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The Future History Book

Give success a hand

IKEA Components


Join the ride to 2012 Visionary thinking and hard work will lead IKEA Components to a higher level. The journey has already started – for all of us. Only by joining forces we will achieve the change that will result in a more competitive business but also a new business culture. See this change process as an opportunity to develop yourself. During the way you will be inspired, learn more and experience great team building. This booklet gives you the story of how we reached our goals. Because we will. Maybe not next year but definitely in 2012.


Content ICOMP’s role in IKEA ...................................................................................................... 6

Competence............................................................................................................................. 30

The improvement work ................................................................................................ 8

The IKEA supplier view on us .......................................................................... 32

The Strategic Priorities & Role Model Priorities. ....................... 10

Our suppliers........................................................................................................................... 34

Working methods/processes.............................................................................. 12

Competitors ............................................................................................................................. 36

The IKEA integration .................................................................................................... 14

Business intelligence...................................................................................................... 38

How we organized to meet our task ..................................................... 16

Product and distribution.......................................................................................... 40

Leadership..................................................................................................................................18

Excellence in running operations................................................................. 42

Risk handling........................................................................................................................... 20

Product quality .................................................................................................................... 42

System Support .................................................................................................................. 22

Environment. ............................................................................................................................. 43

Cost efficiency (C/E). .................................................................................................... 24

Supply............................................................................................................................................... 44

What do we measure?.............................................................................................. 26

Price performance............................................................................................................ 46

Co-workers................................................................................................................................. 28

Range and Innovations ........................................................................................... 47

5


ICOMP’s role in IKEA

Show your potential ICOMP’s role was in 2008 clearly understood and accepted

were far better than anywhere else in the IKEA Supply

within several parts of IKEA and compared to 2002 it was a

Chain. We created a new and more professional way

big difference. A contributing factor to our good reputation was

to measure price development and price levels that were

probably due to the fact that IKEA top management spread the

unique within IKEA. This gave both our way of working and

word about our great improvements concerning product quality

our performance Best Practice status.

and very good results in GHP, WAY and delivery performance. Smart solutions and a couple of very strong innovations also

In IKEA Creating process we continued to deliver components

very strong. Today we are often asked to give our contribution. Almost everyone in the important IKEA functions understands ICOMP’s role in IKEA and what benefits we bring. IKEA of Sweden, IKEA Trading, IKEA suppliers and ICOMP competitors say and talk about ICOMP as a world

with real good IKEA benefits and also here we became a “good

class company. The attention outside

affected the picture of ICOMP as a competence center in some

example”. The IKEA Creating direction of 2008 was focusing

IKEA, putting the spotlight on ICOMP

selected areas. In 2008 ICOMP was an important contributor to

a lot on ICOMP competence areas. We managed to de-

the new IKEA Quality Strategy. Thanks to our experience from

liver several solutions that contributed in making this

improving the Q-performance we were invited as a Best Prac-

IKEA strategy really successful. We also managed

tice. However, in 2008 there were still several IKEA functions who

to market our performance and contribution

hadn’t fully understood our potential.

much better.

Best Practice status

2012 – a world class company

During 2008–2012 we focused even harder to be the good ex-

Today we act with much more confidence

ample in IKEA Supply Chain. The new big measurable impro-

and get many proofs from all over IKEA that

vements we did in product quality and delivery performance

our work and contribution is considered as

6

as an interesting benchmarking objective, of course helped bring about the change.

Learning summing-up! • To reach a strong status within IKEA you need show high performance. • The results must be proved by measurable facts. 7


The improvement work

Reaching the good example without doubts

Learning summing-up!

In 2008 many co-workers within IKEA and IKEA suppliers valued

fore. Strategic Priorities and Role Model Priorities should be the

say it feels like we have less to

the improvement work we had done the last years and we also

learning examples for this.

do now, even if we know we do

experienced that the attitude towards us had changed and be-

In 2009 we were struggling with these new working methods

more. In VOICE 2012 when we

come more positive. By this time we were much more respected

to improve. Before we started more improvement projects than

measured the efficiency bar-

and not “just a problem”.

we managed to finalize and even fewer with good results. Less

rier “work load is too heavy”,

But we realized two major things. Firstly; the biggest impro-

improvement projects were now started. Key success factors were

we still see it as a barrier even

vements were made in a few organizational units. Secondly;

professional approaches, strongly improved deployment thanks

if it is lower on the ranking.

most co-workers were impatient and expected even more and

to better systematic and sharp measurement tools/methods.

• Good examples can convince also coworkers who doubt. • When you stop improving you become less attractive. • SP’s and RMP’s became learning examples how to improve from good to excellent.

The biggest proof of the

faster improvements. That is the true IKEA spirit – but of cour-

In this improvement work many co-workers took big steps

se we should be proud of the fantastic work we actually had

forward and developed higher competence levels. Contributing

efficiency index which

done.

factors in developing co-workers were better communication and

has improved another

competence mapping. Managers became much more professio-

almost 20% the last

Become the good example

nal in coaching and communicating the long term goals, priorities

four years.

In the two House of Parliament-meetings in 2008 an important

and competence demands.

improvements is the cost

step for the future direction was taken. The business goals were set to increase our performance to a much higher level; reaching

2012 – more feels less

“The good example” without doubts. It was decided that impro-

Today we have reached the excellent performance levels that

vement work should be done in a quite different way than be-

were set up in 2008. Just like a couple of years ago co-workers

8

9


The Strategic Priorities & Role Model Priorities

Models with higher demands IKEA Components used to start hundreds of improvement pro-

developed approaches and their systematics

jects but failed in finalizing a big part of them. This was of cour-

became obvious for the involved co-workers

se a big problem since it was a waste of money and co-worker

after some time. By this everyone could now

effort. The solution was to focus our improvement work on the

get a clear understanding of what the level

core business and the tasks that contributed the most to com-

“Excellent” really meant.

pany success.

