IKEA Value Chain Analysis
IKEA value chain analysis is not just the name of mere evaluation of general activities. Rather, it focuses on customer satisfaction by improving the procedural creation of goods through user feedback and many other factors.
1. Lead-in
Being a well-established and massive home-furnishing corporation, IKEA has multiple activities in progress simultaneously. It uses an IKEA value chain analysis report to keep track of the procedures and evaluate their consequences. As a typical individual, you may ask what is a value chain analysis? The term chain analysis refers to assessing ongoing activities inside a corporation for better judgment. Its primary aim is to work on the improvement of company processes to minimize customer-related problems.
In general, the IKEA Value Chain (Analysis) is a perfectly beneficial analytic approach for customers and corporation management. It can help reduce the overall cost of goods produced, delivering exceptional value at minimum costs. Besides that, a better analysis of resources, management, and production can help you create a differentiated product. The above two traits of your product can help it stand out in the crowd of contenders and result in your life-longing business success. The above operations depict how important value chain analysis is. To understand it better, we'll discuss an example of the IKEA value chain to clarify the concept for you.
2. Background of Toyota
The home furnishing furniture brand has been on the market since 1943. As for its abbreviated name, it comes from the initials of its founder, Ingvar Kamprad. He started the firm at the age of 17 in southern Sweden. At this instant, the company works under the president and CEO Jesper Brodin.
The company's first functional and official store came into existence in 1963 in Norway. In 1965 IKEA launched its flagship store, which was the largest working furniture service store of that time. All the work started from a child entrepreneur is now spreading and reached one million employees around the globe. According to statistics, IKEA's revenue crossed the 41.9 billion EUR mark in 2021.
3. Toyota Value Chain Analysis
There is no better way to know what is value chain analysis other than its judgmental example. However, the analytic report must be from an ideal firm that used its concepts for improvement to perfection. IKEA is one of the firms that used its ideal analysis charts to improve throughout the decades and provide extreme value to the users. It is not just adding up the activities and keeping track but much more. It is the name of listing customers' satisfactory needs and strategies to fulfill them.
Like any other value chart analysis, the IKEA analytic report also has two different types of activities. We'll discuss both of them in detail below.
Primary Activities
These activities directly relate to the production, maintenance, sale, and after-sale service of a product. Long story short, these activities are essential for designing, improving, and inspiring to sell the appropriate product to the specific customer. It includes five sub-classes.
- 1.Inbound Logistics
- 2.Operation
- 3.Outbound Logistics
- 4.Marketing And Sales
- 5.Service
Inbound Logistics
IKEA has 1220 suppliers in 55 countries worldwide. These suppliers need raw materials for goods production. Inbound logistics deals with the purchasing of these materials. The majority of the component's suppliers are externally located all around the globe. It has 31 trading offices in 26 diverse countries that provide raw materials. China comes at the top with a 20% product purchase rate. The average relationship length of the IKEA suppliers is up to 11 years. It means that the world's largest furniture store keeps a stable supplier relationship.
Operations
This activity includes the overall creation procedure of furnished products. It starts from the initial phase of treating the raw materials up to product finishing. IKEA Value Chain (Analysis) distributes its operational activities in three separate sections.
- Finance
- Property
- Franchise
Finance being the core of the business, uses decentralized strategies to develop ideal global operating procedures. There are numerous franchises worldwide that deliver ideal furniture products in the market. The biggest one is the Ingka Group franchise which has 158,800 people working. This organizational franchise is an active member of 30 markets and controls 367 stores. As for the property, IKEA has 40 production stores in 10 countries. So, most of its produced goods contain IKEA industrial raw products. The major production unit is in the south pacific and east Asia. Therefore, IKEA saves a lot of cost through human resource payments.
Outbound Logistics
Once the product is complete, the company has two options. They either store the goods or starts shipping them to customers. Outbound logistics refer to the same two procedures of transporting and warehousing. IKEA is a big corporation running in 50 markets. For that reason, it requires a foolproof transporting and storing strategy. Besides that, the company uses a widely spread network of service centers for the task. It has 11 customer division centers and 28 general distribution centers interconnected in 16 countries. As for the transporting service, the company uses two distinct ways.
- The parcel way is for any product below 25kg. Its minimum price is $12, which can change with the central location.
- Truck delivery transports any product above the 25kg weight limit. Its price range starts from $50 and goes up according to the package.
