Quality as Value-Adding Management Concept: IKEA Supplier Quality Assurance

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This essay is about basic quality management concepts with a focus on IKEA as case. The quality assurance is more focused than other practices.

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Quality as Value-Adding Management Concept: IKEA Supplier Quality Assurance

  1. 1. QUALITYAS VALUE-ADDINGMANAGEMENTCONCEPT:IKEASupplier Quality Assurance
  2. 2. Karlstad Business SchoolHandelshögskolan vid KarlstadsUniversitetTITLE OF THE WORK:Quality as Value-Adding Management Concept:IKEA Supplier Quality AssurancePrepared byHafez Shurrab
  3. 3. ITABLE OF CONTENTSTABLES OF FIGURES............................................................................................................ II1. INTRODUCTION ......................................................................................................... - 1 -2. METHODOLOGY ........................................................................................................ - 2 -3. BACKGROUND ........................................................................................................... - 2 -4. THEORY ....................................................................................................................... - 2 -5. ANALYSIS AND DISCUSSION.................................................................................. - 4 -6. CONCLUSION.............................................................................................................. - 5 -7. REFERENCES .............................................................................................................. - 6 -APPENDIX ........................................................................................................................... - 7 -
  4. 4. IITABLES OF FIGURESFigure 1: The Dimensions of Good and Service Quality...................................................... - 3 -
  5. 5. - 1 -1. INTRODUCTIONQuality has always been used as expression for the degree ofsatisfaction for any piece of work. It includes a mixture of tangible and intangiblecharacteristics that are not straightforwardly measurable. Therefore, it is not simple tojudge how much good things are. Applying that on the scale of business activities, anywork package that mayinvolveinputs and outcomes could reflect a degree of quality.Such outcomes leave a cumulative impact on the overall level of organizational quality.From that sense, the organizational practices concerned with quality and degrees ofgoodness arose during 1930s. That started with some quality control tools and practicessuch as inspections and control charts. Then, some concepts such as qualityassuranceand cost developed. After that, quality in forms of teams and quality circleshas been incorporated, before the revolutionary contributions of Japanese t111111ookthe lead for the sake of quality management as comprehensive approach to manageorganizations (TQM) (Bergman &Klefsjö, 2010).Quality concept has been introduced by many specialists. As a result, a highcontrast appeared for the discussion of what outcome may be characterized by aqualified quality. Some of them stressed on technical functionality, while othersconsidered the financial performance as driving indicator. All opinions have beenmerged altogether to result in a common reflection on what may characterize a goodquality of outcome: high fulfilling efficiency with minimum allocated costs. Later, andduring the age of their revolution with quality, Japanese considered a key element thatbecame afterwards a prerequisite to compete in the market. That isthe customer-orientedapproach. In today’s business, it is very difficult to survive in the market if the customervalue is not considered as major part of a company’s targets. Day after day, competitorsbecome more aggressive and creative. To control the goodness of value produced by acompany, there should be a framing QMSfor routines and activities of companies. Thereis a broad range of quality values, tools and methodologies in which organizations selectfrom, align themselves with and integrate to bring the best of their value creationsystems (Hellsten&Klefsjö, 2000). This report is dedicated to discuss qualitymanagement and some relevant of quality assurance practices. What efforts a companymay show to assure quality standardsare discussed through analysing aspects of the