Learning summing-up! • More from less was a key word. We have become much more efficient by doing the right things. • “Excellent level approaches” results in much better performance levels.

2012 – established method Stepwise implementation

Working with Strategic and Role Model

In 2008 we started to analyze and select our improvement areas

Priorities is today a well established

more professionally, which was quite a challenge. At the end of

method for bigger improvement pro-

2008 we started the first Strategic Priority and in the beginning

jects. All important improvement needs

of 2009 the first Role Model Priority. We decided to implement

are prioritized by Business Area mana-

the new way of working stepwise and at an appropriate pace

gement and selected after evaluations

since ambitions were very high and it was important to really

by the Process Owners. The projects that

learn how to run improvement projects successfully.

are launched are well analyzed and target

Several Strategic and Role Model Priorities with higher

oriented. The results are professionally followed up

performance demands were delivered and ICOMP’s results

and show a clear positive effect on business results.

increased year by year. The extremely tough demands on the 10

11


Working methods/processes

Focus on things that make the difference By the time of 2008 the attitudes towards our processes had be-

to be improved and who should do it, but also to really understand

By this we secure that co-workers focus on the most important

come much more positive, probably thanks to some big impro-

how and where. This understanding helped us becoming better.

approaches and really understand them and perform. In 2009

vements the last couple of years. Still several didn’t understand

Most of the approaches we had in 2008 were far too weak to

we said most co-workers only needed to fully understand and

the way to use our processes for improvement purposes. Many of

meet our needs for reaching an excellent performance level. From

develop a sharp competence in some ten approaches. Now we

the improved results at this time had been achieved thanks to the

2009 and onwards we saw more of professional “40 p- approaches”

see we were right.

process oriented way of working. Still, only a few functions had

or close to. Another success factor was when we realized that the

good experiences from this.

employee deployment was an equally important key to success. This process development work gave many new key measure-

A new dimension to process development

ments that focused on the things making the difference. During this

From 2008 and some years forward, the way to describe and

work we also realized the importance of building “structural com-

develop our processes improved. After struggling with barrier-

petence” which from 2009 was a new important success factor.

breaking work we found new opportunities to develop the company achieving really good results.

that has implemented a sharp process-oriented improvement system, and we are invited to forums to share our experiences and success.

Learning summing-up! 2012 – focus on the most important processes

In 2009 new process maps were implemented – not covering

The total number of approaches used in ICOMP are less today

all areas however. More things had to be done the coming years

than in 2008. The fact is that no one could not even find and

as we started to work in new ways. The new process maps gave

count all the own-developed approaches that were used before.

us continuously strong inputs finding ways to work with company

Today we have much better control and know what impact each

improvements. The solution was not only to know what needed

approach has on different performance areas.

12

ICOMP is now recognized far outside IKEA as a company

• Focus on professional approaches, and sharp measurements, where it really makes the difference. • Not a lot and not to steer everywhere is a success factor. More from less. • Think not only what and who, but also how and where. 13


The IKEA integration

A win-win situation In 2008 the integration with other IKEA organizations had come

tional aspect, performance was conside-

connection to an IKEA category are integrated in the IKEA ca-

a long way. Trading units and Range development were already

red more important than the integration

tegory work. Some have even been appointed as own catego-

well integrated. 115 co-workers related to ICOMP’s businesses

itself. To be able to come forward we

ries. IKEA of Sweden is in 2012 dependent on ICOMP’s contri-

were to >1/3 of their time sitting outside an ICOMP legal unit.

occasionally had to take one step back.

bution in the range and product development.

Purchase development in categories started to integrate in 2008

This “tango method” was however fruitful

and a few Material Areas started working with the same strate-

for all parties.

gic purchase agenda. Also some administrative functions co-operated to be able

2012 – we are a main contributor

to take advantage of the economy of scale. Even if integration in

Today the integration isn’t only physical and focu-

most cases was successful we started to question some of them in

sing on a common business agenda. It also includes

2008, due to questionable performance.

systems, methods and processes. ICOMP is now seen as a competence center in seve-

Integration Tango method

ral of our Material Areas, where we also take leadership to

The goal was to integrate further. While IKEA units competed

become the main contributor in one or more selected areas for

within the organization, ICOMP constantly had to deal with the

IKEA. Today all important IKEA Trading Areas and IoS Business

competition from many global competitors. Continuous efficiency

Areas have several representatives from ICOMP.

pressure and external competition was seen as problematic for

The purchase development work in categories for compo-

ICOMP co-workers in the IKEA-integrated units. From an opera-

nents is functioning well. All ICOMP Material Areas with a direct

14

Learning – summing-up! • We have learned to be more independent in critical situations and to believe in our way to do things. • This learning means a great contribution to all IKEA operations regardless the difference in the size of the organization. • Acting from inside of IKEA was a key success factor. After a step by step integration process, ICOMP has contributed greatly to IKEA operations – both with knowledge and performance. 15


How we organized to meet our task

Dare to be different and share within the matrix In 2008 many saw the need of better utilizing existing front edge

The roles for Leading Business Development became clearer and

and when we were

competences to be able to manage the increased demands. Even

improved their performance. This resulted in a much better coach-

in start up phase for

so we had problems to express the directives for how to utilize

ing of co-workers. The roles for Leading Company Development

opening up new busi-

this in clarifying charts and documents. Management groups and

and Leading Peoples Development had the same journey. Areas

ness opportunities.

cross-functional groups existed but these few examples of cross-

lacking roles for a focused leadership responsibility became new

functional teamwork were not clearly communicated.

opportunities, and areas scoring low became critical and had to

2012 – good cost control

be dealt with.

Not solving growth and new challenges

Many BA’s and Functional responsible areas developed most

with a linear cost index, and with traditio-

of their performance by internal work inside the BA or function.

