Improving Customers Service At IKEA Using Six Sigma .
International Journal of Scientific & Engineering Research, Volume 5, Issue 1, January-2014ISSN 2229-55181712Improving Customers Service at IKEA Using SixSigma MethodologyAdnan MiskiAbstract— IKEA is an international home furnishing company with a goal of creating a better everyday life at affordable prices. However, in one oftheir international branches, IKEA has reported substantial revenue loss in 2011 attributed to numerous customer complaints. We executed Six Sigma’sDMAIC methodology aimed at revamping the existing business process. SIPOC was used to define overall flow, Data Collection and KANO model formeasuring and understanding customers’ discontent, Pareto Chart to identify the vital issues, Ishikawa Diagram to analyze the root causes, AffinityDiagrams for suggested improvements, and finally Control Charts to monitor the process implemented. The project successfully reduced the number ofcomplaints from 333 to 43 per month.Index Terms— Ishikawa, KANO, SIPOC, Six Sigma Methodology—————————— ——————————1 INTRODUCTIONIKEA has been experiencing problems in a few of itsbranches as far as the sales are concerned. The customerfeedback shows that the customers or the clients aredissatisfied with the delivery of the products (in terms of thetime taken for the delivery and/or the condition of theproduct upon delivery) as well as the unsatisfactory customerservice. These issues have drastically affected the sales of thebranch and also adversely affect the reputation of IKEA. Ifthese problems are not solved IKEA will lose time and money(in terms of fixing the damages caused to the customer), whichjeopardizes their overall efficiency and earning potential. Also,undue problems could lead customers to choose anothercompany, and so IKEA can also lose customers.A) shows the SIPOC diagram for the service process at IKEA.The input in the service process is when a customer ordersnew item or when a customer asks for his item to be repaired.Once this is done, the process starts with processing availabledata. The activities in this process could be packaging, sortingfurniture into categories etc. Once the data is processed, anorder is taken and further communication takes place with thesupplier in order to check for the availability of the orderedfurniture. If the required items are available, the order isconfirmed and is supplied to the final customer.IJSER1.1 Solution ApproachIKEA is facing a high wave of problems from the globalcompetition and the dissatisfaction of customers. In order tocompete, they have to find a solution to the problem they arefacing. Six Sigma (Define, Measure, Analyze, Improve, andControl) methodologies give the company an opportunity toimprove their performance and competitiveness.2 DEFINE PHASE2.1 Project ScopeThe focus of the project will be on the service level of thecompany. One important point that will be taken intoconsideration is the relationship between the employees andcustomers. It will also focus on the existing services and theactivities taken to satisfy the customers. For example, what isthe method or process for taking an order from a customer,delivery process, customer care services etc.The process starts from the point where a customer places anorder and stops when the customer receives his order asshown in figure 1 (Appendix A). The method of SIPOC is usedto provide a broad view of a process; who is the processowner, how inputs are acquired, whom the process serves,and how it adds value. SIPOC stands for Supplier, Input,Process, Output and finally the Customer. Figure 2 (Appendix2.2 VOC (Voice of the Customer) Survey AnalysisThe "Voice of the Customer" is a process used to capture therequirements/feedback from the customer to provide themwith the best service. This provides sufficient informationabout the quality and customer satisfaction levels on services.As shown in the data collecting section in figure 3 (AppendixA) and the graph of the survey of the customers and theoutputs of this process are defining Critical to Qualityrequirements (CTQ), and the specifications for each CTQrequirement. (1) Reliability and Assurance: The ability of thecompany to provide the promised services. For example,delivering the ordered item on time. (2) The Response ofCustomer’s Service: The respond to all customer’s complaintsand inquiries, as well as taking the best action if a certainproblem exist. (3) Service Efficiency: The amount of time andeffort spent by the customer to choose the desired item andmake an order.3 MEASURE PHASE3.1 Quality Measures in IKEAQuality of the service and quality of the products is importantto international home products retailers. Every major furniturecompany views quality differently. In IKEA, home furnishingproducts must be safe for daily usage as well as environmentfriendly. In the design phase, product developers andtechnicians take into account quality and environmentalimpact at every stage of the new products’ development usingthe least resources to make the best possible products, withoutIJSER 2014http://www.ijser.org
