IMPROVING IKEA’S ORDER COMPLETION PROCESS
Executive Summary
IKEA is a large global company that deals in home furniture products shipped to different countries across the world. The customer feedback concerning this company based in Sweden indicate that various customers especiallty those that order their products online have been complaining about untimely delivery of products and unsatisfactory customer service. These issues if not addressed promptly can affect the sales of the company as its competitive position in the market negatively. In addition, the problems can lead to huge long-term costs in terms of repairing the damage imposed on the customer and the company as well in terms of reputation. This paper illustrates how an error proofing strategy can be utilized to solve the problem of delays in the order completion process.
Introduction
Logistics management is an important aspect of the environment of international trade. It involves the process of distribution and materials management (Liu & Hou, 2011). Currently, the most profound trends in logistics management include reducing costs, shorter lead time, cross-docking and, direct delivery. It is important that organizations and companies across the world are keen on logistics management since customers place great attention on receiving the products they have ordered within the anticipated time rather than how the company fulfills the order. One of the ways to reduce delays and improve customer satisfaction is by improving the order completion process. Currently, there are many ways of order completion, however, inconsistencies in the supply chain of organizations is still a major concern to be addressed for companies to reduce the number of complaints from customers as well as improve customer’s overall satisfaction. This paper intends to shed light on the order completion process in IKEA, a global home furnishing retailer having over 355 stores within 29 nations across the world.
Problem Statement
The order completion process of IKEA needs to be improved. The company is facing issues such as global competition and customer dissatisfaction hence they need to address the problem facing them now. Currently, the company has a warehouse situated in its premises where there is a key showroom floor where customers can look through items they intend to buy and purchase the product before taking them home (Larson 1996, p.4). It also uses low-flow and high-flow facilities where the company stores its products before they are shipped to customers across the world. Over the years, however, they have been concerns on late delivery and damaged items upon delivery. Winter (2013, p.1) indicates that IKEA ignores to disclose itself to its customers’ idiosyncrasies. Such idiosyncrasies can be observed in the case of Winter and her husband ordering a book case from the company. The process began on June 7 when they purchased the bookcase, later on, June 13 they received an email from the company indicating that their order had departed from the company’s distribution center. Later on June 16, they got an email from UX Logistics indicating that their order was ready to deliver and also an email from IKEA indicating that their order was ready to be delivered. The email from IKEA also indicated that they would get a call in two to three days for scheduling their date of delivery. On June 17, the UX Logistics company confirmed that Winter’s delivery was scheduled for June 21 and later in the day they confirmed that Winter’s delivery was scheduled for June 26. Several days later Winter’s husband would have to call UX logistics who told him that they could not deliver the item since their item had not arrived at the company. Upon enquiring from IKEA, the company would tell them that UX logistics had their item and that they ought to call UX logistics to enquire why they were not delivering the item. These delays made them request the company to cancel their order and instead get the order from the store themselves which IKEA indicated that it would be impossible since the item had already been delivered to UX Logistics.
Analysis
Thousand of products need to be handled every day in IKEA. According to Liu & Hou, (2011,p.32), every distribution center has about a thousand employees and the overall time for work s eighteen hours daily for handling 12,000 m3 of the goods of the company. As such, the company has a demanding task of moving the products efficiently as well as ensuring that the products sought by the customer are always available. Some of the areas that require work in logistics include receiving and replenishment, regulating stock and management among others. The purpose of receiving and replenishment is recording and monitoring orders, checking the notices of delivery and redesigning the locations of overstock. Also, IKEA has not been replenishing during the day since it has a large adequate bin to cover all sales for a single day.
IKEA has two options of delivery that include small and large item delivery. The delivery of small items such as picture frames, hangers, and small textiles. These items can be shipped at £9.95- £19.95 (depends on the order size) usually through a standard carrier like FedEx in a similar way to other purchases done online (IKEA 2019, p.1). The delivery of large items, on the other hand, needs greater coordination and is done through the delivery services of third parties who handle the delivery. The delivery services get the items to the customer as flat packed. In addition, they partner with Task rabbit to assist customers who need assembly services.
Usually, the orders placed in the store are delivered the following day if one places an order within their local store. For orders placed online the customers just add the selected products to their shopping bag and the item is delivered to them directly within a few days whereby the earliest date of delivery is usually displayed after calculating the delivery to the customer’s postcode. As IKEA (2019, p.1) indicates, the company aims at fulfilling these orders in 14days which depends on the availability of the stock as well as the location of the customer.
