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Project on QUALITY MANAGEMENT AND

CUSTOMER SATISFACTION AT IKEA

SUBMITTED TO
MRS. SEEMA SHUKLA

SUBMITTED BY
SHIVAM GARG

PG20171122
ABSTRACT
This Briefing Paper has been designed to critically evaluate the application of Total
Quality Management (TQM) in the world’s leading furniture company, IKEA. The paper
will further critique and outline how IKEA holistically approaches the concept of TQM,
applying it numerous principles across the various aspects of the business, and in general
as a whole.
In terms of methodology the authors have adapted a Cross-sectional study, taking note of
how TQM Principles are currently applied at IKEA and benchmarking these with
industry leaders in that area or field of business with the view of determining a Best
Fit/Best Practise approach.
Our findings established that though IKEA adheres to the most stringent of measures
towards applying TQM principles in the process of and the production of its products, at such
an unparalleled high standard towards the elimination of waste (Muda) and unnecessary
processes, the company still falters in the area on convenience delivery and assemblage.

A BACKGROUND ON TOTAL QUALITY MANAGEMENT

Total Quality Management was pioneered in the early 1900s through “Quality Gurus”,
who went into different companies to achieve better quality products, higher volumes of
production, and reduced scrap and rework to ensure cost savings (Bank, 2000). Dr Walter
Shewhart, a Laboratory Physicist, introduced the principles of “Statistical Quality Control
(SPC)” which were used in the production process of exchanges and telephone handsets
(Kennedy, 1994). Edwards W Deming and Dr Joseph Juran continued Shewart’s work
at Western Electricity Hawthorne Plant; Deming applied the Shewart’s concept of statistical
control while working on the 1940 US Census with little success until he went to Japan in
1950 to lecture on quality control, where he introduced what is known as Deming’s 14
principles and the PCDA cycle. Dr Joseph Juran later developed a “Company Wide
Quality Management” concept (CWQM). Quality conscious companies like Toyota embraced
the shift towards a Total Quality Management philosophy and this led to a Total Quality
Movement in Japan (Kennedy, 1994). Professor Kaoru Ishikawa took TQM beyond the
factory floor to the Strategic and Managerial levels of the organisation launching “Quality
Circles”. Armand Feigenbaum, an American quality control expert and businessman coined
“Total Quality Control (TQC)” and was reported to be the first to make reference to these
quality principles as “Total Quality Management” (Huggins, 1998).
According to the International Standard Organisation (ISO), TQM is a process of managing
of the entire organisation towards ensuring excellence in every department geared
towards satisfying the customer. This is engaged without compromising on the
company’s profitability or viability. (Ashok, 2012). TQM involves working towards an
objective of engaging constant improvement of products, processes, services and culture
ensuring that quality is looked from a holistic view rather than the product alone.
BACKGROUND OF IKEA
IKEA is the world’s largest furniture retailing company with strong strategic
positioning in the market. It has very clear and distinct value propositions. IKEA’s
proposition is “offering a wide range of well-designed, functional home furnishings
at prices as low as many people as possible can afford them” (Brian Leavy, 2013);
segmenting low income earners and 25-49 year olds. In 1943, Ingvar Kamprad,
the founder of the company , was seventeen when he built upon family owned
farmland, selling items like socks, pens and furniture… which became the bedrock
product his company was to be based upon; borrowing the initials letters from his
name, farm and village of origin (Älmhult), he gave it the name IKEA (Torekull,
2011) (Agencevu, 2009). In January of this year IKEA’s sales Turnover totalled
29.2 billion. The IKEA Group saw growth in its net income by 3.1% in 2013 to 3.3
billion, with strong growth in China, Russia and the USA. The company reportedly
operated in 42 countries globally and ran at least 345 stores by the time in
question. IKEA aims to increase its stores by 50% by the end of the decade, introducing 20-
25 stores each year (500 stores by 2020) (Kifle, 2014). IKEA strategy is to penetrate
smaller markets then moving into dynamic urban centres (Drew & Smith, 1995). IKEA has
maintained this situational strategy, influenced by its culture seeing the company
operating via a franchise arrangement, in numerous countries around the world; Keeping
its corporate identity and image; and uniformity in quality and the design of its products,
providing consistency for IKEA’s customers allowing them to know what to expect (Jafry,
2012). The IKEA group consumes 1% of the Earth's wood supply.

