IKEA Singapore Value Chain: Supply Chain, Kano Model, and Analysis

This report provides a comprehensive analysis of IKEA Singapore's value chain, examining its customer relationships, supplier management, and operational efficiency. The report delves into the lean supply chain processes of IKEA Singapore, highlighting how the company ensures product availability and quality. It explores the application of the Kano Model to understand customer satisfaction, differentiating between dissatisfiers, satisfiers, and delighters. The analysis covers aspects such as product quality, ease of transport and assembly, and the impact of congestion and employee communication on customer experience. Furthermore, it emphasizes IKEA Singapore's commitment to providing affordable products and creating a better life for its customers, while also addressing areas for improvement, such as addressing customer complaints and enhancing the overall shopping experience through innovative designs and services.

Running head: IKEA SINGAPORE VALUE CHAIN 1
IKEA (Singapore) Value Chain
Name
Institution

IKEA SINGAPORE VALUE CHAIN 2
Table of Figures
Figure 1.......................................................................................................................................................3
Figure 2........................................................................................................................................................4
Figure 3.......................................................................................................................................................7

IKEA SINGAPORE VALUE CHAIN 3
IKEA Singapore’s Value Chain
The Customers and Suppliers of IKEA Singapore
IKEA stores in Singapore have very efficient supply chain processes, and the backend
operations are very smooth. Being branches of the world’s largest retailer of home furnishings,
the two stores in the country -located in Alexandra and Tampines- have a supply system that is
very lean (IKEA, 2017b). Their different products, though very innovative, have followed the six
sigma principle of reducing disparity in designs and quality.
IKEA stores in Singapore hold more than ninety-five thousand products each. They are
both able to ensure that there are always products in stock regardless of how high the demand
may be. These products include; lighting and electrical appliances, furnishing products, food, and
decoration products. These products are made from materials such as; wood, metal, plastic, and
textiles. The parent company sources its products from various companies around the globe that
produce these materials. It has made it its utmost priority to cultivate sustainable relationships
with its suppliers (IKEA, 2017a). Due to the existence of good relationships between the
suppliers and the management in the main company, IKEA Singapore is in turn able to reap the
benefits by receiving high quality products for sale. This enables the company to save costs by
receiving the products at at fair prices which increases the profit margins. The management in
the stores then checks the quality of the products that come in to ensure that they are still in good
quality and are not damaged during the transportation process.

IKEA SINGAPORE VALUE CHAIN 4
Figure 1
The main company also has a code of conduct called IWAY which contains guidelines
for the suppliers to follow. On the premises of each IKEA store in Singapore, there is a
warehouse which stores the products sent from the factories. Both stores have logistics personnel
who have the duty of ensuring an efficient inflow of goods in and out of the warehouses. The
figure below shows the actions of the parent company in the process of distributing products to
stores in different countries including Singapore.

IKEA SINGAPORE VALUE CHAIN 5
Figure 2
IKEA Singapore just like the parent company has the vision of creating a better life for
all people. In this regard, it aims at providing its products at prices that are as low as possible in a
bid to make them affordable to as many people as possible. Both stores in the country, therefore,
produce a wide array of products that are easily portable by the customers to assist them in the
transportation process. The furnishings are also very easily assembled (Hissom, 2011). This is a
lean business practice because it aids the company in saving costs associated with after-sale
services such as transportation and assembly. Both stores, therefore, target all people as its
customers with more emphasis on people who do not very high incomes. Their various
customers include households for home furnishings and decorations, office staff, health centers,
and other retailers.

