A-Team Final Presentation 19.05.2008 Our team Justyna Batko – Polonia, Warsaw University if Life Sciences Alejandro Sanchez – Elda Miquel Llorca – Picassent Plan of presentation Introduction Task 1- basic information Task 2- products and services Task 3- 10 OM decisions Task 4- forecast Task 5- e-commerce Summary For someone who do not know what is Is a privately-held, international home products retailer that sells flat pack furniture, accessories, bathrooms and kitchens at retail stores around the world. The company, which pioneered flat-pack design furniture at affordable prices, is now the world's largest furniture manufacturer. A-Team project Task 1. Basic information 1. VISION 2. BUSINESS SECTOR Self-assembly furniture. 3. SIZE Employees: 118,000 Visitors: Revenue: 4. LOCATION World map: Country’s first store: - 1980 -> Spain: Gran Canaria (Las Palmas) - 1991 -> Poland: Platan 5. STRUCTURE 6. HISTORY Begining point At the age of five Ingvar Kamprad starts selling matches to his nearby neighbours and by the time he is seven, he starts selling further afield, using his bicycle. He finds that he can buy matches in bulk cheaply in Stockholm and re-sell them individually at a very low price but still make a good profit. From matches he expands to selling flower seeds, greeting cards, Christmas tree decorations, and later pencils and ball-point pens. Concept beginning Ingvar's innovative idea was to offer home furnishing products of good function and design at prices much lower than competitors by using simple cost-cutting solutions that did not affect the quality of products. The name IKEA comes from the initials of Ingvar Kamprad, I and K, plus the first letters of Elmtaryd and Agunnaryd, which are the names of the farm and village where he grew up. 1940s – 1950s The roots of a furniture dealer. Ingvar Kamprad is entrepreneurial in developing IKEA into a furniture retailer. This period sees the exploration of furniture design, self assembly, advertising, the use of a catalogue and a showroom to reach the many people. 1960s – 1970s The IKEA concept starts to take shape. New IKEA stores open and hero products are developed such as POÄNG and BILLY bookcase. It is a time where concept takes shape and is documented in Ingvar Kamprad's The Testament of a Furniture Dealer. 1980s IKEA expands dramatically into new markets such as USA, Italy, France and the UK. More IKEA classics arrive such as KLIPPAN, LACK and MOMENT. IKEA begins to take the form of today's modern IKEA. 1990s IKEA grows even more. Children's IKEA is introduced and the focus is on home furnishing solutions to meet the needs of families with children. The IKEA Group is formed and responsibility for people and the environment is seen as a prerequisite for doing good business. 2000s IKEA expands into even more markets such as Japan and Russia. Everything for the bedroom and kitchen is explored and presented in coordinated furnishing solutions. This period also sees the successes of several partnerships regarding social and environmental projects. A-Team project Task 2. Products and services How the bussines runs? The business idea is based on a partnership with the customer: – „we do our part, which starts with our designers working with manufacturers to find smart ways to make furniture using existing production processes” – „then our buyers look all over the world for good suppliers with the most suitable raw materials” – „we buy in bulk, on a global scale, so that we can get the best deals, and you can get the lowest price” Products modern, flexible adaptable home furnishings, scalable both to smaller homes and dwellings as well as large houses much of IKEA's furniture is designed to be assembled by the consumer „democratic design” - the company applies an integrated approach to manufacturing and design the company implements economies of scale, capturing material streams and creating manufacturing processes that hold costs and resource use down The price tag first The fundamental idea is to combine an extremely low price with beautiful design and high quality. With the low price in mind, our designers began by reviewing the whole production process, including materials used, logistics, and labour and transport costs. By working together with skilled manufacturers, IKEA designers find ways to get the most out of a raw material. We are constantly looking for smart solutions to meet our customers needs. Flat packing saves shipping cost Our flat-packs and our customers' willingness to assemble products themselves enable us to reduce labour, shipping and storage costs. IKEA designs furniture so that it can be packed unassembled. Ultimately, this means that we are able to offer our customers products at low prices. New product - HAMMOCK Gentle swinging helps both your body and mind to relax. Assembled size – Length: 220 cm – Width: 140 cm good to know Max. load 250 kg when the hammock is hanging in a load-bearing construction. Suspension fittings and cord included. Seats 2. care instructions Hand wash, warm (40°C). Do not bleach. Iron, high temperature. Do not dryclean. Do not tumble dry. product description & measurements Fabric: 100% cotton Rope: 100% polyester Ring: Steel, Galvanised The house of quality A-Team project Task 3. 