The clearer feed back on performance on many roles stres-

Almost no one with responsibility for an organizational area, ex-

sed the needs of splitting responsibilities for many “all-round-

nal organizational approaches is a success

pressed in 2008 their organization in a chart published on In-

roles”. E.g. the “all-round business man” had difficulties to score

factor for ICOMP. Today we manage our

tranet.

a satisfying competence in all areas of responsibility.

1 000 M€ business doubled compared to 2008 with much better performance and

Clearer roles for leadership

Strategic alliances

at trimmed costs. Meaning during the

In 2009 all management and most co-worker roles became

Organizational units with extremely high competence needs,

past eight years we now score a cost efficiency

possible to measure giving each leader and co-worker a good

and when high competence needs were asked for only during

index at 51. (2004; index 100. 2008; index 61).

feed back on how they better could contribute to the targeted

certain times, solved this by developing strategic alliances with

In 2012 we have a good cost control over the or-

increased performance. This gave the organizational utilization

external parties to be able to reach the front edge competence

ganizational growth, which still is performing at healthy

a really strong push.

needed. This was for example developed in Design Engineering,

business improved levels.

16

Learning summing-up! • Measurement is the key to success; this time to improve the way how to organize. • Dare to be different and try non-traditional ways. 17


Learning – summing up!

Leadership

Manage work in a professional way

• We can give you a manager title, but you need to deserve your leadership.

In 2008 the picture of our way of working with split leadership re-

way. During this time co-workers saw the ability to lead in change

sponsibility was quite clear. Even though we felt in general that we

and being a role model for our values as a big improvement area.

• It is important to invest time in analyzing what we need and to secure the implementation.

• The impact of living and leading by the IKEA values creates a strong sustainable leadership.

needed to develop it further as well as define and clarify the demands and expectations.

2012 – The three dimensions of leadership

The co-worker survey 2008 confirmed our worry: leadership

2012 we have a clearly defined leadership structure, describing

managers and non-managers has de-

index of 64% showed we needed to strengthen the leadership.We

leadership in three dimensions; People leadership, Business lead-

creased and overall we recognize

lacked possibilities to measure the success factors for our five dif-

ership and Company development leadership. We have used the

even more transparency in terms

ferent leadership roles; Resource Managers, Business Area Mana-

Competence Mapping tool in order to measure the competence

of sharing goals, knowledge and

gers, Site Managers, Process Owners and Specialists.

level on each area.

performance for result. In 2008

Today we have not only created a strong leadership but also

our leadership index for the or-

Clarifying the leadership role

developed the organization. The People leadership is fully concen-

ganization was 64%; today we

We decided to create a definition of Leadership within IKEA Com-

trating on coaching and developing the deployment of sharp ap-

have 80% of our leaders above

ponents. The result was three dimensions of leadership and we

proaches. The Business leadership creates the possibility for the or-

80%. Today we also have a ma-

started to clarify each part and put clear demands and expecta-

ganization to grow and to put clear demands on the expectations.

jority of our new leaders coming

tions on each of them.

The Company development leadership creates sharp approaches

from internal promotion developed

driving the improvement work as well as our way of working.

within the organization who are

We adapted this structure to the competence mapping. During the years we also managed to improve the prerequisites

All together this leadership based on the IKEA values, harmo-

for all leaders in order to manage their work in a professional

nizes the process. The gap index from co-worker surveys between

18

seen as culture ambassadors.

19


Risk handling

Identified actions reduce exposure In 2008 there was low understanding of our risk exposure. In-

Bring awareness of risks

creased raw material prices and high currency fluctuation cau-

Development and implementation of a risk map has been im-

sed us big losses during a number of years due to our inability to

portant to be able to make our risk exposure understandable

handle the risk exposure properly. During the years 2006-2008

for the many co-workers. It made us aware of risks and how we

we lost between 1-3 MEUR per year related to risks, related to

judge probability and consequences for each risk.

mainly raw material and currency.

But it took us some years to find out how we should meet and reduce our exposure towards risks that had big consequences. Reactions from the material areas were very positive and motivating. Step by step we managed to diversify risk buffer strictly related to each MA’s risk exposure and capability to handle the risks. 2012 – pro active actions We have today a well known and anchored structure and approach for how we meet and evaluate risks. Almost all work and time spent on risk evaluation is done with a pro active purpose. We have been able to meet and handle some risk areas very well during the last years. We have classified risks into four main categories; External, Operational, Finance and

20

Strategic & Management. Risks within each category are well described with identified actions that should be taken to reduce our exposure. There is a clear trend within risk scenarios and areas that are new to us, such as environmental, transport capacity and political tensions. The challenge is to observe, understand and adapt in time. Improved handling of risk last year has resulted in lower cost for risks: compared to 2008 losses are reduced by 70%.

Learning – summing-up! • Every business is constantly exposed to different risks. Risk management is about understanding the risk exposure, possible consequences and the risk appetite. • We have learnt the importance of having a good structure for mapping risks to be able to understand and evaluate consequences. 21


System Support

Unified with company development In 2008 some system supports, such as M3 and Business Intel-

work. We also managed to better support

ligence/Data warehouse, doubtlessly had a positive impact on

the commission businesses which had

our improved way of working. Since the systems are very power-

been neglected the past years.

ful and crucial for the business, availability and competence in

Our efforts to meet the in-

handling them became a risk factor. Every time a system went

creasing functional needs in-

down we experienced big problems. Consequently many co-

cluding the implementation

workers saw the systems as a big efficiency barrier.

of five new modules in our core systems made a gre-

considered having strong system sup-

Expectations are however also higher than ever meaning we still

ports. In VOICE 2012 “Computer sys-

ask for more. ICOMP is recognized as a company having a suc-

tems” is still one of the Top-10 efficiency barrier, but now with much higher complexity and measured

performance

showing good improvements since 2008.

