QUALITY AS VALUE-ADDING

MANAGEMENT CONCEPT:

IKEA Supplier Quality Assurance

 Karlstad Business School
Handelshögskolan 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 -

I
 TABLES OF FIGURES

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

II
1. INTRODUCTION
Quality 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. BACKGROUND
IKEA 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 DISCUSSION

IKEA, 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 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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