QUALITY AS VALUE-ADDING

MANAGEMENT CONCEPT:

IKEA Supplier Quality Assurance

Karlstad Business SchoolHandelshögskolan vid Karlstads Universitet

TITLE OF THE WORK:

Quality as Value-Adding Management Concept:

IKEA Supplier Quality Assurance

Prepared by

Hafez Shurrab

TABLE OF CONTENTS

TABLES OF FIGURES.............................................................................................................II

1. INTRODUCTION..........................................................................................................- 1 -

2. METHODOLOGY.........................................................................................................- 2 -

3. BACKGROUND............................................................................................................- 2 -

4. THEORY........................................................................................................................- 2 -

5. ANALYSIS AND DISCUSSION...................................................................................- 4 -

6. CONCLUSION...............................................................................................................- 5 -

7. REFERENCES...............................................................................................................- 6 -

APPENDIX............................................................................................................................- 7 -

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TABLES OF FIGURES

Figure 1: The Dimensions of Good and Service Quality.......................................................- 3 -

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1. INTRODUCTIONQuality has always been used as expression for the degree of goodness and

satisfaction for any piece of work. It includes a mixture of tangible and intangible

characteristics that are not straightforwardly measurable. Therefore, it is not simple to

judge how much good things are. Applying that on the scale of business activities, any

work package that may involve inputs 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 of

goodness arose during 1930s. That started with some quality control tools and practices

such as inspections and control charts. Then, some concepts such as quality assurance

and cost developed. After that, quality in forms of teams and quality circles has been

incorporated, before the revolutionary contributions of Japanese t111111ook the lead

for the sake of quality management as comprehensive approach to manage

organizations (TQM) (Bergman & Klefsjö, 2010).

Quality concept has been introduced by many specialists. As a result, a high

contrast appeared for the discussion of what outcome may be characterized by a

qualified quality. Some of them stressed on technical functionality, while others

considered the financial performance as driving indicator. All opinions have been

merged altogether to result in a common reflection on what may characterize a good

quality of outcome: high fulfilling efficiency with minimum allocated costs. Later, and

during the age of their revolution with quality, Japanese considered a key element that

became afterwards a prerequisite to compete in the market. That is the customer-

oriented approach. In today’s business, it is very difficult to survive in the market if the

customer value is not considered as major part of a company’s targets. Day after day,

competitors become more aggressive and creative. To control the goodness of value

produced by a company, there should be a framing QMS for routines and activities of

companies. There is a broad range of quality values, tools and methodologies in which

organizations select from, align themselves with and integrate to bring the best of their

value creation systems (Hellsten & Klefsjö, 2000). This report is dedicated to discuss

quality management and some relevant of quality assurance practices. What efforts a

company may show to assure quality standards are discussed through analysing aspects

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of the efforts dedicated by IKEA Group. The experience of IKEA about their ability to

deliver products with high qualities and low prices is very interesting to discuss.

2. METHODOLOGY Information about the theories was collected from books, scientific articles, IKEA

Group’s documents that are available online or on paper (see Appendix), and the course

literature “Quality from Customer Needs to Customer Satisfaction”. The scientific

articles were found in the databases Emerald and Willy through the key words: quality,

management, systems, implementation, Sweden and contributions. The books, course

literature 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 of IKEA in general

and IKEA Supplier Quality Assurance Group particularly, and match them with

corresponding 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 Ingvar

Kamprad in 1943. There are 332 IKEA stores in 38 countries. In 2010, IKEA sold 23.1

billion of worth goods. IKEA has a vision to create a better everyday life for the many

people. IKEA takes the responsibility of providing affordable good quality of

furnishing products. It also focuses on sustainability to contribute in a better and

secured future for next generations. The main responsible for IKEA supplier quality

standards is IKEA Supplier Quality Assurance Group (IKEA Group, 2012). They are a

group of quality qualified employees authorized by IKEA to implement the quality

assurance program along 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. THEORY Quality as concept has very common definitions that have been introduced by

significant quality contributors. According to ISO (2005), quality is the degree fulfilling

the requirements providing a range of characteristics. Deming (1986) incorporated

additional element to this definition, which is not only taking in considerations current

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needs of customers, but also the future ones. Crosby’s and Juran’s definitions are

commonly known by their expressive simplicity, which are “conformance to

requirements” and “fitness for use”, respectively (ASQ, 2000). Taguchi defined quality

from a social and economic perspective. Non-quality for Taguchi is not only a loss for

the 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

of customers to be satisfied and exceeded (Bergman & Klefsjö, 2010). Schneider &

White (2005) proposed three different ways to approach quality including innate

excellence (the philosophical approach), efficient manufacturing (the technical

approach), 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 common

category for quality dimensions: service quality and good quality. Figure 1 shows the

dimension 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 overall

activities to produce goods and/or services with high quality credits. According to

