Economic Observer Reporter Zheng Jiexin On the assembly line, pillows and mattresses are being intensively produced one by one, and undergo processes such as pressing, metal testing, and combustion testing in different laboratories before being transported to IKEA. This scene hap

Economic Observer Reporter Zheng Jiexin On the assembly line, pillows and mattresses are being intensively produced, and undergo processes such as pressing, metal testing, and combustion testing in different laboratories before being shipped to IKEA.

This scene happened at Shengnuo Group (1418.HK) located in Jiashan County, Jiaxing City, Zhejiang Province. On September 17, the reporter walked into the Shengnuo Group factory.

This 19-year-old company is a manufacturer of IKEA memory foam bedding and comfort products. Since cooperating with IKEA in 2015, it has not only gradually developed into an innovative supplier of IKEA, but also jointly developed gel cooling mattresses with IKEA. It has also completed the re-planning of the workshop and greatly increased its production capacity.

In fiscal year 2018, IKEA’s purchases from China accounted for 28% of IKEA’s total global purchases. Its supply chain system ensures the supply of goods in IKEA stores, and the stores will reflect consumer demand into the supply chain and produce products that are more in line with market demand.

IKEA China's retail sales in fiscal year 2018 (September 1, 2017 to August 31, 2018) were 15.5 billion yuan. This company is paying more and more attention to the Chinese market and continues to increase investment.

supplier and IKEA

Shengnuo Group is a Hong Kong listed company with a total revenue of nearly 3.8 billion yuan in 2018. The group is mainly engaged in manufacturing and selling household products, polyurethane foam and other businesses.

IKEA has a strict set of screening standards for suppliers, including a set of detailed quality control and evaluation standards for suppliers' products and production processes. This is called the "I-WAY" code of conduct within IKEA, that is, IKEA Code of Conduct for Procurement of Goods, Materials and Services. IWAY examines suppliers' social, environmental and working conditions and other aspects. It is a prerequisite for suppliers to do business with IKEA.

In fiscal year 2015, Shengnuo Group passed IKEA's evaluation of new suppliers and officially became its supplier, starting to supply IKEA in May. Lin Zhifan, chairman of

Shengnuo Group, told reporters that he encountered many difficulties in the process of cooperating with IKEA. After all, when cooperating with a world-class company like IKEA, it requires world-class things. “At the beginning, "There is a big controversy within our board of directors. The point of controversy is whether to cooperate with IKEA, because the relative profit is very low. What can we get through cooperation?"

Lin Zhifan believes that for enterprises to develop and grow, they cannot only focus on the short term. If the group starts to cooperate with the world's top manufacturers, it means that it must promote the optimization of internal management. This action is promoted spontaneously from within the company, and the process is slow. After discussion, Shengnuo Group made a major decision, that is, no matter how big the investment is, this matter must be done and done well.

IKEA said that when it first cooperated with Shengnuo Group, it found that Shengnuo Group’s factory area spreads over a large area, and different links in mattress production are distributed in different areas, which directly increases the internal transportation in the mattress production process. Logistics costs.

IKEA began to communicate with Shengnuo Group on these issues.

Shengnuo Group also began to realize that the factory has many turnover areas and the production process is relatively scattered. IKEA decided to provide talent assistance to Shengnuo Group, and IKEA's lean production experts will guide the process. The steps guided by

include sponge cutting and final packaging, etc., with the intention of shortening the entire production process of Shengnuo Group, integrating Shengnuo Group's resources, and optimizing the production process. Statistics from

show that after the transformation, the production capacity of mattress covers of Shengnuo Group increased by about 50%.

IKEA also brought a production management system to Shengnuo Group. The system automatically collects data on the production line and monitors the defective rate, so that improvements in production can be based on evidence.

Through the listing project, the two-shift production system of the Shengnuo Group factory was successfully changed to a one-shift production system, and the work efficiency of workers was improved.

Shengnuo Group said that cooperation with IKEA can obtain long-term and stable orders to promote profit and business growth. The most critical point is that it can achieve knowledge transfer and reintegration and optimization of the supply chain. IKEA will also share information in the process. Customer needs, industry references for new technological practices, etc., we will jointly explore some leading concepts and find innovative solutions in production and products.

Lin Zhifan said, “After long-term efforts and cooperation with IKEA, we have simplified and transformed the factory process step by step to make it more efficient, and also updated the concept of factory operation and management. I think this is the most valuable part of cooperation with IKEA. ”

In addition to helping suppliers lean production and guiding corporate strategies, IKEA also actively promotes suppliers to improve product quality. Zhang Dan, manager of the IKEA China Testing and Training Center, introduced in her sharing that the center she works for is the first self-owned center set up by IKEA outside its headquarters in Ålmhult, Sweden, that integrates product testing, supplier and employee training. All-in-one laboratory. In addition to providing testing services in various fields such as cardboard packaging materials, furniture, textiles, toys, curtains, leather, and food contact materials, the center is also responsible for monitoring product quality and cost control. In addition, we will also provide suggestions for supplier quality control.