THE PRINCIPLES OF QM
The principles of QM include the various tools and QM based approaches that
are implemented towards putting it to work in an organisation. These include but
are not limited to:
JUST IN TIME: makes available its output/finished goods and services to the
department/customer that requires it as and at when needed. Just in time is
designed to eliminate waste and manage resources.

QUALITY CIRCLES:

Quality circles are usually a group of 1 to 6 under supervision of a leader. The employees
meet together on regular basis to identify, analyse, solve problems and introduce solutions
to improve their work performance. They use various techniques to analyse and solve
problems to achieve and sustain. Quality circles have been used for many years since the
70s. Japanese description of quality circles: is better than one to take one hundred
steps is for one hundred people to take one step. Ishikawa was credited for creating Quality
Circles Japan 1962, being known and another method for improving quality. Implementing
Quality Circles into Ikea will benefit on productivity, quality and boost their employee’s
morale. An IKEA quality circle organisation structure could be made up of: The steering
committee, The Coordinator, A Facilitator, the Circle leader and Circle members.
Training for IKEA employees should be designed to:
Change attitude
Continuous Improvement
Self-development
Development of team spirit

BENCHMARKING:

Benchmarking is the measuring of an organisation’s internal processes against departments


within the business, their competitors and other industries to identify, understand, and adapt
outstanding practices (Bank, 2000).
Benchmarking is an internal and external process and is essential for IKEA, in terms of
TQM, as it identifies how well the company in comparison to other companies and also
how each department is doing within the business.

Benchmarking will give IKEA practically processes and procedures to implement to achieve
a TQM culture. Benchmarking can be used alongside other TQM theories; especially as
part of the Deming Quality Approach recommendations mentioned in this paper. Internal
benchmarking can be used as analytical to for IKEA when looking at their past performance.
External benchmarking will give IKEA an understanding of what their main competitors are
doing, and what they need to do to remain competitive (Bank, 2000).

THE ORIGIN OF FLATPACK FURNITURE


After eleven years in the business the concept revolutionised IKEA was Introduced ;
Flatpack furniture. Gillis Lundgren a draughtsman initiated the concept with a transport table.
As it was too big to fit into his car, he suggested that the legs be pulled off and placed
underneath the base of the table. Some of IKEA’s major products sold around the world
today such as Billy bookshelf and the Kippan sofa were part of his designs. (Agencevu,
2009).

14 DEMING PRINCIPLES AND IKEA


IKEA with the implementation of the Deming method and achieving a Total Quality
Management culture; Referring to Figure 1.1, this will include “Visionary Leadership
Style” with elements of “Participative Leadership” leading to “Transformational
Leadership” rather than the existing “Authoritarian Leadership” (Point 1 & 7); “Internal
and External Cooperation”(Points 4 &9); “Organisational Learning”(Points 2,3,6 &13);
“Process Management“ (Point 10&11); “Continuous Improvement” (Kaizen)(Point 13 &
14); “Employee Fulfilment”(Points 8 &12 ); and “Customer Satisfaction”(Point 1 &3).
When developing and using the Deming methodology, IKEA managers will need to be
aware that there are greater implications for top management, especially in terms of their
behaviour (Baillie, 1986) and attitude. According to (Crosby, 1989), Deming and Juran
support this view as they stated that “the problem of quality belongs to management”.

LEAN MANAGEMENT
Lean Management is a principle much in practise in IKEA. The Lean mind set sees the
company so synchronise the retail store and the warehouse with floor marking, tapes and
signage to offer direction, ensuring that both staff and customers can go about their duties
and shopping respectively at any time of the day. The warehouse staff also double up as
the customer service staff as they are trained to direct and interact with customers when the
need arises.