Customers such as Winter will always feel dissatisfied with the service of IKEA and may end up not purchasing another product from them. Recently, a post in the Guardian highlights a complaint on a similar issue of late delivery. The customer wanted to surprise their sixteen-year-old daughter with certain furniture in her bedroom (Smithers 2018, p.1). The order was to be delivered four days early enough to enable the customer to assemble the furniture before the daughter’s birthday. However, 24 hours before the due delivery, the customer got a text indicating that the company had rescheduled the delivery to a different date which puzzled the customer. The situation was inconvenient for the customer because they had taken the week off to be available for their daughter, Also at the moment, eighty to ninety percent of the items were still available in their store which raises questions why the company could not have delivered the items available in stock and later deliver the remaining ones later. Other related complaints include goods arriving damaged or some of the goods or parts missing in the final delivery ((ModerNash Furniture Supply Co n.d, p.1). More importantly, customers are concerned with nonexistent online customer service (customers have to wait for up to two hours to talk with a customer service representative).
Achieving the best quality levels in terms of organizational processes and products as well as minimize costs organizations ought to minimize errors and avoid defects. Defects and errors cause high costs in a lot of industries in terms of rework, wasted production as well as more scrap (Okechukwu et al., 2015, p.1). Minimizing or removing errors within a process can be accomplished through either adding addition detection controls (for instance special tools or additional inspections) or by employing preventive controls.
In light of that, IKEA ought to address these issues and inconsistency if they are to survive in the market through ensuring customer satisfaction besides having to explain to their customer about postponing the delays in shipping that happen. The proposed method to avoid delays and damaged products delivered to customers is applying the technique of Six Sigma also known as Poka-Yoke or Mistake proofing (Tommelein 2008, p.1). It entails eradicating or considerably reducing the chance of an error or alternatively making the error apparent such that permitting it to reach the customer is hard. Implementation of error proofing can minimize or remove risk in a certain process through identifying failures at their source before additional processing which is expensive proceeds (Quality-One International 2015,p.1). By improving the order completion process IKEA can increase the loyalty of customers, despite them currently believing in the value they get from the company’s products, consequently having a positive impact on the company in general.
There are two types of corrective action with the use of the error/mistake proofing. The first type of corrective action involves reducing the condition of error from ever happening again which is usually the key intent of this technique (Hull 2010, p.60). The second type of corrective action is detecting the occurrence of an error and discontinuing the process to ensure that the defect does not continue. Besides IKEA should instill other measures to address the problems of late deliveries, damaged delivered items, trouble in acquiring a refund as well as poor communication with its customers.
Development Plan
According to Wang and Disney (2016, p.700), additional lead time translates to more inventory, the longer cycle of cash conversion and opposes the lean manufacturing direction. The mistake-proofing method in Six Sigma can be utilized to bar or detect mistakes in the order completion process. It is important to mention that implementing the mistake-proofing method can lead to significant costs in its implementation for instance through poor workmanship or poor design of process (Sadri and Ghavam 2011, p.281). The cost can be however offset in the output’s long-term performance and stability. If the method is well implemented then it can assist to minimize the variation and move the median (or mean) in the required direction. As such, it is crucial to for the company’s or organization’s team to balance acquiring the most effective method while being economical and practical. Below is an elaboration of how the mistake-proofing method can be utilized to minimize delays in the order completion process.
The following is a list of steps that usually happen in the order completion process at IKEA:
- IKEA collects the order from customers
- The employees check on the availability of the item with the supplier. The ordered items are then processed if they are available in the stores. The order is altered or ordered from a different manufacturer leading in delays if the order is not available.
- IKEA sends a confirmation to the customer and date for delivery is organized.
The figure below is the process map for the order completion process.
The error proofing method can be applied in the above process by ensuring that the correct order has been placed by the customer and also to ensure that the suppliers confirm on having received the delivery from IKEA awaiting shipping to the customer.
The following diagram, on the other hand, shows the order completion process after the improvement changes suggested in this paper;
The process is outlined below
- IKEA collects the order from the customers
- The employees check on the availability of the item with the supplier. The ordered items are then processed if they are available in the stores. The order is altered or ordered from a different manufacturer leading in delays if the order is not available.
- The customer verifies with the company to ensure that the correct order was placed and if the order placed was wrong then the order is adjusted at this point.
- The customer verifies the order and IKEA sends them a confirmation letter after the customer’s approval. The order is altered upon disapproval of the customer.