Marketing And Sales
A good business only flourishes if it inspires enough customers to purchase the goods. Still, it isn't as easy as it seems. Therefore, IKEA uses these value analysis charts to minimize any mistakes during the marketing process.
On top of that, it helps them portray their products in the best way that tempts customers to buy. IKEA uses different means of marketing advertisement. For instance, digital media, sales promotional seminars, and events.
Service
IKEA has reliable customer service that has been resolving user-experience issues for decades. These not only answer confusing queries but also allow customers to give feedback that may result in sudden product improvement.
The company uses effective customer-service techniques like telephone helpline service, exchange, and refund through service in case of any eligible condition.
Support Activities
As the name suggests, these activities work as a helping hand in the value chain analysis of any corporation. The IKEA value chain analysis has primary and secondary activities, supporting its entire framework. We'll discuss all these below.
Firm Infrastructure
The structural hierarchy of a corporation measures its success rate. The better a management committee organizes, the better the company will perform. Considering this fact, many companies came up with the idea of an analytic report that highlights the areas of improvement within the framework. IKEA has three divisional frameworks that start from the franchise. It jumps up to the range and stops at suppliers. Furthermore, the firm has regional service stores under an individual head CEO.
Human Resources
The thing that actively impacts a corporation's performance is its customers' working attitude and skill excellency. The secret to IKEA's growth lies in its employee efficiency and satisfaction. The firm not only hires the best employees but also uses advanced training programs for employees to reach their extreme potential.
Technology Development
IKEA value chain analysis uses advanced technological improvements for operational perfection and cost-effectiveness. The company uses digitalization techniques for precise organizational procedures. Besides that, the firm is now trying to use data-driven creation to automate product manufacturing. Therefore, it will help minimize any human error during production.
Procurement
The support procurement activity might be a fancy word for you, but its function is not new. It assists the inbound logistics to actively collect and purchase the goods from a massive supplier range. Think of it as a secondary assist in the raw material purchase. IKEA has eight different business units. This activity connects them all and helps purchasing and transferring goods accessible.
4. How to Do a Value Chain Analysis in EdrawMax
Doing a value chain analysis can be difficult if you don't have an appropriate program. Putting all the information in a concise and organized way can be challenging for most. However, it is a no-brainer if you have a perfect solution in your hand. The best way to do a value chart analysis is through chart production in a hassle-free program with a user-valuing interface. EdrawMax is one of the programs that may be the solution you are looking for. With its extreme project detailing and extensive toolkit settings, it has become the top priority of experts. If it's your first time using the tool, the given steps will show you how to do a value chain analysis in EdrawMax Online.
- Step 1: First, you must have enough data to put inside the detail sections. An ideal program will be of no use if you don't know the ups and downs of your firm. So, collect every single piece of information and then download the program from its official website. Once downloaded, open it up and sign up for it using your professional or public email. Create an account, log into it and jump to the home screen.
- Step 2: Once you are at the home interface, Click "New" and "Business" to find the strategies and planning options. Find the value chain analysis layout and click on it to start editing. Besides that, you can find a customized template from the "Templates" section on the home screen.
- Step 3: Once you get your desired template on the edit screen, insert the textual information in its sections. If you are creating from scratch, add sections according to the organization. However, if you have a customizable template, drag its sections to their places.
- Step 4: Once you are done with the data induction, start editing your value chain chart to make it appealing. EdrawMax has tons of options to choose from. You can add symbols from its 26000 symbol library or create new ones as you like.
- Step 5: Once you got your design, you can either export it to storage or share it on the public cloud. Click "Save As" to export the file. However, you can click "Publish" if you want it shared in the community.
5. Key Takeaways
IKEA has been at the top of the race of furniture corporations on account of its ideal value chain. The company kept improving every year with adequate analytic reports of its activities. That is why it reached maximum potential and value supplication stage for customers.
We can say that the IKEA value chain model is an effective option for understanding everything about a chain analysis creation. Yet, portraying this model needs an appropriate visual tool that can design one the same as that. According to experts, the well-known EdrawMax is a choice you must go for. Its special basic layout and advanced template community are some of its great plus points. Don't just rely on statements; try it out yourself with just one click for free!
EdrawMax OnlineReference
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By John Dudovskiy. IKEA Value Chain Analysis, [online]. Available at: https://research-methodology.net/ikea-value-chain-analysis/.
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StudyCorgi. IKEA Supply Chain Analysis, [online] Available at: https://studycorgi.com/ikea-supply-chain-analysis/ (Accessed: 13 September 2022).
