The Truth about IKEA

increased to cater for

The familiar quotation by Ingvar that ‘simplicity is a virtue’ is central to the success story. Only mediocre people propose complicated solutions, he preaches. With this approach I shall also consider the IKEA phenomenon.

IKEA’s factory group, Swedwood AB, had originally brought forward the ambitious idea of making sawmills and factories neighbours of the forest. They had acquired enormous areas of forest and were fine-tuning the schedule in order to implement

Try to imagine a stack of pine-or spruce logs comprising almost 200,000,000 logs. That is how immense IKEA’s need for forest raw material is per year

he forest is IKEA’s most important raw material

Today IKEA’s stores are controlled by so called Commercial Reviews which is an audit of all relevant parts of a store: furniture exhibition, market places, communication, control of costs, security, logistics. Everything is compared to best practice, i.e. the concepts

To be able to sell a coffee cup for 5 kronor you have to calculate ‘1.50 to the factory, 1.50 to IKEA and 1.50 to the tax man

, the global value chain from forest to customer

. My reply then was that a company’s competitive power was a function of its logistics

. In the company’s particular niche of Scandinavian-designed furniture at low prices