 illustrates some of the relationships between operations and some other functions in terms of the flow of information between them. Although it is not comprehensive, it gives an idea of the nature of each relationship. However, note that the support functions have a different relationship with operations than operations has with the other core functions. Operations management’s responsibility to support functions is primarily to make sure that they understand operations’ needs and help them to satisfy these needs. The relationship with the other two core functions is more equal – less of ‘this is what we want’ and more ‘this is what we can do currently – how do we reconcile this with broader business needs?’

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Introduction Operations Management

Introduction

Operations management is about how organizations produce goods and services. Everything you wear, eat, sit on, use, read or knock about on the sports field comes to you courtesy of the operations managers who organized its production. Every book you borrow from the library, every treatment you
receive at the hospital, every service you expect in the shops and every lecture you attend at university – all have been produced. While the people who supervised their ‘production’ may not always be called operations managers that is what they really are. And that is what this book is concerned with – the tasks, issues and decisions of those operations managers who have made the services and products on which we all depend. This is an introductory chapter, so we will examine what we mean by ‘operations management’, how operations processes can be found everywhere, how they are all similar yet different, and what it is that operations managers do.

Love it or hate it, IKEA is the most successful furniture retailer ever. With 276 stores in 36 countries, it has managed to develop its own special way of selling furniture. The stores’ layout means customers often spend two hours in the store – far longer than in rival furniture retailers. IKEA’s philosophy goes back to the original business, started in the 1950s in Sweden by Ingvar Kamprad. He built a showroom on the outskirts of Stockholm where land was cheap and simply displayed suppliers’ furniture as it would be in a domestic setting. Increasing sales soon allowed IKEA to start ordering its own self-designed products from local manufacturers. But it was innovation in its operations that dramatically reduced its selling costs. These included the idea of selling furniture as
self-assembly flat packs (which reduced production and transport costs) and its ‘showroom–warehouse’ concept which required customers to pick the furniture up themselves from the warehouse (which reduced retailing costs). Both of these operating principles are still the basis of IKEA’s retail operations process today. Stores are designed to facilitate the smooth flow of customers, from parking, moving through the store itself, to ordering and picking up goods. At the entrance to each store large notice-boards provide advice to shoppers. For young children, there is a supervised children’s play area, a small cinema, and a parent and baby room so parents can leave their children in the supervised play area for a time. Parents are recalled via the loudspeaker system if the child has any problems. IKEA ‘allow customers to make up their minds in their own time’ but ‘information points’ have staff who can help. All furniture carries a ticket with a code number which indicates its location in the warehouse. (For larger items customers go to the information desks for assistance.)  here is also an area where smaller items are displayed, and can be picked directly. Customers then pass through the warehouse where they pick up the items viewed in the showroom. Finally, customers
pay at the checkouts, where a ramped conveyor belt moves purchases up to the checkout staff. The exit area has service points and a loading area that allows customers to bring their cars from the car park and load their purchases. Behind the public face of IKEA’s huge stores is a complex worldwide network of suppliers, 1,300 direct suppliers, about 10,000 sub-suppliers, wholesale and transport operations include 26 Distribution Centres. This supply network is vitally important to IKEA. 

From purchasing raw materials, right through to finished products arriving in its customers’ homes, IKEA relies on close partnerships with its suppliers to achieve both ongoing supply efficiency and new product development. However, IKEA closely controls all supply and development activities from IKEA’s home town of Älmhult in Sweden. But success brings its own problems and some
customers became increasingly frustrated with overcrowding and long waiting times. In response IKEA in the UK launched a £150 m programme to ‘design out’ the bottlenecks. The changes included: 

● Clearly marked in-store short cuts allowing customers who just want to visit one area, to avoid having to go through all the preceding areas.
● Express checkout tills for customers with a bag only rather than a trolley.
● Extra ‘help staff’ at key points to help customers.
● Redesign of the car parks, making them easier to navigate.
● Dropping the ban on taking trolleys out to the car parks for loading (originally implemented to stop
vehicles being damaged).
● A new warehouse system to stop popular product lines running out during the day.
● More children’s play areas.

IKEA spokeswoman Nicki Craddock said: ‘We know people love our products but hate our shopping
experience. We are being told that by customers every day, so we can’t afford not to make changes.
We realized a lot of people took offence at being herded like sheep on the long route around stores. Now if you know what you are looking for and just want to get in, grab it and get out, you can.’

Operations management is a vital part of IKEA’s success IKEA shows how important operations management is for its own success and the success of any type of organization. Of course, IKEA understands its market and its customers. But, just as important, it knows that the way it manages the network of operations that design, produce and deliver its products and services must be right for its market. No organization can survive in the long term if it cannot supply its customers effectively. And this is essentially what operations management is about – designing, producing and delivering products and services that satisfy market requirements. For any business, it is a vitally important activity. Consider just some of the activities that IKEA’s operations managers are involved in. 

● Arranging the store’s layout to gives smooth and effective flow of customers (called process design)
● Designing stylish products that can be flat-packed  efficiently (called product design)
● Making sure that all staff can contribute to the company’s success (called job design)
● Locating stores of an appropriate size in the most effective place (called supply network design)
● Arranging for the delivery of products to stores (called supply chain management)

● Coping with fluctuations in demand (called capacity management)
● Maintaining cleanliness and safety of storage area (called failure prevention)
● Avoiding running out of products for sale (called inventory management)
● Monitoring and enhancing quality of service to customers (called quality management)
● Continually examining and improving operations practice (called operations improvement).

And these activities are only a small part of IKEA’s total operations management effort. But they do give an indication, first of how operations management should contribute to the businesses success, and second, what would happen if IKEA’s operations managers failed to be effective in carrying out
any of its activities. Badly designed processes, inappropriate products, poor locations, disaffected
staff, empty shelves, or forgetting the importance of continually improving quality, could all turn a
previously successful organization into a failing one. Yet, although the relative importance of these activities will vary between different organizations, operations managers in all organizations will be making the same type of decision (even if what they actually decide is different).

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