(Bergman & Klefsjö, 2010), the logic of activities (input, process and output) can be

perceived as value creation system in which resources are allocated (as inputs) to

perform (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 and

according to prespecified specifications (acceptable quality). Total quality management

(TQM) is a quality management system where the whole organization work together to

deliver the highest customer value within minimum possible cost (waste). There are

essential values of TQM including top management commitment, focus on processes,

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continuous improvement, fact-based decision, focus on customer, and involvement of

everybody (Bergman & Klefsjö, 2010). TQM is more likely to be accompanied by

quality assurance activities. Quality assurance is referred to activities dedicated to make

sure 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 may

include customer satisfaction (customer loyalty), better working conditions (low rates

of turnover and sick leave), better market position (fair market share), shorter lead-

times (higher productivity) and lower costs. That all contribute heavily in enhanced

profitability (Hansson & Eriksson, 2002).

5. ANALYSIS AND DISCUSSIONIKEA, through supplier quality assurance program, enforces its suppliers to

comply with IKEA standards (See Appendix). That represents one of the core values of

TQM whereby everybody (including suppliers) contributes in the value creation

process is supposed to be involved in terms of quality control and development. That

includes suppliers as core actors in value creation systems (Bergman & Klefsjö, 2010).

IKEA standards have been accumulatively set during years of experience in furnishing

industry, using thorough valuable marketing researches and specifying labs for quality

and product development activities such as QFD, DOE and inspections (See Appendix).

IKEA standards are routinely updated with what marketing and product development

may come up with as results. That may reflect another value of TQM, which is focusing

on customers as ultimate target. Besides, the sense of continuous improvement could be

also found from such efforts (Bergman & Klefsjö, 2010).

As focal firm, IKEA introduces a program as blueprint for suppliers to comply

with before integrating them. Fact-based decision value of TQM (Bergman & Klefsjö,

2010) could be clearly seen in how much IKEA puts high pressure on documentations

and procedures required for suppliers to be integrated. This reflects relevant activities to

quality 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 that

suppliers need to consider, and that starts with QMUST (entry requirements to be

fulfilled before going further), QWAY (subsequent requirements need to be fulfilled

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within timeframe when the process starts), 4SIP (supplier inspection program for

suppliers with ambition to further develop their quality systems), and ISO 9001+4SIP.

IKEA suppliers should be well committed to the IKEA quality staircase model as

condition (See Appendix). This represents the top management commitment value of

TQM (Bergman & Klefsjö, 2010). IKEA uses “Customer Experienced Product Quality

(CEPQ)” as concept to describe the expectations of customers on the products’ or

services’ aspects that they may experience and assess. These aspects encompasses areas

such as healthy (e.g. renewable materials, free from harmful chemicals …etc), safe to

use (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 keep

its quality levels up and continuously improve them. However, controlling quality have

concerns associated with innovation performance. Quality management systems are

characterized by high degree of bureaucracy whereby creativity is quite inhibited under.

6. CONCLUSION

Quality is a buzzword in today’s business. The way of understanding quality

significantly affects the type of quality management activities conducted in any

organization. The common view about quality is the customer-based one. Quality could

be managed through QMS such as TQM. The organizations that deliver values

(products and services) could be perceived as value creation systems. Services and

goods are evaluated, in terms of quality, according to specific sets of dimensions. The

quality of products and services to be delivered are assured through activities of quality

assurance. IKEA group is one of the leading companies that gained the success of

integrating quality as management system. IKEA use robust engineering and marketing

tools to frame customers’ expectations. Moreover, IKEA adopts intolerant partnership

policies with suppliers. That could be seen clearly from IKEA supplier quality

assurance program that has been set to make sure that IKEA grows in appropriate

manner whereby all new integrated suppliers are eligible to hold the responsibility of

IKEA’s quality level. However, bureaucratic procedures of QMS may limit

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creativeness that significantly contributes to new customer value to be explored

(innovation).

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7. REFERENCES

Literature Sources:

Bergman, B. and Klefsjö, B. (2010). Quality from Customer Needs to Customer

Satisfaction, 3rd edn., Lund: Utbildningshuset/Studentlitteratur.

Deming, E. W. (1986). Out of the Crisis. Cambridge, Massachusetts Institute of

Technology, 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 of

values, techniques and tools". The TQM Magazine.

ISO (2005). ISO 9000:2005, Quality management systems - Fundamentals and

vocabulary. 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.: Sage

Publications.

Electronic Resources:

ASQ (2000). Quality Glossary - Q - ASQ. [online] Available at:

http://asq.org/glossary/q.html [Accessed: 28th April 2013].

IKEA Group (2010). IKEA Group Yearly Summary FY11, Available at:

http://www.ikea.com/ms/en_US/about_ikea/pdf/ikea_ser_2011.pdf [Accessed: 29th

April 2013].

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APPENDIX

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