The Impacts of ISO 9001 on the Performance of IKEA Quality Management System

Introduction

Ingvar Kamprad founded IKEA in the year 1943. Over the decades, the company has been known for its low prices and superior quality. The supply chain of the company has been outstanding, courtesy of the integration and the policies that suppliers are obliged to uphold.  As such, quality is something, which IKEA tries to control right from the sourcing of the materials. The ISO 9000 requirements revolve around seven principles including customer focus, continues improvement, engagement of people, process approach, evidence-based decision making, relationship management, and leadership. Some positive milestones are evident in IKEA’s operations when it comes to compliance with standards. IKEA has partially complied with ISO 9000 standards in its quality management systems, thus a fair performance concerning revenue and profitability of the company.

 Implementation of ISO 9000 standards in the quality management system of IKEA

The company has to a greater extent attempted to comply with ISO 9000 standards. The products of the company are attested to and are expected to comply with the national and international legislations of all the markets where the products are sold. There are strict specifications in place, hence compelling the suppliers to stick to the strict requirements. IKEA continues to define and develop strict product requirements and make it possible for monitoring and verification of compliance. In order to ensure durable, healthy, and safe quality products, IKEA the company has a test lab that is very useful when it comes to product development phase. This lab has been guaranteed and accredited to international standards. There are remarkable attempts by the company to use materials from the sustainable sources and products are constantly submitted to tough durability tests. This section considers how far the company has gone in embracing ISO 9000.

Customer focus

IKEA is an example of the few companies that have stayed true to the customer-focused purposes. This aligns the company’s commitment to quality with the expectations of the customers as far as quality is concerned. The purpose of the brand has been to create a better everyday life for the consumers. In support of this purpose, the organization offers a wide range of the well-designed and functional domestic furniture products at very affordable prices for many people. Low prices and good quality are embraced right from product development, choice of the suppliers, quality testing and how the products are sold in the stores. IKEA of Sweden (IoS) has the sole mandate of product development in the company (Tarnovskaya, Ghauri & Elg, 2007). There is also a central customer service organization (IKSC).The staffs for this organization receives calls from customers across Sweden concerning everything ranging from the opening hours to product complaints. Every product has to be quality tested in the lab, and thousands of tests are carried each year to ensure that the quality standards expected by the customers are followed. Nevertheless, the company has over 2000 suppliers in over 50 countries. Most of these suppliers are external partners such as Lechner, which manufactures customized worktops (Tarnovskaya, Ghauri & Elg, 2007). All the kitchen fronts and the worktops have a date stamp as well as the supplier number that is attached to them, hence making it possible to track any problems in quality to a specific supplier. There are also customized worktops that are made from both acrylic and stones, designed according to the specifications of the customer. All these shows that IKEA has attempted to understand both the current and the future needs of the customers, and is striving very much to not only meet the requirements of the customers but also to exceed their expectations (Tarnovskaya, Ghauri & Elg, 2007). The bottom-line for IKEA is the delivery of quality, with the customer in mind.

Leadership

Leadership is considered as one of the company’s core values. IKEA managers instill excellence that is directly proportional to the superior quality of products delivered. The managers try to set a good example and encourage others to emulate the same. Kamprad, the founder of the company, admits that the best way to get the best out of the employees is by setting an example and encouraging the employees to work hard while adhering to the stringent business ethics, and above all, excellence. The company has embraced a Democratic leadership approach, and thus employees can participate directly in the decision-making process. Some of the decisions in the company are made based on the feedback obtained from the employees. The leaders have embraced paternalistic and democratic leadership styles where the input of the employees is very important not only for getting feedback but also because this makes the employees feel that they are needed in the organization and that they are part and parcel of the superior quality reputation that the company has earned over time. This has contributed to higher productivity and proficiency rates of the employees in the organization. This has made it possible for the internal environment of IKEA to be fully involved in achieving the quality objectives of the business (Stadtler, 2015).

Engagement of people

People at all levels are of great essence to IKEA. As such, the business has tried to involve a range of stakeholders as much as possible. To some extent, this makes it possible for the company to pull to the same direction and adhere to uniform standards concerning the delivery of quality. There is a platform to ensure that communication of defects is timely and taken seriously. The company has a PR manager that strives to publish accessible and informative content that can be of great use to the people. The company wants dialogue with the stakeholders. One outstanding aspect about this is the transparency about the social policies as well as the inner workings. However, some issues have also impeded this goal. For instance, the company has two PR Agencies. Each of the agencies has the distribution platforms that are meant for sharing the brand stories. This has made it difficult for the company to have oversight of the kind of information that is being distributed and the intended recipients of the information. As such, the information about the brand has not been segmented according to the varied interests of the stakeholders (Bengtsson, 2008).