1713International Journal of Scientific & Engineering Research Volume 5, Issue 1, January-2014ISSN 2229-5518having a negative impact on their functionality or appearance.The main raw materials used in IKEA products are wood,cotton, metal, plastic, glass and rattan and IKEA workstowards using as many renewable and recyclable materials aspossible. The products produced must meet the customers’expectations and they must be completely free from defects.3.2 Data CollectionThe five main methods used when collecting data are: Personal Interviews Telephone Interviews Group Interviews Internet Feedback SurveyFrom the survey we have two results; the first one is aboutProduct Quality Compared to Price as shown in the figure 3(Appendix A). As many as 50 percent customers thought thatthe quality/price ratio was good and 18 percent felt that it wasvery good. No one considered it to be bad.The other result on the service is shown in the Figure 4(Appendix A), 40% ranked IKEA’s service as good. 16%considered the service to be not so good or bad. According tothe interview group, this is due to the fact that some personnelare incompetent or simply bored. Some also thought that thewaiting period to get some of the products were too long.with customer5Poorcommunicationbetween departments inthe %7Others22213.7%59996100%thewhenTotal3.4 BenchmarkingBenchmarking is used in management and particularlystrategic management, in which organizations evaluatevarious aspects of their processes in relation to best practices,usually within own sector. This then allows organizations todevelop plans on how to make improvements or adopt bestpractices usually with the aim of increasing some aspect ofperformance. Benchmarking is a continuous process in whichorganizations continually seek to challenge their practices. Bycomparing performance with two of the company’s maincompetitors, (Home Plaza & City Max), areas lacking inquality can easily be identified. Table 3 is the ‘benchmarking’table for this project, where some of the IKEA servicecharacteristics are compared with the company’s currentcompetitors.Table 3BenchmarkingIJSER3.3 MetricsThe metric selection has to be effective, that’s why we use(SMART):Simple, Measurable, Actionable (they provide a basis fordecision making), Related (to customer requirements), andTimely. In our project: Opportunity is defined as a successful order delivery. A defect is defined as one customer complaint.Customer complaints include (damaged furniture, notreceiving furniture on time, inability to getcompensation for damaged furniture, extra chargesfor new scheduling etc.).During the year of 2011, IKEA had 11.6% sales decline.Moreover, there was 5.4% of the sales decline caused by thedownturn of the economy and other various reasons, and therest of them (7%) were related to the high volume of customercomplaints. The categories of customer complaints are shownin table 2.Table 2Frequency of ComplaintsNumberCategoryPerformance MeasuresIKEAHomePlazaCityMaxQuality Of The Products435Perfect Deliveries344Communication With Customer345Turnaround Time433Inbound Damage By Vendor423FrequencyPercentageInventory Accuracy3441Late delivery1784729.7%Total Cost Of Labor4532Difficult to get refundby the customer1444624.1%Return To Vendor5443Damageddeliver878914.6%Workplace Safety5544Poor764312.7%itemwhencommunicationThe numerical ratings are done in the scale from 1 to 5, where1 poor, 2 low, 3 acceptable, 4 good and 5 excellent.IJSER 2014http://www.ijser.org
1714International Journal of Scientific & Engineering Research Volume 5, Issue 1, January-2014ISSN 2229-5518 Quality of the Products: measures the quality of theproducts that is offered to the customers.Perfect deliveries: measures the percentage of perfectdeliveries.Communication with Customer: measures theoutcomes of the communication with the customer.Turnaround Time: tracks the turnaround time oncustomer service calls and in-shop repair of customerowned merchandise. When people have a problem,the longer they wait, the worse it gets.Inbound Damage by Vendor: Measure the inbounddamage by vendor and steps taken by the supplier (ortrucker) to resolve the issue.Number and Percentage of Service Calls: measuresthe number of service calls and percentage