10 OM decissions 10 Operations Managemnt Decissions Goods & service design Quality Process & capacity design Location selection Layout design Human resource and job design Supply-chain management Inventory Scheduling Maintenance Goods and service design It is simple and straightforward. Products are hard-wearing and easy to live with. – They reflect and facilitate an easy, natural and unconstrained way of life. – They express form, and are colourful and cheerful. – And they appeal to the young at heart of all ages. Quality IKEA products have the label "Design and Quality, IKEA of Sweden" and are sold in IKEA stores. KEA works to ensure that products and materials are adapted to minimise any negative impact on the environment, and are safe for customers from a health perspective. IKEA products must be manufactured under acceptable working conditions by suppliers who take responsibility for the environment. Process and capacity design It starts with focusing on what's important. Will an expensive finish on the back of a shelf or under a table-top improve the function? Absolutely not. So IKEA designers do not do it, because a product is of no use to the customer if it is not affordable. IKEA designers design every IKEA product starting with a functional need and a price. Then they use their vast knowledge of innovative, low-cost manufacturing processes to create functional products, often co-ordinated in style. Then large volumes are purchased to push prices down even further. Location selection The IKEA store is where the IKEA range is sold. It is also where the range comes to life. Layout design Inside the IKEA store, there are hundreds of inspirational displays – realistic room settings – real-life homes – product combinations that provide fresh ideas and know-how on contemporary interior design There are up to 10,000 different products offered in some IKEA stores. There are many new products introduced throughout the year in the IKEA store. Human resources and job design 118.000 co-workers spread across functions – – – – – – – purchasing distribution whole-sale range retail support functions the Swedwood Group Supply-chain management every product start with functional need and a price innovative, low-cost manufacturing processes to create functional products, often co-ordinated in style designed to be transported in flat packs and assembled at the customer's home this lowers the price by minimising transportation and storage costs IKEA's code of conduct defines what suppliers can expect from IKEA and specifies what IKEA requires from its suppliers. Inventory IKEA has 45 trading service offices in 31 countries this allows company to be close to suppliers - about 1,350 in 50 countries They can monitor production, test new ideas, negotiate prices and check quality while keeping an eye on social and working conditions. Top five purchasing countries China 22%, Poland 16%, Italy 8%, Sweden 6% and Germany 6% Scheduling IKEA has 31 distribution centres in 16 countries. Using flat packs, transporting goods where possible by rail and sea, and utilising fuel-saving techniques allows company to be cost-effective and environmentally friendly. IKEA provide production and design for one year production of one line of products is done simultaneously with the research and design process of new products Maintanance they pay much attention to be in touch with customers and their needs catalogue serves as a permanent invitation to the IKEA store – constant inspiration – serves as an invaluable source of product information – contains details on how to get to the nearest store and its opening hours A-Team project Task 4. Forecasting Steps in forecasting Determine the use of the forecast Select the items to be forecast Determine the time horizon of the forecast Select the forecasting model(s) Gather the data Make the forecast Validate and implement results 1. USE OF THE FORECAST We use forecasting in order to predict which i going to be the impact of our new good in the global market. Then forecasting can help us to know if this new good is going to be profitable or not. 2. ITEM 3. TIME HORIZON SHORT-TERM: - Marketing. MEDIUM-TERM: - Increase our budget. LONG-TERM: - Using this new good to expand our company in a new work field. 4. FORECASTING MODELS Qualitative Methods: We use our experience to predict the market devolpment. Quantitative Methods: When we have data, we can use mathematical techniques to predict the market development. Quantitative Forecasting Methods We have done a study of the last 8 years using these two methods: - Moving average. - Exponentical smoothing. 5. DATA YEAR 2000 2001 2002 2003 2004 2005 2006 2007 GAIN (million €) 1100 1000 1150 1200 1250 1280 1300 1400 6. FORECAST 7. RESULTS 1600 1400 1200 1000 800 600 400 200 0 GAIN Year 2008 2007 2006 2005 2004 2003 2002 2001 MOVING AVERAGE (n=3) 2000 Million euros FORECASTING EXPONENTIAL SMOOTHING (a= 0.5) 8. CONCLUTIONS The most important conclution is that according to our results our company is not going to increase its benefits, but proably it will do it next years, because despite of forecasting give us lower values than real values, we achieve very high benefits. A-Team project Task 5. Ecommerce fully interactive room images – users can engage with the images and see tips and ideas for a variety of products and everyday situations “The trick was to develop a user interface that balances efficiency and discovery” with an IKEA step-by-step guide shopping are easier Payment Methods Ask Anna the automated customer service chat character driven by artificial intelligence Anna has proven to be very effective in providing 24/7 support and advice to millions of IKEA customers worldwide, reducing support costs Summary wide range of well designed, functional home furnishing products at prices so low that as many people as possible will be able to afford them Sources www.ikea-group.ikea.com www.ikea.com www.wikipedia.org www.franchisor.ikea.com "IKEA: Flat-pack accounting", The Economist, 200605-11 Questions?
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