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Supplier Capacity at IKEA – Capacity planning from an outside-in perspective

Viklund, Johanna LU and Larsson, Johanna LU (2012) MTT820 20121
Engineering Logistics
Abstract
Background:IKEA has, during a long time, experienced problems with incorrect capacities registered in their system. There is no standardized way of working with registering and updating the information regarding capacity today. Therefore, the information regarding the suppliers’ capacities does not reflect the reality. Furthermore, the company does not have a clear picture of how the capacities are allocated. They have an insufficient overview of their capacities since they often are registered in different units which make them difficult to compare. If IKEA has enough capacity available but have allocated it wrongly, there is a possibility to utilize the capacities better and improve the planning process. Therefore One Supplier Capacity... (More)
Background:IKEA has, during a long time, experienced problems with incorrect capacities registered in their system. There is no standardized way of working with registering and updating the information regarding capacity today. Therefore, the information regarding the suppliers’ capacities does not reflect the reality. Furthermore, the company does not have a clear picture of how the capacities are allocated. They have an insufficient overview of their capacities since they often are registered in different units which make them difficult to compare. If IKEA has enough capacity available but have allocated it wrongly, there is a possibility to utilize the capacities better and improve the planning process. Therefore One Supplier Capacity Process has been created in order to standardize the way of working regarding supplier capacity planning.

Purpose: The purpose of this Master’s thesis is to contribute to and support the global roll-out of One Supplier Capacity Process in the Lighting Category in Trading Area Greater China as well as to evaluate and suggest improvements to the project. The thesis will contribute to the field of research in capacity planning from an outside-in perspective. The deliverables can be divided into four parts:
1. Map and analyse how IKEA is working with capacity planning today (As-Is)
2. Implement the common way of working with One Supplier Capacity Process (To-Be)
3. Evaluate and prove savings
4. Contribute to improve One Supplier Capacity Process

Method: This thesis will have some similarities with action research methodology since analysis and research has been conducted during implementation and used as a basis for decisions. Interviews have been done with the personnel at IKEA to map the current way of working with capacity planning. Embedded case studies have been used when implementing the process in terms of supplier visits. This means that both quantitative and qualitative data has been used in the project.

Delimitations: This Master’s thesis will be connected to the global roll-out of One Supplier Capacity Process in the Lighting category in Trading Area Greater China. During the project, all 23 lighting suppliers will be introduced to the concept but this thesis will only concern seven selected suppliers. The thesis will focus on operational and tactical capacity planning. The limited amount of time will affect the extent of the analysis and it will mainly be based on soft measurements.

Conclusion: The implementation of One Supplier Capacity Process has worked well, followed the original time plan and the objectives with the Master’s thesis have been fulfilled. Several savings have been found with the new way of working such as a global overview, transparency and steps toward a common way of working. Furthermore, the utilization of the capacities has been analysed and it can be concluded that IKEA’s utilization of their capacity is around 70-75%. To further improve the process it has been suggested to for example create explicit guidelines, develop the allocation tool and improve the handling of extra capacity. (Less)
Abstract (Swedish)
Bakgrund: Ikea har under en längre tid upplevt problem med felaktiga kapaciteter registrerade i deras system. Idag finns det inget gemensamt arbetssätt för att registrera och uppdatera kapacitetsinformation och därför reflekterar inte informationen i systemet leverantörernas verkliga kapaciteter. Detta gör det svårt för företaget att kunna ha en överblick över kapaciteterna och hur de är allokerade. Om företaget har tillräckligt med tillgänglig kapacitet men har allokerat den felaktigt så finns det möjlighet för bättre kapacitetsutnyttjande och en förbättrad planeringsprocess. För att standardisera kapacitetsplaneringen har man nu skapat ett globalt arbetssätt genom en process som kallas ”One Supplier Capacity Process”.

Syfte: Syftet... (More)
Bakgrund: Ikea har under en längre tid upplevt problem med felaktiga kapaciteter registrerade i deras system. Idag finns det inget gemensamt arbetssätt för att registrera och uppdatera kapacitetsinformation och därför reflekterar inte informationen i systemet leverantörernas verkliga kapaciteter. Detta gör det svårt för företaget att kunna ha en överblick över kapaciteterna och hur de är allokerade. Om företaget har tillräckligt med tillgänglig kapacitet men har allokerat den felaktigt så finns det möjlighet för bättre kapacitetsutnyttjande och en förbättrad planeringsprocess. För att standardisera kapacitetsplaneringen har man nu skapat ett globalt arbetssätt genom en process som kallas ”One Supplier Capacity Process”.

Syfte: Syftet med detta examensarbete är att bidra och hjälpa till med den globala utrullningen av ”One Supplier Capacity Process” i belysningskategorin på IKEA och hos leverantörerna relaterade till denna. Under arbetet kommer också arbetet och processen att utvärderas och förbättringsmöjligheter kommer att föreslås. Examensarbetet kommer även att bidra med studier av kapacitetsplanering från ett utifrån-och in perspektiv. Arbetet är uppdelat i fyra huvuduppgifter:
1. Kartlägga och analysera hur IKEA arbetar med kapacitetsplanering today (As-Is)
2. Implementera det gemensamma arbetssättet i enlighet med “One Supplier Capacity Process” (To-Be)
3. Utvärdera och bevisa fördelar med det nya arbetssättet
4. Bidra till att förbättra “One Supplier Capacity Process”

Metod: Detta examensarbete har inslag från aktionsforskning eftersom analyser och beslutsunderlag till företaget har gjorts under implementeringen. Intervjuer med personalen har använts för att kartlägga det nuvarande sättet att arbeta. Under implementeringen av det nya arbetssättet har en typ av fallstudier varit ett viktigt verktyg och använts i form av leverantörsbesök. Det innebär att både kvantitativ och kvalitativ data har använts under analysen.