of calls outof total deliveries. Also keeps track of the reasonsservice was necessary and the percentage thatresolved the problem with a single call. This is anearly warning system for factory defects anddeficiencies in warehouse and delivery.Inventory Accuracy: measures the accuracy ofinventory measurement systems.Total Cost of Labor: measures the total cost of allwarehouse labor, including benefits. This is calculatedas a percentage of the cost of goods received plus thecost of goods shipped.Return to Vendor: measures the amount of nonsaleable merchandise and return to vendorWorkplace Safety: measures the safety of theworkplace. The most common way is to count days orstaff hours without an accident.delivery of undamaged goods and a responsive customerservice are a mandatory part of the service, and in absence ofthese features the customer satisfaction cannot be guaranteed.4 ANALYZE PHASEBefore any analysis can be done on IKEA’s overallperformance, we have to first identify the major causes of thecompany’s pitfall. This can be done using Pareto Chart totackle all the “low hanging fruit” where little effort is neededto fix the few major problem areas. After the identification ofthe critical areas, a more thorough analysis will be done toresolve all the issues at their root. This can be achieved usingthe Ishikawa Diagram and 5-Whys analysis.4.1 Pareto ChartIt is a technique to identify the “vital few” from the “trivialmany” (because a high proportion of quality issues resultedfrom only a few causes). Pareto analysis is based on the ParetoPrinciple or “80/20 Rule” which means that 80% of problemsusually stem from 20% of the causes. Pareto charts are used todisplay the Pareto principle in action, arranging data so thatthe few vital factors that are causing most of the problemsreveal themselves. Concentrating improvement efforts onthese few crucial issues will have a greater impact in additionto being more cost-effective than undirected efforts.IJSERFrom the result of the benchmarking, we can see the strengthand weaknesses among IKEA and its competitors. IKEA lacksin quality in three characteristics (Perfect Deliveries,Communication with customer, and Inventory Accuracy) ofthe project. But on the other hand, they were the best in threecharacteristics and equal in the rest.3.5 Kano ModelKANO model was used to determine how important the safeand proper delivery to the customers. It will also be used todetermine what kind of customer service does the clientswants. Following is a brief survey that was conducted: If the product is delivered damaged, how would youfeel? If the product is delivered undamaged, how wouldyou feel? If the product is handled properly during delivery,how do you feel? If the product is handled improperly during delivery,how do you feel? If the customer service is responsive, helpful andaddress the problem immediately, how would youfeel? If the customer service is unresponsive and delay theaddressing of the problem, how would you feel?The results in figure 6 (Appendix A) shows that a properAs shown in figure 5 (Appendix A) Pareto Chart, the mainfocus of effort will be in at the delay in the deliveries forcustomers. Besides that, IKEA should also focus on 3 othermain issues; the difficulty of getting refund by customer,damaged items upon delivery, and poor communication withcustomer. These 4 major components which contribute 80%customer complaints should be prioritized in terms ofimprovement efforts.4.2 Cause and Effect DiagramThis is also known as the “fishbone diagram” or “Ishikawadiagram”. Cause and effect diagram enables a team to focuson the content of a problem, not on the history of the problemor differing personal interests of team members. Moreover, itcreates a snapshot of collective knowledge and consensus of ateam and builds support for solutions. The purpose of thediagram is to summarize the major causes of each issue and toidentify potential root causes in an orderly and systematicapproach.Figure 7 (Appendix) shows all the potential causes of eachissue captured by the Pareto Chart. These can also be groupedtogether based on the different major categories; People,Methods, Management, Machines, and Environment andanalyze what are the causes and the effects of each category asshown in table 4.IJSER 2014http://www.ijser.orgTable 4Cause and Effect Analysis