How does the IKEA China Testing and Training Center ensure product quality? Zhang Dan gives an example. Just an ordinary spring mattress product needs to undergo more than 200 tests before reaching the consumer terminal, including multi-dimensional tests on physical and mechanical properties, combustion performance, formaldehyde, volatile organic compounds, odor, etc. .

IKEA China Testing and Training Center issues more than 60,000 test reports every year, and the number of tests reaches 200,000. Today, the testing business has become globalized, with 95% of the business coming from the Asia-Pacific region and 5% from Europe and the Americas. It provides testing services to about 1,600 suppliers every year, 68% of which are suppliers in China.

IKEA's supply chain logic

IKEA is divided into two major groups, Intelligent IKEA Group and Ingka Group. Inter IKEA Group is responsible for product design, procurement, production and logistics; Ingka IKEA Group is responsible for retail and shopping malls. The advantage of this split is that Ingka Group can serve consumers more attentively. The architecture of

has only changed in recent years.

IKEA was founded in Sweden in 1943. IKEA founder Ingvar Kamprad donated IKEA to the Stichting INGKAFoundation in the Netherlands in 1982. A complex system of funds, trusts and holding companies was established.

The IKEA system is mainly operated by two relatively independent companies with different management and owners. One is "The Ingka Group" (The Ingka Group, including INGKA Holding B.V. and its controlled entities), which is responsible for operating business, and is owned by the Stettin Ingka Foundation. The other is "The Ingka Group" which is responsible for providing franchise licenses. "InterIKEA Group" (InterIKEA Group, including InterIKEA Holding B.V. and its controlled entities), is owned by the Interogo Foundation in Liechtenstein.

Ingka Group, as the largest franchisee of Inter IKEA Group, is responsible for operating IKEA stores around the world, but it needs to pay a franchise fee to Inter IKEA Group, the owner of the "IKEA" brand. The payment amount is 1% of the overall turnover of IKEA stores. 3%.

Since September 1, 2016, the IKEA brand owner "Inter IKEA Group" has taken over all product development and value chain management functions of "IKEA", and the "Ingka Group" has transformed into a pure retailer. The development is based on a franchise agreement signed with the "Inter IKEA Group".

IKEA's internal collaboration has begun to become more efficient. IKEA's supply chain system guarantees the supply of goods in IKEA stores. At the same time, the stores will reflect consumer demand into the supply chain and produce products that better meet consumer demand.

Ingka Group opened 367 IKEA stores in 30 countries or regions around the world in fiscal year 2018 (September 1, 2017 to August 31, 2018). IKEA store sales revenue was 34.8 billion euros and net profit was 1.5 billion euros. , receiving a total of 838 million visitors. Among them, IKEA China's retail sales in fiscal year 2018 were 15.5 billion yuan, and it received more than 100 million visitors.

Since opening its first shopping mall in Shanghai in 1998, IKEA has opened 28 shopping malls, 2 experience centers and 3 Huiju shopping centers in Shanghai, Beijing, Chengdu, Guangzhou, Shenzhen, Nanjing, Dalian and other cities.

Apart from Sweden, China is the only country with a complete value chain for IKEA. In fiscal year 2018, IKEA’s procurement volume in China accounted for 28% of IKEA’s total global procurement, with more than 300 suppliers. This is precisely because IKEA is increasingly Pay attention to the Chinese market.

It is understood that in terms of channels, IKEA will develop and integrate new online and offline channels. IKEA said it will comprehensively upgrade its existing malls, and Shanghai Xuhui Mall will become the first in the world. In addition, in terms of expanding the coverage of online and offline channels, IKEA will open 4 new shopping malls in Guangzhou, Zhengzhou, Guiyang and Changsha in the next 4 months, and will further expand e-commerce coverage.

According to IKEA, third- and fourth-tier cities will also be included in its future strategy. In addition, IKEA will also open small shopping malls closer to consumers. The first small shopping mall will open in Shanghai before the Spring Festival in 2020. AnnaPawlak-Kuliga said: "We have done a lot of research and believe that through small shopping malls we can be more Close to customers. At the same time, in terms of shopping mall design, we will use more innovative ways to design to better meet people's home furnishing needs."

In addition, IKEA established the IKEA China Digital Innovation Center on July 8, 2019. As a new business unit, the center will be dedicated to improving IKEA’s overall digital capabilities. Since its e-commerce was launched in October 2018, its business scope has covered 227 cities. "We are relatively cautious when planning our omni-channel strategy, and we need to conduct sufficient market research in all aspects. At the same time, we believe that we must maintain a flexible attitude in setting strategies, and we must look at the development and evolution of the market and the market situation. How to expand and then adjust strategies in real time," said AnnaPawlak-Kuliga.

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