PSM further strengthened

at contribution in achie-

We needed to improve the performance to an excellent level. We

ving the main goals of

nization has deve-

made several measures to be able to better balance performan-

ICOMP.

loped even sharper

ce and costs from the core system support. The organization for

The

PSM-orga-

competence. 2012 – M3 is the hub

system performance

(PSM) was further strengthened and their work was optimized to

Our business system

is measured and in-

meet new challenges. We also started to utilize their competence

M3 is the hub. Together

cludes

more focused to prioritized objects.

with the development of

A new product documentation system was introduced in 2010

22

several smart functional system modules, we are

Learning – summing-up!

The

supporting and developing our Processes, Systems and Methods

which had a very positive effect on the product development

cessful and strong system integration.

comparisons

showing we perform good compared to external companies. 23


Cost efficiency (C/E)

Effective tool to steer and control In 2008 measurement of C/E was mainly seen as a follow up tool.

2012 – delegated responsibility

challenge for us the last year and coming years will be to handle

Cost efficiency is our tool to steer and control cost at all levels in

We didn’t work with and utilize C/E according to its purpose; to

Today we use the C/E tool to steer and control cost in the or-

and meet the increased cost level in east Europe. Countries like

the organization.

use C/E as a steering tool when taking long term decisions about

ganization. It’s crystal clear to everyone who has cost re-

Slovakia, Czech Republic, Poland and the Baltic states will soon

costs. A big challenge was the creation of measurements that

sponsibilities, how you can steer and plan the costs on

reach the same cost level as west European countries.

were done manually with high risk for human mistakes and also

both long and short term. Responsibilities for costs are

were time-consuming.

delegated to the level where the decisions are taken. Internal work with strategic priorities to-

Turnaround of responsibility

gether with focus on “more from less”

We had a tough time to improve cost efficiency to today’s le-

during some years has really paid

vel. The big improvements were reached only when co-workers

off during the last two years. We

clearly understood the purpose of C/E and GM showed deter-

have been able to secure cost

mination.

advantages from increased bu-

A complete turnaround of responsibility with decentralized

siness volumes as well as from

cost responsibility was one key factor for success. Development

new and different ways of

and implementation of a systematic tool to deliver C/E was an-

working.

other. The quality of figures improved and we were able to publish the report at the same time as our monthly reports.

ICOMP’s current cost structure is not a disadvantage or burden to be competitive. The main

24

Learning – summing-up! • Responsibilities for costs delegated to where decisions are taken. • Clear measurements, which are well explained and understood is the key factor.

25


What do we measure?

Result and performance in processes In 2007 we had implemented our first version of scorecards and

lected components and fittings. The big improvements were done

set up of Key Performance Indicators (KPI’s). Cognos was used as

within our work with strategic priorities.

the key tool to run and view reports, KPI’s and scorecards. Main

In beginning of 2009 we were struggling with the set up of

part of buy and sell business was followed up and measured in

new measurements in our systems, things took longer time than

accordance with definitions of KPI’s we used then.

expected but all hard work paid off and we learned how to de-

2008 was the breakthrough when the many co-workers started to trust figures in Cognos and started using KPI’s on a

fine and implement new measurements in our systems and organization.

daily basis to steer and follow up the business. The big chal-

Improved process maps made it possible for us to start to

lenge was to get correct measurements in commission business.

measure performance in all sub processes and approaches. It

We invested in the system Pipechain but met challenges in the

has been a long way to find and develop measurements from the

implementation towards the component suppliers and IKEA

process aspect, but the step by step progress has been valuable

suppliers.

for process owners, and a big help in steering and leading with a process orientation.

Improved measurements Definitions of measurements and KPI’s has been further develo-

2012 – focus on processes

ped and improved, especially those related to the three overall

Measurements today have strong focus on customer goals and

directions; excellent performance in quality and delivery, unique

process goals. The measurements are more sophisticated and

prices to IKEA suppliers and being a competence centre for se-

also include innovations.

26

“What is measured is done” and “process orientation” has

The overall set up of goals is more focused on customer satisfac-

been core statements within ICOMP during the first decade of

tion and how the IKEA customers and IKEA suppliers experience

the 21 century. Focus has now shifted to measure result and per-

our performance. We have a clear tree structure where the set up

formance in our processes as a complement to functions, and on

of KPI’s support the overall goals in a very clear way.

st

“where” things go wrong rather than “who” made the mistake. We are able to understand and react on low performance quicker and more precise. Today everyone has a clear picture of what must be done to improve results. You often hear and see colleagues talking about and taking on full ownership and responsibilities of their work and results from what they are doing.

Learning – summing up! • Co-workers need to understand definitions of measurements to be able to analyze and to steer operations with KPI’s and scorecards. • Implementing and anchoring new approaches takes time.

27


Co-workers

In the drivers seat In 2008 we performed very well in many areas. The way of wor-

A diverse workforce creating better business results on all le-

sibilities for development. The developed and

on performance and that the organization is efficient where I as

king with excellent result in quality showed us for example that if

vels was all the time on the agenda. At the same time we

implemented tool of compe-

an individual have the possibility to grow. All co-workers have

we develop sharp approaches and coach and develop our co-

didn’t have a clear definition and a clear view on what we

tence mapping was well

a clear picture of the expectations on their role as well as they

workers for fulfillment of the demands, we deliver excellent results.

meant by having diverse workforces and due to that we

received by co-workers

feel that they can get coaching in their professional development and career.

