The story about the IKEA value chain
This is a story about the integrated IKEA value chain. But first, what’s a value chain and what does it mean when we say that it’s integrated? Let’s find out!
If you could boil IKEA into a broth, you’d end up with 10 words at the bottom of the pan. “To create a better everyday life for the many people.” That’s our vision, and we try to fulfil it through a wide range of well-designed, functional home furnishing products at prices so low that as many people as possible can afford them.
One of the cornerstones of IKEA is a never-ending curiosity. Since the 70’s, we’ve made thousands of home visits to figure out how people live. It would’ve been more convenient to sit in a warm office in Älmhult and guess, but that’s not us. So, we knock on doors, chat to people, look through cabinets, drawers, and boxes – always looking for a better understanding of what life at home really looks like. Then we use that knowledge to figure out products that make a difference.
Product development
The IKEA value chain works around the clock, across the planet. That’s why finding clever ways for products and components to get from one end of the value chain to our customers’ home is so important.
Democratic Design helps us create products with the almost impossible combination of form, function, quality, sustainability, and a low price. All five are important, and how we balance them depends on the job that the product has in our range. It may sound strange, but the first thing we design is the price tag. Because ultimately, the low price serves as the welcome committee of IKEA. To arrive at a low price, we strive for low costs in everything we do.
Democratic design only works when we work together. Designers, engineers, product developers, sourcing specialist, well, everyone.
Raw materials
It almost feels unreal to think that IKEA started out as a one-person company. Today, our co-workers could populate a large city. With that scale comes the opportunity to work with many people, partners and suppliers across the IKEA value chain.
Materials used in IKEA products account for the largest share of the IKEA climate footprint. That is why we focus on developing and exploring new materials, while making informed material choices throughout the design process.
We work to integrate environmental and social considerations across our business, from product development and sourcing to production and retail. We focus on increasing the use of renewable and recycled materials in our products and on reducing greenhouse gas emissions across the IKEA value chain.
Production and development
Our suppliers are part of the gang, too. In many cases they become long-term partners, not only supplying IKEA with products, but also new ideas and knowledge. It’s a genuine partnership and quite often the product design and production method are perfected on the factory floor. Sometimes it even starts there! What do we already have and can we use that in a new way?
We have the ambition to influence every little part in our value chain to the better. We believe that taking responsibility is a privilege. IWAY, which is the IKEA supplier code of conduct, help us to make sure that we practice what we preach. IWAY is a set of very clear rules that regulates every little thing from environmental, social and working conditions to animal welfare. It’s about doing the right thing – together.
Logistics and transportation
Logistics and efficient transportation have always played an important role at IKEA. The flatpack, that first saw the light of day in 1952, was the start of the modern, rebellious IKEA. Funnily enough, the flatpack still says a lot about who we are. We genuinely dislike wasting resources by transporting air, which is why efficient packaging is part of our design process, and not an afterthought. A product that comes in a flatpack is beautiful in so many ways. It costs less because you assemble it yourself, it’s well-protected and it’s been transported in the most efficient way possible.
Meeting the customer
Shopping at IKEA used to be synonymous with going to a big blue box on the outskirts of town. Today, the blue box is just one of many places where our customers meet us. Our ambition is to always be close to where people find it convenient to meet us.
In the mid 80’s, our founder Ingvar Kamprad decided that IKEA should be operated in a franchise system. IKEA is one brand, but if you look under the hood, you’ll find many different companies with different owners, working together in the integrated value chain. We are more than 215.000 co-workers, sharing the same vision, culture and values. Together with our partners, we connect millions of people daily.
Speaking of togetherness, if we had a superpower, it would probably be that we do things together. We grow, fail and learn together. That is our value chain, and why we believe it is quite unique.