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