Still in 2008 there were many areas left to improve. In fall

didn’t manage to change our way of acting. The diversity

and they could recognize

2008 we did a co-worker satisfaction survey. The general con-

from a gender perspective was not on a satisfying level if

themselves in the compe-

clusion was that the many co-workers expected more from the

we looked into our different management teams.

tence stair–case.

organization. The co-worker satisfaction index differed a lot from

We now have a clear definition of diversity, meaning we can measure performance from a diversity perspective when we look

We managed to clarify

into different management teams, promoting co-workers, set

co-workers working in office compared to co-workers in the Pro-

Constructive feedback for growth

our diversity definition and

project groups. Today we have diverse workforces that are con-

duction and Warehouse units. The co-worker satisfaction index

The pride among our co-workers came from a develop-

stepwise changed our way

tributing to great results.

was much higher for managers compared to non-managers.

ment journey where we managed to bring constructive

of acting in terms of setting

They way of working with improvements from the co-worker

feedback to our co-workers. Our co-workers saw them-

management teams and project

survey was questioned. We realized that we need to integrate

selves sitting in the driver’s seat of their own develop-

the improvement work into the business agenda and day to day

ment where the leadership in the organisation sup-

activities more than we had done before.

ported them with right requirements.

groups. 2012 – picture of expectations

In our P&D units we struggled with high staff turnover rates

We managed to give our co-workers a very

In 2012 the co-worker survey

and generally our co-workers in these units didn’t see IKEA Com-

clear and committed goal picture and we coached

tells us that co-workers feel they

ponents as unique for their employer choice.

with feedback, measurements and described pos-

get constructive feedback based

28

Learning – summing up! • Proud people perform. • Constructive feedback is the base for individual growth. • The involvement of co-workers in the improvement work creates sustainability.

29


Competence

Grow with the business In 2008 competence issues were high on every agenda. We were

the improvements areas and starting to work with them meant

split is as follows: aspirant 15%, in the role

all aware of the fact that high competence was a success factor

a lot of work and effort from many involved co-workers. In the

40%, seniors 40% and masters 5%.

for excellent results. We did a lot of competence activities and

end of 2009 we had managed to create a strong approach for

We have managed to create a detai-

development programs such as Potential programs.

Competence and Performance measurement, which enabled us

led Competence Process Map, including

to coach individuals to increase their competence.

different approaches for managers to

We started the journey of change by analyzing and mapping the Competence Process and described the different areas within the process in a more concrete way.

During this time we also strengthened our brand and market

use. The evaluation of the process

position in terms of attracting the right competence to our orga-

in terms of measuring the level

Among many valuable actions we structured a big part of the

nization both internally and externally. Thanks to the fact that

of approaches and deployment

necessary education programs within the frame of TQE school

ICOMP co-workers achieved outstanding results we managed to

(CIP) shows us that we perform

and Movex school. At the same time we were unsure whether we

attract co-workers also from other IKEA units.

on an excellent level.

did the right things or not.

Externally we succeeded in finding other channels on the

Today we see a clear con-

We realized that we needed structure and put up a goal

market in order to attract new competencies as well as speed

nection between competence

about a common way to define and measure competence and

up the recruitment process. On top of that we implemented a

and business result. This is the re-

performance. We also agreed to measure competence move-

structured succession planning enabling us to recruit in due

turn of our investments. We have

ments within different positions in the organization.

time.

learned and we use the Everyday

Learning – summing up! • We have learned to prioritize and focus – not trying to do everything at once. Instead less with quality and creating sharp approaches that enable us to deliver result. • The foundation is a clear Competence Process describing the way we should work. • To know where we are competence wise give us a qualified way to develop our coworkers. • When individuals grow – the business grows.

University in a structured way for Becoming a stronger brand

2012 – connection to business result

The implementation of a systematic way of working, identifying

Today all our core competence positions have been mapped. The

30

building competence.

31


The IKEA supplier view on us

Communicate and cooperate The IKEA suppliers’ view on us in 2008 was that we were an

realization that we were far from best practice was an important

average company that sometimes had a monopoly situation. We

starting point.

no claims, no missed orders and a price that make suppliers almost hesitate before asking for offers from other suppliers. Communication with ICOMP is

were acknowledged for our quality improvements and improved

There were many strategic priorities that had a direct impact

also seen as very good and most IKEA suppliers simply see ICOMP as the

delivery performance, but often blamed for our prices and not

on the IKEA suppliers’ view on us. The fact that our performance

natural partner. “Your good job enables me to concentrate on get-

being flexible and service minded enough. IKEA’s supplier sur-

within quality, delivery, price development and innovations im-

vey in 2007 painted a pretty bleak picture. But steps in the right

proved, contributed greatly. Communication was another

direction were taken already in 2008. However, we sometimes

important factor. Being able to inform the IKEA suppliers

felt that we didn’t get enough credit for good performance, but

concerning for example price development and close

generally didn’t know how good or bad we were in comparison

cooperation on product development projects were

to our competitors.

things that really made them change their view on us. Slowly but surely we truly started to be the pre-

Good but not good enough

ferred supplier rather than one of the many

We decided to become a lot better. Based on some success stories, we knew that we were able to move mountains once we

2012 – ICOMP knows what I want

made up our minds. Even if we already were met with recog-

“ICOMP knows what I need and want before I know it

nition for good product quality and fairly good delivery per-

myself” is a typical comment from a randomly selected

formance, we decided to improve a lot more. Pricing needed a

IKEA supplier. Our excellence in running operations and con-

total reengineering to reach even acceptable levels. The honest

stant strive to improve are especially appreciated. Basically

32

ting the product made and shipped when IKEA needs it. It would simply not have been possible if I should put my fingers in all component purchase too.” Results from IKEA’s supplier survey clearly verify ICOMP’s successful changes.

