Quality and Statistical Quality Control Techniques

1. IKEA Name University

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. Methods Analysis • 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

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. • OrganizationalBenefits • High productivity • Quality • Flexibility • Customer satisfaction.

19. Developing a High Performance Work Systems Linkages to Strategy • System Design • Work flow • HRM practices • Support technology Principles of High Involvement • OUTCOMES • Organizational • Employee Implementation Process

20. PERT Diagram for HPWS implementation Conduct focus group surveys Assess current systems in place 3 weeks Document Findings and Recommendations Design the competency profile to support strategy Develop Job design & reward strategies 2 weeks 4 weeks Perform industry benchmark on HRM practices 1 week 3 weeks Evaluate Knowledge Management Systems 2 weeks 2 weeks Train employees in new Knowledge Management Systems Train employees in new workflow Roll-out new workflow Design improved workflow Evaluate Workflow productivity Implement Knowledge Management Systems 4 weeks 4 weeks 2 weeks 3 weeks 2 weeks 3 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.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.