WORKSHOP 1. Restock warehouse and visual displays. Display of furniture and development of good visual displays. Selection of furniture

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1 WORKSHOP 1 Task 1: Input- Process - Output Input Process Output Transformed resources All items of furniture/ home ware: small basket items; flat pack items in the selfservice warehouse; special items Customers Transforming Resources Visual displays Warehouses Trolleys and equipment Checkout equipment Customers Check out staff Staff on information points Staff Restock warehouse and visual displays Display of furniture and development of good visual displays Answer queries Process financial transactions Customers Selection of furniture Design of configuration (e.g. a shelving system) Picking of items from the warehouse Transportation of items through the store Loading of items into car Delivery of items Assembly of items Happy customers?!? Flat packs/assembled furniture taken to customer home

2 Task 3: 4Vs HIGH VOLUME - IKEA s operations are very large and purpose-built. They feature very large car parks and are located close to major motorway intersections. In fact, everything about the design of IKEA s operations encourage high volume of throughput. This high volume means that many of the fixed costs of running the IKEA operation such as local taxes, administrative costs and some energy costs are spread over a high volume of individual sales transactions. This reduces the overall cost of making a sale, part of IKEAs strategy of offering good value for money. HIGH VARIETY OF PRODUCTS BUT LOW VARIETY OF SERVICE The variety of products sold in IKEA store is relatively large compared with many furniture retail operations. For example, it includes small items such as glassware and kitchenware as well as very large items such as sofas, tables and shelving systems. Modular design of some products such as shelving systems allows variety to be extended even further from a few basic component parts. These components can be assembled together (by the customers) in different ways to offer an almost infinite variety of combinations. However, as far as the variety of service is concerned it is relatively narrow. Most products are sold in cartons, customers are left to make decisions by themselves without interference from sales staff (though advice is available if requested) and even when ordering special products the order is taken down by staff in a standardized form. The check-out operation, where customers pay for the goods, is also highly standardized with everyone going through exactly the same sequence of activities. Even delivery to the customers home is largely a matter of the customer carrying the goods themselves in their own cars (though a delivery service is also available). HIGH VARIATION OF DEMAND BUT PREDICTABLE - Weekends and public holidays are much busier than working week days, therefore variation is relatively high. However, from IKEAs experience, demand is relatively predictable. Because of this predictability they can plan to have more staff available at busy periods. However, also because customers are encouraged to perform much of the

3 service themselves, the need to fluctuate staff is less than it would be in a conventional store. Also, in conventional stores, because of the high level of expertise and customer contact required, it is much more difficult to obtain the services of part-time staff during peak demands. The relatively standardized and simplified service given by IKEA makes it easier to schedule part-time staff in busy periods. LOW VISIBILITY Finally, customer contact is, in some parts of the operation, high, but overall it is lower than most furniture retail operations. Consider: customers are responsible for choosing which types of furniture they require, working out whether this furniture would fit together in their own home (special sheets and tape measures are provided by IKEA to help customers do this), filling in order forms when special furniture has to be delivered, serving themselves to smaller items into trolleys, entering the warehouse area and picking out from the warehouse shelves the cartoned larger items, transporting the goods through to the checkout, and finally loading the goods on to their own car. Most of this occurs with very little customer contact. In many instances the only point at which interaction takes place between customer and service staff is at the point of payment. In effect, the customer is trained to perform much of the value adding part of the service themselves. Clearly, this cuts down the costs of the transaction as far as IKEA is concerned. These savings can then be passed on to the customer.

4 Workshop 2 Task 2: Level of decision-making Types of Decision Made Strategic Expansion plan Boutique or chain? Budgets Long-term strategy Tactical Room design Menu design Layout of hotel Marketing plan for hotel Staffing Operational Room reservations Rates the customer should pay Table reservations Billing Order supplies (food; beverages; linen etc.) Maintenance Rota Shifts

5 Task 3: Order winners Quality, more specifically, the style and feeling of luxury of the hotel Quality of the food on offer Order qualifiers Service level, customers seem to be able to tolerate the delay in service however, this is the key aspect that Hotel Nouveau have to watch this. If there service does not meet the qualifying level, they may lose customers. Less competitive factors Price Hotel Plaza Nouveau are choosing not to compete on price. They do charge a bit more and their customers are prepared to pay it, but if they lower it it could have an impact on demand.

6 Workshop 4 Task 1 Average frequency per shift Average time taken to perform service (minutes) % Frequency per shift Cumulative % frequency per shift Making photocopies % 21% Providing drinks % 37% Faxing documents % 50% Locking/unlocking meeting rooms % 61% Relaying messages to meeting rooms % 71% Providing extra keys 3 2 8% 79% Showing guests to rooms % 86% Arranging computer wireless connections % 91% Providing medication % 95% Providing extra linen % 99% Arranging rooms % 100% Total: 38 61

7 Task 2 Task 3 Use Pareto s Diagram to Identify Areas for Improvement Do you think it was wise to spend time examining this particular issue? Yes, it works out that the desk is left unattended for 2 hours, 51 ½ mins per shift Customers would be frequently left waiting for help It may also mean that queries need to be handled better. How can the Pareto diagram be used to improve their processes? The diagram indicates that the majority of times the desk is left unattended is for photocopying the machine could be located at the reception desk, this would save 40 minutes. Furthermore, it seems that the some of the processes need to be organised better with other personnel in the hotel, e.g. waiting staff and other assistants.

8 Workshop 5 Task 2 No. Task Description Chart symbols Distance (approx) Average time 1. Concept and design in US 2. Send design (from 1) to Taiwan 6562 miles Not known 3. Engineering design in Taiwan 4. Send design (from 1) to Canada 824 miles Not known 5. Design of Graphic processors in Canada 6. Send design of graphic processors to Taiwan 7. Graphic processors manufacturing in Taiwan 5946 miles Not known 8. Graphic processors stored in Taiwan 9. Graphic processors shipped to China 1336 miles Not known 10. LCD screens manufactured in Taiwan 11. LCD screens stored in Taiwan 12. LCD screen shipped to China 1336 miles Not known 13. Memory chips manufactured in South Korea 14. Memory chips stored in South Korea 15. Memory chips shipped to China 540 miles Not known 16. Hard drives made in Japan 17. Hard drives stored in Japan

9 18. Hard drives shipped to China 4089 miles Not known 19. Other components manufactured in China 20. Other components stored in China 21. Other components moved to assembly facility in China unknown Not known 22. Other components manufactured in Japan 23. Other components stored in Japan 24. Other components shipped to China 4089 miles Not known 25. Other components manufactured in Singapore 26. Other components stored in Singapore 27. Other components shipped to China 2361 miles Not known 28. Other components made in South Korea 29. Other components stored in South Korea 30. Other components shipped to China 540 miles Not known 31. Other components manufactured in the US 32. Other components stored in the US 33. Other components shipped to China 8,954 miles Not known 34. Assembly of the laptop in China 35. Storage of laptops in China 36. Ship to customers various Not known

10 Task 3: Evaluate the Supply Chain What other supply chain processes would be managed? Supplier selection and evaluation Inventory management Time management Quality testing and assurance Etc. What are the advantages and disadvantages of locating across the globe? Advantages Locate the best supplier for the different components Identify skill sets in the particular areas of the design of the product Cost effective Etc. Disadvantages Difficult to co-ordinate Time lags and delays between the different facilities In transit inventory will have to be managed Slow time to market Etc. Do you think this is a physically efficient supply chain or ancustomer responsive agile one? HP has focused on cost-effectiveness rather than quick customer response. Inventory will be located more densely upstream (away from customers) rather than a quick response to customers Etc.