Learning – summing-up! • Never stand still – you will be passed by competitors. To always be on the road of continuous improvements went from being a slogan to something we all understood and accepted. • To listen and communicate is valuable. • Do things together, think partnership! 33


Our suppliers

Partnership is the key In 2008 we often blamed the suppliers for mistakes. ICOMP was

and logical solution from the smart programs that had been de-

them out professionally together

seen as a company that promised a lot, but did not really know

veloped.

with the suppliers were important

what they wanted. Poor documentation, bad forecasts, tough,

Partnership became a key word, and we worked very hard

not always fair, demanding and good payers, were some of the

together with the suppliers to develop the productivity and ef-

views they had on us. Our often large volumes were very attrac-

ficiency in the factories. ICOMP both helped out hands on and

verifies the suppliers’ satisfaction, at

tive for both existing and potential suppliers.

pointed out areas that the suppliers dealt with on their own. All in

the same time as our new internal me-

all it was very clear that the cooperation with ICOMP was good

asurements verify that our purchase prices

for the suppliers’ competitiveness.

have become immensely more competitive

Better competitiveness for both

keys. The component supplier survey

The first big step came when we decided to change our approach

Our increasing volumes further contributed to the suppliers’

to become and be perceived as professional. The work started

interest. ICOMP’s contribution was also seen as extremely va-

Internal measurements also secure the ef-

in many places of the chain simultaneously. Product descriptions

luable on the quality side, and it was an eye opener for many

ficiency and suitability of our chosen supplier

were secured, suppliers were used as consultants already during

suppliers to visit ICOMP’s own production facilities and see that

base. Our supplier set ups are proven to op-

the development phase, ICOMP’s input in terms of timely volu-

“the impossible was possible”.

timize the supply set up, as we have learned

mes got closer to reality and we talked function and products

than three years ago.

parts of it. We use the suppliers a lot more at

Lots of development projects and price discussions were

Today a number of suppliers acknowledge that they would have

different stages, such as product develop-

done with great support from advanced systems. We started to

been out of business if it was not for the partnership with ICOMP.

ment and continuous improvements. Com-

agree with the suppliers on basics and then got the agreeable

The way we made supplier development plans and carried

munication and cooperation are key words.

34

• Do your own homework before pushing others to carry out drastic changes. • See the suppliers as partners rather than only deliverers, respect and use their competence. Be humble in relations.

to secure the total set up rather than only 2012 – purchase prices more competitive

rather than article numbers.

Learning – summing-up!

35


Competitors

Adjust and stay on top In 2008 it was popular among most of our big competitors to

market. On top of this, lead times were cut and our service and

grew steadily and started

also says no to a number of business opportuni-

point out ICOMP as a monopolist. They saw that we had advan-

flexibility improved greatly.

to dominate the market. In

ties, based on that excellent performance is seen

tages that nobody else was close to. In theory this was correct,

During the coming two years ICOMP gradually became more

the eyes of the competi-

as a prerequisite, and these left over volumes

but we didn’t manage to utilise them. Some competitors were

and more popular among IKEA suppliers, and it was evident that

tors we had gone from

are fast vacuumed by the competitors. Only the

politically smarter than we were and managed to out maneuver

a big transformation had been made. But at the same time new

a monopolist to a true

best performing competitors are still around in

us, for example on solid paper board and stainless steel. Others

competitors emerged. Some IKEA suppliers bought components

performer.

2012, and a majority of them are of a different

had a tactic based on cheating that left us empty handed.

by themselves, some of our component suppliers started to by-

kind than we were used to in 2008.

ICOMP was seen as a company that secured whatever de-

pass us and new slim internet based competitors emerged. Some

2012 – a success to copy

mands IKEA had, such as IWAY and GHP, but had either a weak

traditional competitors withdrew from the IKEA market, but most

“What have they done at

purchase organization or a huge margin. Prices were, anyway,

of them continued to struggle for a share of the demand. The best

ICOMP and how can I

Learning – summing-up!

often possible to beat.

competitors managed to stay strong at IKEA, but many saw their

copy their success” is a

sales share getting reduced. All in all there were fewer competi-

frequently asked ques-

tors, but a growing competition.

tion by the competitors.

• Respect your competition and use them for comparison in order to outperform them.

Fewer competitors – growing competition When the word started spreading from the market that ICOMP

Some of the competitors approached ICOMP with sugges-

was improving its quality and delivery performance, some of

tions on co-operations, ranging from bench mark exchanges

suppliers choose not to

the competitors started to worry a bit. They felt however pretty

to shared matrices. Others panicked and tried to buy themsel-

use ICOMP, based on old

safe with the price advantage they still had. During 2009 ICOMP

ves market shares by dumping prices short term, but it seldom

clashes or good old rela-

started to deliver some excellent price offers that surprised the

worked. Gradually, along with the competitors’ failures, ICOMP

tions with others. ICOMP

36

Some of the IKEA

• Politics and cheating are not the course of action for long term success; true performance is the only way to the top. • A bad reputation takes a long time to get rid of. 37


Business intelligence

Valuable facts all around us In 2008 the concept of business intelligence, BI, only existed in the

to put the information into the system or not which often resulted

heads of a few. The information these people had was valua-

in an overload of “good to know” facts and on the other hand a

ble but we lacked a structured method of securing that the right

lack of valuable information. Step by step we managed to clarify

people got the right information. We also had different definitions

what information we really needed which improved the quality

of business intelligence which was confusing.

considerably. Another difficulty was how to structure the distribution securing

Acceptance as starting point

that the right co-worker got the information he or she needed.

The change started with the realization and acceptance of the fact that we need excellent business intelligence to become excellent.

2012 – BI important for total offer

The exact definition of BI still was not clear, but it was evident to

We have managed to set up a qualified business intelligence which

everyone what had to be done.

has resulted in great advantages. Now we have a clear picture of

As a starting point we acknowledged the fact that BI is all

the market, suppliers, competitors and IKEA. This means:

around us. We further realized that it would be a great compe-

- quicker product launches

titive advantage if we could use it fully to strengthen our offer.

- easier to analyze market needs

Keywords for the task were collection, systematization, distribution

- time advantage

and follow up. The strategic priorities created sharp approaches

- quicker and easier improvement of weaknesses

and tools to secure that we dealt with the available information in the right way. Initially co-workers could feel uncertain whether 38

Learning – summing-up! • Needed information is all around us. We need to set a structure for collection, systematization, distribution and follow up. • Start acting on defined weaknesses even if you do not know 100% where you are heading, dare to navigate and try new ways. • Competition is global and getting tougher every day. All competitive advantages must be made the most of.

