11.2: Operations Management for Manufacturing
Operations management is a vital component of any business, encompassing the practices, techniques, and tools that organizations use to produce and deliver goods and services efficiently and effectively. Whether in manufacturing or service industries, operations management plays a crucial role in building a competitive edge and driving long-term success.[1] Employing proficient staff, ensuring operations are ethical and safe, and choosing strategic locations are important for maintaining operational excellence.
Operations management and the production process are closely intertwined, as operations management oversees and optimizes the production process to ensure efficiency, quality, and value creation.
Here’s how they relate:
- Planning the production process. Operations management involves determining the resources, steps, and timelines needed to produce goods or services. This planning phase aligns production goals with business objectives, ensuring resources like labour, materials, and machinery are used effectively.
- Resource allocation. The production process requires inputs such as raw materials, labour, and technology. Operations management allocates these resources to minimize waste and optimize productivity, considering costs and demand forecasts.
- Process optimization. Operations managers analyze the production process to identify bottlenecks, inefficiencies, or areas for improvement. They implement techniques like lean manufacturing, Six Sigma, or Total Quality Management (TQM) to streamline processes.
- Monitoring and controlling. During production, operations management monitors progress against planned schedules and budgets. Real-time tracking systems and metrics ensure the process stays aligned with targets, and any deviations are corrected promptly.
- Quality assurance. Operations management integrates quality control and assurance into the production process to ensure the final products meet customer expectations and regulatory standards.
- Delivery and feedback. Once production is complete, operations management oversees product delivery, evaluates performance, and collects feedback to refine the process for future cycles.
In summary, operations management is the strategic framework that governs every aspect of the production process, ensuring that goods and services are produced efficiently, meet quality standards, and align with customer and market demands.
IKEA’s Operations Model
Operations management is an essential part of the Swedish furniture company IKEA’s success. Its management systems have enabled the company to offer more than 10,000 products at competitive prices as it has grown over nearly eight decades.[2] IKEA’s reputation has rested on its efficient and effective management of: [3]
- Product and process design
- Inventory
- Quality assurance
- Supply chain networks
- Back-end operations
To maintain its low prices, IKEA must ensure efficient operational management across all levels of the organization—from product design and material sourcing to flat packing, distribution, and adapting to demand fluctuations. The ability to sustain low manufacturing or service costs through streamlined operations is a key factor that distinguishes successful businesses from their competitors.
IKEA has strict requirements around quality, function, and cost when it comes to designing products. To reduce the price of production and distribution, the company uses a ready-to-assemble design for items in its inventory, and the flat packing method used to ship and store its products reduces consumer and manufacturing costs.
IKEA begins each product design phase by first establishing a target price. To minimize waste and reduce overall costs, the company relies on a standardized production process that uses a limited range of raw materials. Within these constraints, IKEA’s designers develop products that meet the brand’s core values of affordability, sustainability, quality design, and functionality.
To maintain a competitive edge, IKEA employs a robust forecasting system that anticipates market trends and initiates production planning years in advance. By strategically allocating production based on supplier capabilities and resources, IKEA successfully balances output across its network of third-party manufacturers. Together, these strategies significantly lower per-unit production costs across its vast inventory.
After production, IKEA’s operational management oversees the transportation of the final products to a network of automated distribution centers around the globe. The well-designed system ensures cost-effective distribution to the 484 IKEA stores worldwide.[4]
Each retail location functions as both a store and a warehouse. Each IKEA store is supported by both an in-store logistics manager and a store goods manager, responsible for overseeing ordering and material handling, respectively. Working together, they align inventory management with customer demand to optimize profitability. By integrating retail spaces with warehouse functions and adopting a self-service model, IKEA reduces distribution and storage costs, helping it maintain a strong competitive advantage.
IKEA partners with over 1,500 global suppliers in 54 countries to maintain strong, collaborative relationships across its supply chain.[5] By working closely with suppliers and avoiding internal competition between suppliers, IKEA co-develops cost-effective, innovative production methods. This long-term approach reduces costs and enhances value. Through tight control of design, production, and distribution, IKEA keeps prices low while scaling globally—demonstrating the power of efficient operational management.
Media Attributions
“IKEA Building” by RDNE Stock Project, used under the Pexels license.
- geeksforgeeks. (2024, March 27). What is operations management? Definition, purpose, benefits, and examples. ↵
- IKEA. (n.d.). Where do your products come from? ↵
- Faircloth, T. (2021, September 16). Why IKEA’s operations model is so successful. Chekhub. ↵
- IKEA. (2025). How we work. ↵
- IKEA. (n.d.). Let's grow together: Become and IKEA supplier. ↵
A vital component of any business, encompassing the practices, techniques, and tools that organizations use to produce and deliver goods and services efficiently and effectively.