  6. 6. - 2 -efforts dedicated by IKEA Group.The experience of IKEA about their ability to deliverproducts with high qualities and low prices is very interesting to discuss.2. METHODOLOGYInformation about the theories was collected from books, scientific articles,IKEAGroup’s documents that are available online or on paper (see Appendix), and the courseliterature “Quality from Customer Needs to Customer Satisfaction”. The scientificarticles were found in the databases Emerald and Willythrough the key words: quality,management, systems, implementation, Swedenand contributions. The books, courseliterature and scientific articles are used to build up the core theory of quality concepts,while the documents of IKEA Group is used to analyse the efforts ofIKEA in generaland IKEA Supplier Quality Assurance Groupparticularly,and match them withcorresponding theories.3. BACKGROUNDIKEA is a group that offers a broad set of functional, well-designed, sustainable,low price and good quality home furnishing products. It has been founded by IngvarKamprad in 1943. There are 332 IKEA stores in 38 countries. In 2010, IKEA sold 23.1billion of worth goods. IKEA has a vision to create a better everyday life for the manypeople. IKEA takes the responsibility of providing affordable good quality of furnishingproducts. It also focuses on sustainability to contribute in a better and secured future fornext generations. The main responsible for IKEA supplier quality standards is IKEASupplier Quality Assurance Group(IKEA Group, 2012). They are a group of qualityqualified employees authorized by IKEA to implement the quality assurance programalong with IKEA suppliers. They control the documentation altogether with suppliers’relevant activities to make sure that they (the suppliers) are in line with customers’expectations and IKEA’s standards (See Appendix).4. THEORYQuality as concept has very common definitions that have been introduced bysignificant quality contributors. According to ISO (2005), quality is the degree fulfillingthe requirements providing a range of characteristics. Deming (1986) incorporatedadditional element to this definition, which is not only taking in considerations current
  7. 7. - 3 -needs of customers, but also the future ones. Crosby’s and Juran’s definitions arecommonly known by their expressive simplicity, which are “conformance torequirements” and “fitness for use”, respectively (ASQ, 2000). Taguchi defined qualityfrom a social and economic perspective. Non-quality for Taguchi is not only a loss forthe producer, but also for the whole society after being exported and delivered (Lance,1988). Generally, quality could be defined as the ability for the expectations and need ofcustomers to be satisfied and exceeded(Bergman &Klefsjö, 2010).Schneider&White(2005) proposed three different ways to approach quality including innateexcellence (the philosophical approach), efficient manufacturing (the technicalapproach), and the user-based approach (in which quality is determined by its user).Quality differs in dimensions to be referred to. There are two mostly commoncategory for quality dimensions: service quality and good quality. Figure 1 shows thedimension of good quality (on the left) and service quality (on the right).Figure 1: The Dimensions of Good and Service Quality (source: (Bergman & Klefsjö, 2010))To bring the best of an organization in terms of quality, managing the overallactivities to produce goods and/or services with high quality credits. Accordingto(Bergman &Klefsjö, 2010),the logic of activities (input, process and output) can beperceived as value creation system in which resources are allocated (as inputs) toperform (process) certain sets of activities to introduce value (outputs) to the end-customer. It important for the created value to be delivered with minim cost andaccording to prespecified specifications (acceptable quality). Total quality management(TQM) is a quality management system where the whole organization work together todeliver the highest customer value within minimum possible cost (waste). There areessential values of TQM including top management commitment, focus on processes,
  8. 8. - 4 -continuous improvement, fact-based decision, focus on customer, and involvement ofeverybody (Bergman &Klefsjö, 2010). TQM is more likely to be accompanied byquality assurance activities. Quality assurance is referred to activities dedicated to makesure that the requirements for a product or service will be fulfilled (ASQ, 2000).There are several manifestations that may reflect the success of quality. That mayinclude customer satisfaction (customer loyalty), better working conditions (low rates ofturnover and sick leave), better market position (fair market share), shorter lead-times(higher productivity) and lower costs. That all contribute heavily in enhancedprofitability (Hansson& Eriksson, 2002).5. ANALYSISAND DISCUSSIONIKEA, through supplier quality assurance program, enforces its suppliers to complywith IKEA standards (See Appendix).That represents one of the core values of TQMwhereby everybody (including suppliers) contributes in the value creation process issupposed to be involved in terms of quality control and development. That includessuppliers as core actors in value creation systems (Bergman &Klefsjö, 2010).IKEAstandards