BI has become a very important contributor in strengthening ICOMP´s total offer. 39


Product and distribution

Focusing on a few but important steps Product and Distribution, P&D, had already in 2008 managed to

Rather fast we took big steps in the intended direction by wor-

become one of the good examples related to product quality. One

king systematically and focused, using our best resources. Quite

reason was the strong police force we built to stop the problems, but

soon we managed to perform a lot better than in previous years.

we had also seen a mind shift among the co-workers. Delivery per-

Purchasers started bringing suppliers to our own units with the

formance was also improving rapidly (only P&D failures measured).

intention to open their minds. It was clear that this helped us to

creased efficiency was that we could postpone the establishment

improve supplier performance.

of a 3rd P&D unit, as we managed to supply the increasing needs

The big headache was price in terms of cost efficiency, go-

from the existing units.

ing in the wrong direction with increasing volumes and measu-

We became a good example in the eyes of IKEA and IKEA’s

rements that were not totally objective and fair. We thought that

suppliers. Everyone could definitely remember our failures, as

P&D co-workers were highly motivated feeling that they de-

we had very efficient packing machines, and did not really see

they were so few. As we had started measuring how serious our

veloped. Nobody found it acceptable to deliver something to the

much light in the tunnel. We were also planning for a third P&D

few failures were now, it was also clear that when we failed it did

next link of the chain without securing it was properly dealt with.

unit as we saw big future needs to fill.

not affect IKEA’s availability. Main contributing factors were our new efficient packing

2012 – popular for benchmarking

Becoming better than the best

machines and a very efficient set up of operations, enabling us

ICOMP’s P&D units are very popular benchmark spots for inter-

A milestone in our development of P&D was the decision to work

to double the packing efficiency. We had managed to become

nal and external companies. Both old and new IKEA demands

with RMP’s (Role Model Priorities) with the ambition to become

lean and simple. The good quality results further helped us to

are fully met, including environmental goals. There are clear veri-

better than the best. We clearly defined what we wanted to ac-

reduce costs.

fications that our units are outstanding performers in all aspects,

hieve and put up extremely difficult goals; for example to pack 250 million fitting bags without any claims. 40

Keywords during the great improvement were “flexibility, planning, communication and customer”. An effect of the in-

Learning – summing up! • When pushing others to improve, it’s of great help to show that new solutions work by demonstrating in your own factory. • The focused work on a few, but very important, improvements was a crucial key to success, along with devoted co-workers that did not settle for less than world class results. • When you are a good example, you can easier make others improve.

and we truly feel that we are contributing to a better IKEA and a better global environment. 41


Excellence in running operations

QSE, Supply, Price and Innovations

Learning – summing-up! • Good product quality give better business.

In 2008 our role was to draw benefits from natural IKEA strengths

school, se-

set-ups for production and distribution of a

in order to create substantial total cost and quality benefits. We

cured and

wide range of components and raw materi-

decided to be much better within QSE, Supply, Price and Inno-

maintained

als for IKEA suppliers.

vations.

competence among our co-workers and suppliers.

Environment

Environmental responsibility with focus on

In 2008 we had a narrow outlook on envi-

more efficient use of raw materials in our pro-

Product quality

2012 – a calibrated view

ronmental responsibility. The discussions we

In 2008 we had improved a lot, going from 0,51% claimed value,

Today QSE is supporting all parts of supply and trading and is a

had concerned CO² emissions. Some competi-

transportation that reduces CO² emissions had been

370 claims 2005 and not even all business included to 0,09%

on the top of our agenda past years.

natural part of all ICOMP business. Quality methods are created

tors started to inform about CO² impact for their

claimed value. We were seen as the good example within Supply

and deployed based on customer satisfaction. We have a cali-

products but ICOMP decided to await the IKEA

Chain as well as by some of the IKEA suppliers.

brated view of “good quality” within IKEA.

strategy before setting our strategic directions, go-

Better business

TQE department are specialists and set the standard for pro-

now in for front within IKEA. We fulfill both IWAY and

responsibility for components and material. Quality is no longer

derstood that good product quality give better business. Every-

questioned – it’s seen as fundamental.

The rapidly increasing concern for sustainability had put

To get here we actually did what we said and had full management commitment. We have focused and extended TQE 42

We have been riding on our good reputation and are

duct development. We are seen as a competence centre with Demands on sustainability

working with improvements.

2012 – sustainable supply

als and action plan.

The key success factor was that all co-workers and suppliers unbody took responsibility for product quality and was continuously

duct range and the development of solutions for

GHP supply. ICOMP’s’ main focus has been to secure sustainable supply for all components and materials within our

We have reached a performance level that very few thought

new and increasing demands on IKEA and ICOMP which had

area of responsibility. We are today working with a different

was possible. Performance has improved substantially, claimed

major influence on our business. The focus on sustainability within

supply structure to be able to optimize production and logistical

value 0,005%, total customer claims 24, 100% GHP and very few

IKEA meant that ICOMP saw new business opportunities. We de-

flows.

unsatisfied IKEA suppliers.

cided to become a good example by securing sustainable supply

Today’s performance is outstanding – within IKEA we are 43


achievements;

able to fulfill standards and regulations for a sustainable supply to the IKEA suppliers. Thanks to high performance even more bu-

needed

was really important to be able to continuously compare the fo-

material areas were im-

all

recast with the capacity in a structured way, to be able to adjust

plemented, the ap-

siness opportunities will open up for ICOMP the coming years.

proach had been improved

Learning – summing-up!

with

transports, we didn’t have the possibility to follow up neither performance nor costs. We didn’t know if the goods reached

compile

and

the IKEA supplier in time, we couldn’t communicate our needed

analyze seve-

transport capacity, reduce our costs or impact on the environ-

ral sources of

ment by improving the filling rate etcetera. We needed to create

information and

approaches and tools to update information about the range

take this work in the coming years. Performance for ORF was about

In 2008 we focused supply and delivery performance only for a

90%.

few years ahead. In addition to that only parts of ICOMP and

At the beginning of the journey we didn’t focus much on

possibilities to

• High performance opens up new business opportunities.

