6 years, 11 months ago

Operational excellence in the self-serve warehouse of IKEA

The life of a process consultant results in experiencing some ordinary shopping-situations through a different lens. In this blog I share my personal experience when buying a Pax wardrobe at IKEA and how I think the process in the self-serve warehouse of IKEA can even be improved a little bit from the perspective of operational excellence.

Since I left my childhood home, I have regularly visited IKEA to buy furniture or home accessories. I find it an intriguing concept: easy to (dis)assemble furniture with a decent price and a good look and feel; what more does the customer need? Every time I am at IKEA, I am amazed how IKEA has organized its business (model): large showrooms with a homely atmosphere, every conceivable piece of furniture and a lot of impulse purchases placed near the end of the walkway throughout the showroom. I think the most fascinating part is at the end of the walkway towards the exit. Aside from the cheap and amazing ice creams and hotdogs (which makes IKEA a convenient place-to-take-your-kids-with-you), customers collect their own products in the self-serve warehouse, and take them to the check-out for purchase. In this way, the customer fulfills the role of a costless employee in the logistics warehouse process!

My self-serve warehouse puzzle

You pick things up yourselfLast weekend I was at IKEA to buy a Pax wardrobe which I think is one of IKEAs most popular pieces of furniture. IKEA allows you to fully customize your own Pax wardrobe; the amount and types of cabinet elements, shelves, drawers and hinges. You can imagine the amount of effort and intelligence this requires from the procurement and inventory policy, since each ordered Pax wardrobe consists of different elements. But when picking the articles for my wardrobe in the self-serve warehouse, the costless employee (in the form of myself) was a bit puzzled. My own composed Pax wardrobe had four doors and each of the doors required four hinges (so 4 x 4 = 16 hinges). But based on my picking list which was created by one of the IKEA employee based on my input I was supposed to collect six bags each consisting of three hinges (6 x 3 = 18 hinges). So my direct response was; what went wrong?!

I explained my concerns to a friendly IKEA employee, who also didnt understand my picking list at first sight. When he joined me in visiting the shelf he found the answer: because the four-pack bags of hinges were out of stock, the system automatically referred me to the shelf with three-pack bags of hinges. In itself I found this quite a brilliant business rule set in IKEAs inventory system. Although I would have two redundant hinges; for most IKEA customers it is worth to buy two extra hinges instead of coming back later when the four-packs are in stock again. So in this way this solution is really customer focused!

From excellent to even more excellent

Thinking about this experience in a bit more detail I thought that IKEAs self-serve warehouse process could easily be improved in order to make the process even more customer focused. From a process point of view I would suggest:

  • Assuming that these kind of out-of-stock situations will always occur, mentioning such an automatic referral by the inventory system on the customers picking list would be even more customer focused. By explicitly mentioning such an automatic referral to the three-pack bags of hinges, the customer is no longer confused on why he has to pick up two redundant hinges. From a customer perspective this would be an improvement compared to just referring the customer to another product when the initial product is out of stock! Or leave the choice to the customer; when the customer decides to come back later for the four-pack bags of hinges, this is a new opportunity to provide the customer the ultimate IKEA-experience!
  • IKEABy preventing the occurrence of confused customers that consult IKEA employees, employee time and costs can be saved and the process of self-serving customers can be even more efficient (and prices of furniture can remain low). Of course this depends on the number of times such an above mentioned out-of-stock situation occurs, but I hope you get what I mean.

So in this way I think that such a small improvement (by just printing a few words of explanation on the customers picking list) can easily contribute to the self-serve process in IKEAs warehouse. It brings advantages to both the customer and the internal operations of IKEA. And that is what operational excellence is about: improving organizational processes in order to deliver optimal customer value!