have been accumulatively set during years of experience in furnishingindustry, using thorough valuable marketing researchesand specifying labs for qualityand product development activities such as QFD, DOE and inspections (See Appendix).IKEA standards are routinely updated with what marketing and product developmentmay come up with as results. That may reflect another value of TQM, which is focusingon customers as ultimate target. Besides, the sense of continuous improvement could bealso found from such efforts (Bergman &Klefsjö, 2010).As focal firm, IKEA introduces a program as blueprint for suppliers to comply withbefore integrating them. Fact-based decision value of TQM (Bergman &Klefsjö, 2010)could be clearly seen in how much IKEA puts high pressure on documentations andprocedures required for suppliers to be integrated. This reflects relevant activities toquality assurance (ASQ, 2000). A model called IKEA quality staircase is used as go-no-go gauge to filter the qualified suppliers to be internalized. There are 4 steps thatsuppliers need to consider, and that starts with QMUST (entry requirements to befulfilled before going further), QWAY (subsequent requirements need to be fulfilled
  9. 9. - 5 -within timeframe when the process starts), 4SIP (supplier inspection program forsuppliers with ambition to further develop their quality systems), and ISO 9001+4SIP.IKEA suppliers should be well committed to the IKEA quality staircase model ascondition (See Appendix). This represents the top management commitment value ofTQM (Bergman &Klefsjö, 2010). IKEA uses “Customer Experienced Product Quality(CEPQ)” as concept to describe the expectations of customers on the products’ orservices’ aspects that they may experience and assess. These aspects encompasses areassuch as healthy (e.g. renewable materials, free from harmful chemicals …etc), safe touse (e.g. no injuries, allergy …etc), customer friendly (e.g. easy to assemble and install…etc), and durable and functional (e.g. durable surfaces, good workmanship …etc).These aspects correspond some of good quality dimensions shown in figure 1.These are some examples of efforts IKEA allocates through TQM as QMS to keepits quality levels up and continuously improve them. However, controlling quality haveconcerns associated with innovation performance.Quality management systems arecharacterized by high degree of bureaucracywherebycreativity is quite inhibited under.6. CONCLUSIONQuality is a buzzword in today’s business. The way of understanding qualitysignificantly affects the type of quality management activities conducted in anyorganization. The common view about quality is the customer-based one. Quality couldbe managed through QMS such as TQM. The organizations that deliver values(products and services) could be perceived as value creation systems. Services andgoods are evaluated, in terms of quality, according to specific sets of dimensions.Thequality of products and services to be delivered are assured through activities of qualityassurance. IKEA group is one of the leading companies that gained the success ofintegrating quality as management system. IKEA use robust engineering and marketingtools to frame customers’ expectations. Moreover, IKEA adopts intolerant partnershippolicies with suppliers. That could be seen clearly from IKEA supplier qualityassurance program that has been set to make sure that IKEA grows in appropriatemanner whereby all new integrated suppliers are eligible to hold the responsibility ofIKEA’s quality level. However, bureaucratic procedures of QMS may limit creativenessthat significantly contributes to new customer value to be explored (innovation).
  10. 10. - 6 -7. REFERENCESLiterature Sources:Bergman, B. and Klefsjö, B. (2010). Quality from Customer Needs to CustomerSatisfaction, 3rd edn., Lund: Utbildningshuset/Studentlitteratur.Deming, E. W. (1986). Out of the Crisis. Cambridge, Massachusetts Institute ofTechnology, Center for Advanced Engineering Study.Hansson, J.and Eriksson, H. (2002).The impact of TQM on financial performance,Measuring Business Excellence.Hellsten. U. and Klefsjö. B. (2000), "TQM as a management system consisting ofvalues, techniques and tools". The TQM Magazine.ISO (2005). ISO 9000:2005, Quality management systems - Fundamentals andvocabulary. International Organization for Standardization.Lance E. A. (1988). Quality by design: Taguchi methods and U.S. industry. Dearborn,Mich. ASI Press.Schneider, B. and White, S. (2004) Service quality. Thousand Oaks, Calif.: SagePublications.Electronic Resources:ASQ (2000). Quality Glossary - Q - ASQ. [online] Available at:http://asq.org/glossary/q.html [Accessed: 28thApril 2013].IKEA Group (2010). IKEA Group Yearly Summary FY11, Availableat:http://www.ikea.com/ms/en_US/about_ikea/pdf/ikea_ser_2011.pdf [Accessed: 29thApril 2013].
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