Supply

our capacity in due time.

well-founded

decisions, and efficiency has improved greatly.

and to be able to track the consignments and shipments both on the way and follow up afterwards.

During the journey it became much clearer to us what affected the forecast accuracy which led to a new way of working

2012 – a smoother supply chain

its processes could be measured and analyzed. This meant that

Structured forecasting

in areas such as order handling, agreements with suppliers and

The improvements done led to a much smoother supply chain,

only some approaches and tools were used to a satisfactory le-

We focused on a few areas with high impact on supply perfor-

IKEA suppliers.

information is efficiently spread and compiled leading to actions

vel, others were not used at all, missing or needed to be impro-

mance. Forecasting was one of them. Only from working with

With a reliable forecast it was logical to continue with our ca-

taken in right time. We have a much better knowledge of how the

ved. We decided to define what had to be done and to prioritize

forecast in a structured way we have reached some important

pacity planning. We improved the approach and created tools. It

IKEA suppliers judge our delivery performance and what is im-

44

45


portant to them. The costs have been

ment in different ways. Neither of

very important corner stones for building facts. We had during

reduced both depending on higher

our measurements for outgoing price

the last years developed a number of new measurements for

efficiency and less costs need to be

were in-line with how other IKEA units

price. Together they gave us the full picture of price performance,

spent on transporting air, scrapping

measured their price development.

both our own as well as effect from external factors and in com-

not needed goods or costly “firefighting” actions etcetera.

Learning – summing-up! • You need to be able to measure to understand and understand to be able to improve.

We didn’t really know if our per-

parison with competitors. We managed to implement open cost calculations and a

ficult to compile and follow what was

good raw material structure to handle fluctuations. One chal-

Range and Innovations

connected to external factors like raw

lenge was to develop and establish system support and to make

We came from a situation in 2008 where we were not able to

sure that figures in our systems had high quality.

measure innovations and found it hard to implement them. In ad-

material prices and currencies, and what were improvements thanks to economy of scale and finding new and better suppliers.

dition to that ideas were not taken care of in a good way. 2012 – ICOMP seen as the good example

However our own belief was that our price

Our price and price development are today seen as best practice

50% creating and 50% delivery

performance was good and resulted in

within IKEA. We are in leading position compared to competitors

We soon came to the insight that we did not know how to define

and on the market. We have an updated best buy model which

an innovation. Much time was allocated to visit relevant seminars

is fully in use and implemented. We are measuring all our busi-

and seeking contact with other companies in order to find a good definition of an innovation.

Price performance

Development of new measurements

nesses both compared to actual price development and price

In 2008 we measured incoming

Our development of new measurements

distance compared to accepted market price index.

46

• To get the full picture of performance you need facts.

formance was good or bad. It was dif-

cost savings for IKEA suppliers.

and outgoing price develop-

Learning – summing-up!

for price performance was one of the

Our search focus was to create a definition that could be clearly understood by our co-workers as well as by our external 47


(IKEA of Sweden) contact surfaces. Once we had sett-

cess and at the same time se-

Performance level has improved and reached an expected

curing that we had the right

level; today we implement five innovations per year. Assembly

Learning – summing-up!

index has been reduced by 25%. Time to market for innovations

•Y ou need to agree and understand the definition of innovations. An innovation is also often more than a product and it is hard, time consuming work.

people in our team.

is reduced by approximately 50%.

led for a definition we

We also found out

came to the next con-

that the complete inno-

Our way of working and performance are very much ap-

clusion; innovation is

vation process consists

preciated. By IoS and IKEA suppliers we are seen as a true com-

not a spark of genius

of 50% creating and

petence centre and the natural cooperation partner. We work

at least 50% delivery of

as a fully integrated part of IKEA supply chain. We feel that we

the innovation. This was so-

are well prepared to meet the strong competition from both new

•D elivering the innovation is at least 50% of the success.

Asia suppliers and well-known developing companies.

• T he need for innovations will only increase over time, but, we must also not forget to work with existing solutions in a slower incremental way.

as the result of hard, structured, time consuming every day work is. To get here we worked with cross-BA innovation groups together with strategic alliances with external

mething that we continuously worked with and tried to improve; the learning was tremendous but painful.

•O perational acute aspects often overshadow innovation needs. It is important that you find ways to keep promising embryos alive in the organization.

parties. Further we implemented strong tools and working methods and we had a clear and well de-

2012 – fully integrated in IKEA supply chain

veloped co-operation with IKEA of Sweden. Some of

Today measurement of performance is seen as im-

the key success factors for getting here was to work

portant to be able to secure that we satisfy the custo-

with marketing of both good innovations as well as

mer and surpass our client demands and needs. We

human competences. We had been working hard to

are now measuring assembly index, time to market,

improve our structural competence within CDR pro-

range development and project fulfillment.

48

49


Thanks for great work! At last! After a couple of tough years we have reached far. Yes, we met some set backs and yes, it has been quite a challenge. But we have come through. Of course our goals are important, but this journey also taught us to value the process and learn from it. To all of you who has put a lot of your effort and energy into this journey – thank you and congratulations! For more information please contact: BjÜrn Larsson, bjorn.larsson@memo.ikea.com Fredrik Johansson, fredrik-c.johansson@memo.ikea.com Peter Larsson, peter.larsson52@memo.ikea.com Olof Sixten, olof.sixten@memo.ikea.com

50


The Future History Book was produced in August 2009 by IKEA Components.

IKEA Components


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