Process approach

The company has also tried as much as possible to embrace the process approach. For instance, the company is organized into four different main areas whereby the IKEA of Sweden conducts the first area range. Secondly, the purchasing is undertaken by the agents who are responsible for placing orders according to the specifications of the company. Then there is the distribution and wholesale which undertakes the distribution and transports of the finished products to the regional distribution centers of the company, and then across the globe. There are then the sales functions, which are carried out by ensuring the uniformity of the selling methods as well as the customer service standards in all the stores belonging to the company. The four areas have direct implications on the quality management system of the company because any procedural purchases that will lead to the production of defective products will spell doom for the company. As for the supply chain, the company has introduced the IKEA code of conduct called IWAY, which has been designed to evaluate and check the regulation of the suppliers with the regulations in place. On the same note, sales, wholesale and distribution are properly leveraged, courtesy of the company’s stringent policies tailored towards quality improvement. This shows that the company has tried to manage the activities more efficiently by approaching some of these functions and the related resources as a process (Jones & Robinson, 2012).

Continuous Improvement Initiative

The company designs and sells the ready to assemble furniture as well as the home accessories. It has been known for its modern architectural designs while paying much attention to the operational details, cost control and continues product development. The quality of the products has remarkably been on the rise courtesy of the continuous improvement and innovation measures. They have remained on top of continues improvement and change. In a bid to achieve continuous improvement, the company has strived to have a value system in place which supports innovation and continues improvement. It has a well-defined governance and organizational structure that is meant to manage innovation. This can also be seen in the measure innovation that has been put in place by the company (Enquist, Edvardsson & Petros Sebhatu, 2007). The operative key performance indicator for the company measures the achievement in terms of the innovation status and the quality milestones that the company has been able to make over time. There is a clear attempt to partner everyone in the innovation strategy development. The company is one of the world leaders in innovation, and they strived to continuously find out what their customers spend their money on by using innovation to continuously improve their services and develop new service prepositions as well as the levels of innovations that are improved. This can be seen in such aspects as the moving showrooms, popup advertising, pop-up lounge, storage balconies among others. As such, it suffices to say that continuous improvement in the overall performance of the organization has been a permanent objective of the organization, tailored towards aligning quality of products with the customer tastes and preferences (Buttle, 2009).

Evidence-based Decision-making

The company has not been left behind when it comes to evidence-based decision-making, which is a key aspect in the standardization of quality. Most of the decisions that are made by IKEA are supported by some data that can easily be interpreted to create a framework for decision-making. For instance, the company has successfully addressed the problem of supplying cheap and attractive furnishing courtesy of in-depth research that finally led to more informed decision-making in improving quality. Courtesy of continuous market research, the company has been able to create more relevant product offers, which have also increased the level of sales. IKEA uses Opticom, which has assisted them to ask both the existing and the potential customers the questions and then analyze the results. This eventually shapes the internal strategy and execution by the company. The Total Quality Management principles have also proven to be effective in most companies that use them. The company makes decisions based on TQM principles such as adherence to the customer needs a policy. The business always establishes changes and upholds quality in the organization based on the continuous research (Tarnovskaya et al., 2007).

Relationship management at the company

The company has a very comprehensive Customer Relationship Management system that makes it possible for the company to improve the quality delivered constantly. CRM has not only assisted in better customer service but also gives the customers a better value preposition. The relationship management with the suppliers has also impacted positively on the quality management systems in the company. The relationship with the suppliers has also been strengthened, thus leading to centralized supply chain planning in which standardization, integration, and specialization are embraced. This has led to numerous improvements in the operational performance; hence, better quality in the organization. This implies that the relationship management has been a very important aspect quality management system for IKEA (Ferrell & Hartline, 2011).

Impacts of ISO 9000 standards on the IKEA’s quality management systems and the overall performance

The company’s attempts to comply with ISO 9000 in the quality management system have brought tremendous results in the recent past. The company’s customer service departments can obtain a large amount of customer feedback of which the company can utilize in the development of the test methods as well as the products. This strengthens the quality management of the company and makes the company exclusively ISO 9000 compliant (Hoyle, 2001).

The company takes pride in having developed the Ikea supplier quality standards, which is further, developed by ISO 9001. This standard can be said to be demanding as compared to the ISO 9000 standard that goes an extra mile to ensure that the suppliers of the company can meet the internationally agreed quality standards. This requirement has been a great boost to the reputation of the company, which is directly proportional to its performance both in the local and international markets (Jones & Robinson, 2012).

The product development phase for most of the products involves the numerous tests in the test lab, which has also been accredited to international standards. The implication for this is that the quality of products is taken very seriously, hence conforming to customer expectations when it comes to quality. Given that the company has managed to deliver quality at very minimal prices, it succeeded in raising 25.2 billion euro total revenue, and a total of almost 2.9 million Euros for two consecutive years since 2012 (Stadtler, 2015).

The fact that the company has been able to engage with people has seen it realize some consistency in delivery of quality. The reputation of the company’s brands has been the same in most of the markets in which the company operates. For example, the company delivers lightweight tables that have taken the market by storm. Lightweight means quality. There are many durable, lightweight materials that the company delivers using less wood, and has less impact on the environment (Jones & Robinson, 2012).