CULTURE

IKEA culture is based on its corporate values which have their origin in Smaland, a
province in Southern Sweden where people are exceptionally thrifty, hardworking and
innovative. The Swedish culture has been described using the Hofstede cultural framework
as a lower context culture with a relatively low power distance (31%) according to Clearly
Cultural), a collectivist society with low masculinity factors.
Gleamed from the Swedish culture, a collectivism orientation is quite evident with IKEA;
where loyalty, family type values and value are stipulated very clearly. People who
digress from this would not even pass the recruitment stage at IKEA. IKEA have a top down
culture where employees are described to be dictated to by their superiors. IKEA is
dedicated to making quality and good, simple design available to the masses. Kamprad’s
penny pinching nature has been pasted through the entire organisation where employees
and customers should understand the philosophy that “You do your part, we do our part and
together we save money” (Telegraph, 2012). This philosophy also is seen in IKEA
recruitment where IKEA try to find people who understand why the company does what it
does. Values act as a reference for readiness to receive or assign responsibility for
acceptable behaviours. Internally the IKEA view is to have the customer’s interest at heart, be
open and cost conscious but (Smithers, 2014) reported that customers
are not happy because of the delivery services and this is reflected in terms of
Customer Convenience in the Customer Service Index mentioned elsewhere in this report.
Customers have also been disheartened with items, such as screws, being missing in
products; product recalls and “cheap” quality products.
SUPPLY CHAIN MANAGEMENT
IKEA has adapted a Global Supply Chain Management System (Emerald, 1996) which
outsources and engages offshore manufacturing of its products in a central region that deems
to provide IKEA with best advantage. The Supply Chain of IKEA is a Make to Stock (MTS)
as against the Just in Time method (JIT). Prior to adapting its global Supply Chain
approach the stores and departments were saddled with placing orders themselves since the
system was forecast based, this led to stock outs, creating the Bull whip effect scenario in the
movement of items; where either too much or too little stock was ordered (Holmberg, NA).
The present IKEA Supply Chain Management System is designed so that the company
controls and handles its own designing, manufacturing, warehousing and even retailing.
Furthermore, the retail outlets serve as the warehouse stores with customers at times walking
through to pick up their goods and to pay at its exit tills (Lim, NA). IKEA has established a
lasting relationship with its raw material suppliers seeing the growth of many of them, over
the years, being due to the company. IKEA’s products are packed by automated Flat
Pack machines and transported to distribution centres. From there they are taken to the
Warehouse which is linked to the retail stores. The customers are part of the IKEA supply
chain, visiting the warehouse to pick up their goods and assemble the furniture themselves.

ERGONOMICS OF IKEA
Ergonomics of IKEA is very poor, visitors to the IKEA stores struggle with the structure
and layout as it’s not designed with the efficiency, comfort or ease of use for customers. The
Daily Telegraph reports that IKEA’s layout disorients and confuses buyers. Goods are laid
out in a particular pattern along the shopper’s pathway so that they will see bargain price
tags prompting them to make a purchase. The store’s layout is interpreted as a “Psychological
weapon.”
The “Zag-Zig” kind of trail or “The IKEA Evil Layout” (Hunger, 2012), is used to
encourage the customer to walk throughout the entire length of a predetermined pathway that
displays the entire contents of the IKEA catalogue. An IKEA customers reportedly
averagely could spend a minimum of three to eight hours walking around the store. They
are most likely compelled to make a few impulse purchases in the process, one observer
reckons. (Tozer, 2014) (Hunger, 2012) This store model differs from ergonomic
requirements; which ensures the structure of a store being synergised with the strengths
and ease of operation and coordination towards limiting stress and enabling them to shop
in astreamlined fashion.

TOTAL PRODUCT CONCEPT


Total Product Concept a theory credited to Ted Levitt looks, from the perspective of
Michael Porters, at the differentiation of a product that enhances its marketability and
competitive Advantage. (Michael Porter states that Competitive advantage of a product
could be gained through Cost leadership/ Price or Product differentiation, Levitt argued that
loses recorded in businesses could be as a result of Price,
Quality and Poor Service in a ratio of 1.5/1.5/7 in that order. As seen in in the diagram
tagged Total Product Concept below products could be presented at four levels of
differentiation being: Generic: the core of the product; Expected being what the customer
normally expects in a product; Augmented: being what has been added as an extra to woo the
customer and Potential: being additional value or features that could be add in future to
enhance the products value.
IKEA AUGMENTED REALITY
The augmented product is what really stands the product out. It could lead to customer
loyalty for one product at the expense of another. In this regard IKEA has introduced
what it calls Augmented Reality which provides its customers the opportunity of checking
how a product would fit into a home setting by transferring a virtual image of the product on
to a tablet, or similar potable device while viewing the space it is required in at the home.
The picture below depicts how IKEA augmented reality works.
CUSTOMER SATISFACTION REPORT