IKEA SINGAPORE VALUE CHAIN 6
The Application of the Kano Model in IKEA Singapore
Dissatisfiers are features of different products and services that are expected as a
minimum requirement. Providing these performance requirements in an exemplary manner does
not guarantee that the products will be successful. However, providing them poorly leads to
complaints from customers and dissatisfaction. Meeting these expectations in most instances
does not get noticed by the customers (Vargo, 2007). Customers expect IKEA Singapore
furniture to be of high quality, easily portable, and easy to assemble. In case any of these features
is not as expected, this would be a dissatisfier.
Their hospitality services are also expected to be up to their customers’ expectations. The
food is expected to be hygienically made and provided in clean utensils. The main dissatisfiers in
IKEA Singapore, therefore, are clean environments due to food production, easily portable
products that are easy to use, and fair prices that are in line with the company’s vision (IKEA,
2017a). Incidentally, a dissatisfier is evidenced in the recent past where customers in IKEA
Singapore complained because the chicken wings provided were not cooked properly. The
company however promised to correct this as soon as they can.
Satisfiers are requirements that can be provided in various ways. These requirements can
be performed in different ways hence providing different levels of customer satisfaction. If these
products or services are provided in a proper manner, they could increase the level of customer
satisfaction. However, if they are provided poorly, they are likely to lower customer satisfaction
(Karen, 2006). Satisfiers in IKEA Singapore that could influence customer satisfaction based on
how well they are performed include; congestion. The company should reduce congestion levels
that occur in the stores at different times. Some clients who are visiting the store for a specific

IKEA SINGAPORE VALUE CHAIN 7
product are forced to go through the maze to get the product which is time-consuming.
Therefore, the company should work to ensure that there are shortcuts in the maze for people
wanting specific items to help improve their customer experience (Davidson, 2011). Whenever
certain products that are required by customers are not in the stores, the company should also
ensure that they are provided in time to avoid any delays.
Moreover, because the loading docks for furniture are designed to be used by a team of
people, whenever individuals buy products alone there can be difficulty in carrying the furniture.
IKEA Singapore should, therefore, ensure that there is designated help for the customers to assist
them in the loading process (epicenter group, 2017). The ability to assemble the furniture without
incurring further costs is a very important satisfier that enables the customers to save any extra
costs they would have otherwise incurred. Finally, a very important satisfier is how well the
employees can communicate with the customers in a bid to satisfy their individual needs. Poor
communication skills may lower the quality of service due to a lack of understanding between
both parties.
Delighters are features that go far and beyond what the customers were expecting. They
are also referred to as latent requirements. They are not easily identified by customers. Whenever
delighters are absent, the customer does not get dissatisfied. They could either be products or
services that go the extra mile from what is expected (Taylor, 2017). Therefore, the main
delighters in IKEA Singapore are the innovative designs in furniture and other products. The
quality of these products is also always high. IKEA Singapore micro experience delighters
include the delicious food (excluding the chicken wings) that is very cost friendly, the design in
the form of a maze that enables buyers to have a living experience as they shop, and their

IKEA SINGAPORE VALUE CHAIN 8
playground area where parents drop their children off to play as they shop around (Cardona,
2010).
Figure 3
It is therefore paramount for IKEA Singapore to assess their processes in the provision of
goods and services to their customers to know how to ensure maximum customer satisfaction. In
doing so, they should also ensure that their processes are lean and possess the six sigma
principles. They should, therefore, be aware of the dissatisfiers, satisfiers, and the delighters to
be able to see where the process of provision of goods and services may be falling short and
correct accordingly.

IKEA SINGAPORE VALUE CHAIN 9
References
Cardona, J. P. (2010). Methods To Measure Customer Value for the New Product. Politecnico
Di Milano, 1–142.
Davidson, C. (2011). The good and the gratis - A value aspect on free goods and services.
Epicenter group. (2017). Understanding Your Customers with the Kano Analysis, 12(3).
Hissom, A. (2011). focus on customers.
IKEA. (2017a). Home furnishings, kitchens, appliances, sofas, beds, mattresses - IKEA.
Retrieved September 30, 2017, from http://www.ikea.com/us/en/
IKEA. (2017b). Your chance to relax into greatness - IKEA. Retrieved September 30, 2017,
from http://www.ikea.com/gb/en/ikea/campaigns/ikea-home-furnishing-festival/
Karen, K. (2006). Service Satisfiers and Dissatisfiers Among Malaysian Consumers.
Australasian Marketing Journal (AMJ), 14(1), 79–92. https://doi.org/10.1016/S1441-
3582(06)70054-4
Taylor, C. (2017). Categorizing Service Features Using The Kano Model. Retrieved September
30, 2017, from https://service.asu.edu/blog/categorizing-service-features-using-kano-model
Vargo, S. L. (2007). Satisfiers, Dissatisfiers, Criticals, and Neutrals: A Review of Their Relative
Effects on Customer (Dis)Satisfaction.