- IKEA reconfirms with the supplier about the delivery and condition of the product. Subsequently, the delivery is scheduled to take at a certain date upon which it is completed. In the case that the supplier does not confirm the order, IKEA has to enquire from the customer if they wish to change their order. If they chose to change their order then a fresh order is arranged and the entire cycle commences again.
- The product is delivered to the customer and customer can communicate easily with the customer representatives if the items received are damaged or in the case, there are missing part or items.
Implementation of the Error proofing Method
The management in IKEA ought to be willing to dedicate support and resources for a successful implementation of the error proofing strategy proposed. The employees also ough to get coaching and training to know how they can execute the proposed changes as shown in the process map. Besides, it is crucial to equip them with the skills and tools needed to do the job accurately.
The initial step when implementing the strategy would be to establish a cross-functional team to oversee the process. This team ought to comprise of quality technicians and supervisors who will handle technical issues that may arise along the implementation process. These team members should get the suitable training that can assist them to familiarize with methods of error proofing as well as have adequate information on the process that includes the history of errors and defects happening at every step of the process. In addition, they should get a copy of a current flow diagram of the process and evaluate every step in this process.
It is also essential that the team in the implementation process identifies the likely risks and errors that could likely arise in the process of implementing the strategy. In light of that, they should aim at identifying the points as well as the time when the errors are likely to happen. The PFMEA (Process Failure Mode and Effects Analysis) can assist to identify risks within the process as well as in prioritizing the errors that can likely occur in the process (Quality-One International 2015, p.1). In case, there are any errors that will likely happen in the process suggested in the process then the team ought to brainstorm on the likely methods it can utilize if the errors happen. As such, they can abridge the step through simplifying the right action to execute in place of the error. Also, they can opt to remove the step by evaluating whether the step is needed and whether it adds value to the process. In the case that it is impossible to remove or simplify the step then the team can choose the suitable method or device to use in the operation. Subsequently, they ought to evaluate the effectiveness of this method as well as monitor for adjustments that can be made in terms of reduction in errors and efficiency. It is also essential to mention that the team should continually evaluate the processes as well as identify ways of preventing errors that could lead to defects or delays until the proposed process is woven to the culture of the organization. Steady continuous adjustments ought to be part of their everyday routine.
It is also important to mention that the error proofing method can be utilized with other strategies for it to be more efficient as well as achieve better results. One of these strategies is to introduce a regime of training to assist in reducing defects that emanate from late delivery. Drivers ought to know about the departure time and the length of time required to deliver a product to a certain address. The factors that drivers ought to be versant with include road works, bad weather, and traffic (White and Grenzeback 2007, p.1). The company should also introduce a strong competitive environment among the company’ drivers by issuing out incentives and awards. Such awards can improve the motivation of the drivers as well as increase their awareness and commitment consequently leading to better outcomes with regards to accurate delivery times in the process of delivering the products. In addition, the late deliveries do not merely emanate from IKEA’s companies but rather from different manufacturing companies where IKEA has placed the order. Some of the products that IKEA orders from these companies may take a longer time than anticipated. To address such inconsistencies the company ought to impose a penalty on companies that are late on their delivery to ensure that they put great effort to meet the deadlines consequently minimizing the number of late deliveries.
In addition, the company also ought to deal with the problem of damaged goods and poor communication that happens in the order completion process. The customers ought to have full knowledge of the rules and regulations concerning refunds. It can be achieved by issuing a formal statement that everybody can access. In addition, the employees should not waver to serve the customers that qualify for refunds. The employees also ought to receive training on how they can handle angry customers to prevent negative feedbacks as well as improve the general satisfaction of the services of the company. Furthermore, the company should introduce a fresh system of communication among the departments to ease transferring calls among the representatives in different departments. Such a move can reduce the wait time of customers. In addition, it is essential that the employees are trained on processing deliveries as well as dealing with dissatisfied customers.
Conclusion
Different reasons can explain delays in shipping and ultimately delivering products to consumers. Such reasons may be the supply of raw materials, production errors, inefficient shipping system, or right schedules of production. In the case discussed above the delays in delivering products to consumers in a timely manner are primarily caused by poor communication between the third-party suppliers and the company itself. Other causes could emanate from slow transportation and a low number of warehouses. To address the challenge of the communication with the third party suppliers and minimize delays such as those elaborated by the customers discussed in this paper, the implementation of as error proofing strategy has been suggested. However, an effective team provided with the right training should be set up to review the process and seek out for the errors that may likely happen in the process. More so, refining the process ought to be part of IKEA’s organizational culture. I
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