IKEA EMPLOYEE RELATIONSHIP/ TRAINING

In the area of training IKEA has reportedly stood out with regards giving employees a sense
of belonging. A committed workforce of the part of IKEA has seen the latter provide
innovative concepts as seen in the case of the flatpack concept stated earlier. Also the
company in 2000 implemented initiatives to promote diversity, balance and life. Also in
the area of flexibility, IKEA comes across on a strong note. Diversity leadership/culture
programs to train staff were introduced Part-time staff were even allowed to share hours
with full-time staff where agreed, forming a strong dependant bond among staffers.

EMPLOYEE RETENTION RATE


IKEA reportedly has a low employee turnover rate, being as low a 37% as against the
industry’s 60%. However a case with the companies union in Canada which lingered on
towards the end of last year has seen the company have a few issues in this area as well.
CONCLUSION
In conclusion one may observe that towards ensuring high quality standards IKEA enforces
its suppliers to comply to set IKEA quality standards. (Shurrab, 2001). Towards ensuring this
in 2000 the company introduced the IKEA code of conduct (IWAY) designed to evaluate
and check regulation of suppliers with IKEA regulations.
This is followed up by and what is called an IWAY standard, which is based upon a vision to
have a positive impact on its customers and environment and, to only work with suppliers
that have a similar vision.
IKEA in its approach to business involves and co-produces products (at the packaging
and delivery level) alongside its customers. (Journals, N/A) IKEA applies numerous Total
Quality Management principles in the production of its products. The company has a focus
on the Customer needs policy which is a bedrock of TQM. The Flatpack concept reflects a
focus on the customer having a desire that the product is as compact and portable to enhance
transportation and delivery as possible.
This in turn optimises loading and transportation for IKEA, seeing to the elimination of waste
(muda) an important aspect of TQM (Hailemicheal, 2011) The process of elimination of
waste is also seen in the manufacturing process of the company’s products. An example is the
LED lamp, Stranne, one of IKEA most popular lamps on sales which is strictly produced
under the lowest required energy process and in turn produces a low energy requiring
product. Such Lamps used for illumination in IKEA stores drastically reduces energy cost in
the company. (Hailemicheal, 2011)
Also, on the issue of waste, IKEA has one of the most efficient waste recycling systems
designed by furniture manufacturing company. Cardboard discarded from unpacking items is
stored and later used to serve as compressed content of a compact design, covered, IKEA
Table. (Hailemicheal, 2011)
Sales reportedly increased by 6.3% to £1.2 billion with online sales increasing by 24.9% in
2013 as a result of such, IKEA reports (IKEA, 2006).
However, IKEA does not presently apply a Holistic approach to TQM (as stipulated by
Quality Gurus quoted in this report). Neither is it found applied in other important areas such
as the ergonomics of the store layout and Customer Care.

REFERENCES:
https://www.researchgate.net/publication/262874977_A_critical_evaluation_of_
the_application_of_Total_Quality_Management_at_IKEA_AUTHORS_Anthon
y_Ayodele_Erika_Pasquel_Kimara_Taniesha_and_Erica_Sowah

file:///C:/Users/Dell/Desktop/FULLTEXT01.pdf

http://supplierportal.ikea.com/doingbusinesswithIKEA/quality/GONOGOrequir
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https://www.academia.edu/8663399/A_CRITICAL_EVALUATION_OF_THE
_APPLICATION_OF_TOTAL_QUALITY_MANAGEMENT_AT_IKEA
https://www.thinkswap.com/au/unsw/infs3632-service-and-quality-
management/ikea-case-study-tqm-quality-management

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