Avgränsningar: Detta examensarbete är relaterat till implementeringen av ”One Supplier Capacity Process” i belysningskategorin i Kina. Under examensarbetet kommer alla 23 belysningsleverantörer i Kina att introduceras till konceptet men analysen kommer bara att behandla 7 utvalda leverantörer på grund av tidsbrist. Detta projekt kommer endast beröra operationell och taktisk kapacitetsplanering. Den korta tidsperioden kommer också att påverka analysen som mestadels kommer att utföras baserat på mjuka mått.

Slutsats: Implementeringen av “One Supplier Capacity Process” har fungerat bra och målen med examensarbetet har blivit uppfyllda. Flera fördelar med det nya arbetssättet har identifierats så som global överblick av kapaciteterna, transparens och steg mot ett gemensamt arbetssätt. Kapacitetsutnyttjandet har även analyserats hos 7 leverantörer och det kan konstateras att utnyttjandet ligger på 70-75%. För att förbättra och utveckla arbetsprocessen ytterligare vore det lämpligt att skapa tydliga och globala riktlinjer, vidareutveckla verktyget för allokeringen av kapaciteter samt förbättra hanteringen av extra kapaciteterna. (Less)
Please use this url to cite or link to this publication:
author
Viklund, Johanna LU and Larsson, Johanna LU
supervisor
organization
alternative title
Leverantörskapacitet på IKEA – Kapacitetsplanering från ett utifrån-och in perspektiv
course
MTT820 20121
year
type
M1 - University Diploma
subject
keywords
Capacity Planning, Supplier Capacity, Process implementation, Process evaluation, Kapacitetsplanering, Leverantörskapacitet, Process implementering, Process utvärdering
other publication id
5735
language
English
id
3512838
date added to LUP
2013-02-19 11:13:01
date last changed
2013-02-19 11:13:01
@misc{3512838,
  abstract     = {Background:IKEA has, during a long time, experienced problems with incorrect capacities registered in their system. There is no standardized way of working with registering and updating the information regarding capacity today. Therefore, the information regarding the suppliers’ capacities does not reflect the reality. Furthermore, the company does not have a clear picture of how the capacities are allocated. They have an insufficient overview of their capacities since they often are registered in different units which make them difficult to compare. If IKEA has enough capacity available but have allocated it wrongly, there is a possibility to utilize the capacities better and improve the planning process. Therefore One Supplier Capacity Process has been created in order to standardize the way of working regarding supplier capacity planning.

Purpose: The purpose of this Master’s thesis is to contribute to and support the global roll-out of One Supplier Capacity Process in the Lighting Category in Trading Area Greater China as well as to evaluate and suggest improvements to the project. The thesis will contribute to the field of research in capacity planning from an outside-in perspective. The deliverables can be divided into four parts:
1. Map and analyse how IKEA is working with capacity planning today (As-Is)
2. Implement the common way of working with One Supplier Capacity Process (To-Be)
3. Evaluate and prove savings
4. Contribute to improve One Supplier Capacity Process

Method: This thesis will have some similarities with action research methodology since analysis and research has been conducted during implementation and used as a basis for decisions. Interviews have been done with the personnel at IKEA to map the current way of working with capacity planning. Embedded case studies have been used when implementing the process in terms of supplier visits. This means that both quantitative and qualitative data has been used in the project.

Delimitations: This Master’s thesis will be connected to the global roll-out of One Supplier Capacity Process in the Lighting category in Trading Area Greater China. During the project, all 23 lighting suppliers will be introduced to the concept but this thesis will only concern seven selected suppliers. The thesis will focus on operational and tactical capacity planning. The limited amount of time will affect the extent of the analysis and it will mainly be based on soft measurements.

Conclusion: The implementation of One Supplier Capacity Process has worked well, followed the original time plan and the objectives with the Master’s thesis have been fulfilled. Several savings have been found with the new way of working such as a global overview, transparency and steps toward a common way of working. Furthermore, the utilization of the capacities has been analysed and it can be concluded that IKEA’s utilization of their capacity is around 70-75%. To further improve the process it has been suggested to for example create explicit guidelines, develop the allocation tool and improve the handling of extra capacity.},
  author       = {Viklund, Johanna and Larsson, Johanna},
  keyword      = {Capacity Planning,Supplier Capacity,Process implementation,Process evaluation,Kapacitetsplanering,Leverantörskapacitet,Process implementering,Process utvärdering},
  language     = {eng},
  note         = {Student Paper},
  title        = {Supplier Capacity at IKEA – Capacity planning from an outside-in perspective},
  year         = {2012},
}