Nevertheless, the incorporation of ISO 9000 Standards in the quality management system of the company has earned the company enormous reputation when it comes to sustainability. As mentioned earlier, the company uses materials from the sustainable sources and submits the products through the durability tests. As such, the company has been able to earn hundreds of environmental certificates across the globe. The customers have been able to view IKEA as a company that represents full responsibility to healthy, safe and legally compliant products that are produced with minimal impact on the environment (Hoyle, 2001). This earns the company more customer loyalty, hence sustainability in the level of sales that have been recorded by the company (Jones & Robinson, 2012).

How IKEA can implement the ISO 9000 standards to improve its quality

The company is very much concerned about cutting down costs. Although this is important for the average consumers, the cost strategy should not be prioritized at the expense of quality and customer preferences. The company should also try to benchmark with the competitors to establish how it can adapt the best practices that are applied elsewhere. There is need to augment service delivery, hence providing assemblage and delivery of the products at the customer’s venue. Although the company is embracing ISO 9000 standards, this has not been achieved to the later. The company should adhere to these standards in a holistic level from the downstream (which is the sourcing of the raw materials) to the upward stream (which entails the assemblage and delivery of the final product) as expected by the customer (Dahlvig, 2012).

The company should also consider adopting such approaches as TQM and Six Sigma to the later to manage and strategically increase the quality of products that is delivered. It is important this is collectively done in all the stores. Evidently, the size of the organization has also made it difficult for them to be able to manage and lead the process excellently. It is important that leaders operate under a similar set of objectives, aims, and rules. In order to improve the process based quality management, each process has to deal with the optimum use of time and resources. As for the decision-making approach, the company appears to be more conservative, although they are still democratic. They should approach issues more carefully, and consider contextual factors because the business is widespread in various parts of the country (Racine, 2011). The company can also utilize the Crosby theory of management in its quality management system. The theory stresses on prevention of errors where quality is considered an adherence to the requirements and poor quality considered as the price that is paid for non-conformity. It calls for encouragement to the employees, commitment from the upper management, creating incentives for conforming to the standards, training given to the employees accordingly, and consistently determining the costs for quality. The company has tried to implement the ISO 9000 standards in its quality management system, though partially. There is a need that quality is incorporated deeply into the culture of the organization (Ireland, Hoskisson & Hitt, 2008).

Conclusion

The company has made a tremendous step in the implementation of ISO 9000 standards in its quality management standards. The company enforces its suppliers to comply with the quality standards that have been clearly stipulated. They are obliged to comply with the code of conduct (IWAY) that has been designed to evaluate and check the regulation of the suppliers. The company uses the Total Quality Management principles, which is part of its quality management system. There is also the process elimination of wastes that is evident in the manufacturing process. IKEA has attempted to understand both the current and the future needs of the customers and is striving very much to meet the requirements of the customers and exceed their expectations in terms of quality. To some extent, the company has succeeded, considering the market that it enjoys. The leadership styles of the company have been able to instill excellence when it comes to quality because the feedback from the stakeholders counts. As such, everyone in the organization is responsible for quality. The company has tried to manage the activities more efficiently by approaching some of these functions and the related resources as a process. The relationship with the suppliers has also been strengthened, hence leading to centralized supply chain planning in which standardization, integration and specialization are achieved. Going by the principles stipulated by ISO 9000 namely customer focus, leadership, engagement of people, process approach, continues improvement, and evidence-based decision-making, it suffices to say that IKEA has made a step in upholding ISO 9000 standards in its quality management systems. As such, the company only needs to reinforce most of these aspects in a bid to incorporate them in the quality management system as well as the organizational culture.

 

References

Bengtsson, S. (2008). Designers of Ikea. Stockholm: Arvinius.

Buttle, F. (2009). Customer relationship management: concepts and technologies. Routledge.

Dahlvig, A. (2012). The IKEA Edge: Building Global Growth and social good at the world’s most iconic home store. New York: McGraw-Hill.

Enquist, B., Edvardsson, B., & Petros Sebhatu, S. (2007). Values-based service quality for sustainable business. Managing Service Quality: An International Journal, 17(4), 385-403.

Ferrell, O. C., & Hartline, M. D. (2011). Marketing strategy. Australia: South-Western Cengage Learning.

Hoyle, D. (2001). ISO 9000: quality systems handbook.

Ireland, R. D., Hoskisson, R. E., & Hitt, M. A. (2008). Understanding business strategy: Concepts and cases. Mason, OH: South-Western Cengage Learning.

Jones, P., & Robinson, P. (2012). Operations management. Oxford University Press.

Racine, J.-L. (2011). Harnessing quality for global competitiveness in Eastern Europe and Central Asia. Washington, DC: World Bank.

Stadtler, H. (2015). Supply chain management: An overview. In Supply chain management and advanced planning (pp. 3-28). Springer Berlin Heidelberg.

Tarnovskaya, V., Ghauri, P. N., & Elg, U. (2007, November). Market driving supplier strategy: IKEA’s global sourcing network in two developing markets. In Proceedings of the International Conference “Novye napravleniya razvitiya marketinga: vzaimodeystviya i partneskie otnosheniya”[New directions of marketing development: interactions and partner relations], Moscow, Russia.

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