1715International Journal of Scientific & Engineering Research Volume 5, Issue 1, January-2014ISSN 2229-5518AreaCauseEffectPeopleInsufficient trainingInexperience driversLate deliveryDamagedproductsMethodsInefficient route planningLate deliveryMachinesLack of navigation systemIncompatible lifting systemLate deliveryDamagedproductsManagementComplicated return policyDifficulty to accept a moreimproved systemPoor customerservicePoor customerserviceEnvironmentPoor communicationbetween employeesUnavailable seniorexperienced staffsUnwilling to provide helpand guidanceThe compensation package offered is not up to par with theindustry’s standard causing a high turnover rate amongemployees. This system should definitely be revamped todistinguish between good and poor performers and rewardthem accordingly.5 IMPROVE PHASE5.1 BrainstormingOur project focuses on the most frequent causes of customers’complaints. The following table summarizes the suggestedimprovements for each problem.Table 6Suggested ImprovementsCause of ComplaintsImprovementsIJSER4.3 5-Whys AnalysisThe 5-Why technique is used to identify the root cause of theproblem and also can redefine a problem statement as a chainof causes and effects to identify the source of the symptoms byasking whys. In table 5 there we can see the why’s for the highcustomer complaints.Table 55-Whys customer complaintsWhySupport which is a vital element in ensuring the success of anyteam. This inevitably caused a snowball effect on the overallemployees’ performance. Besides that, IKEA also came outshort on one of the most important motivation drivers; theReward System.Damaged DeliveredItems- Introduce a training regime fordelivery labor.Offercompensationsforcustomers in case of damageddelivered items.- Include penalty for any disregard.Difficulty To Get ARefund- Explain the conditions of getting arefund to customers when makingan order.- Train employees on how to dealwith unsatisfied customers.- Adding a refund policy documentonline and in stores.Poor CommunicationWith Customers- Train workers on how to dealwith customer calls, process orders,and enquiries faster.- Introduce a service feedback fromthe customer after each call from thecustomer.- Introduce awards “employee ofthe month”.CauseWhy there is a highcustomer complaints rate?Because there is low qualityof customer serviceWhy there is low quality ofcustomer service?Because there is no enoughtraining for employeesWhy there is no enoughtraining for employees?Because there is a shortage ofstaff (trainees)Why there is a shortage ofstaff?Because there is a high y there is a high staffturnover rate in ourcustomerservicedepartment?Late Delivery- Introduce a training regime for alldrivers- Install GPS devices and trackersinto all delivery cars.- Include penalty in case of latedelivery.- Introduce awards for mostconsistent drivers.Because the staff has lowdegree pay satisfaction.From the 5 Whys analysis, it can be seen that one of the issuesfaced by IKEA is the Crisis of Resources. The moreexperienced workforce is currently inadequate to provide thenecessary training and guidance resulting in low Span ofThe suggested improvements are explained below:IJSER 2014http://www.ijser.org
1716International Journal of Scientific & Engineering Research Volume 5, Issue 1, January-2014ISSN 2229-5518 Late Delivery:o DriversIntroducing a training regime for drivers can help reducedefects caused by late delivery. Drivers will know when toleave and how long it will take to deliver the product to aspecific address. Factors such as traffic, road works and badweather can all be avoided if the driver has the requiredknowledge. Introducing a GPS system will also help avoid thepossibility of a driver losing his way around as he will bedirectly instructed by the navigation system on where to goand what exit to take.It is important to have a healthy competitive atmosphereamong the drivers in the company. If monthly award such as“driver of the month” is introduced, drivers would take theirjob more seriously and would compete to gain the approval eness of drivers therefore, having betterend results when delivering products in terms of accuratedelivery times.o Manufacturing companyIn some cases, late deliveries are not caused by furniturecompanies. They order the furniture from a certainmanufacturing company (factory). Some products might takelonger to manufacture than promised. A solution would be toimpose a fee on the manufacturing company which wouldcompensate for any late deliveries. If such a penalty exists, themanufacturing company will strive to meet deadlines, andtherefore reduces the percentage of late deliveries.customers.5.2 Affinity DiagramThe affinity diagram in figure 8 (Appendix A) is a businesstool used to organize and simplify possible suggestions forimprovements. It is one of the seven management andplanning quality tools and it aids top management to lay outwhat needs to be done.5.3 Error Proofing Using Source Inspection:Process mapping before improvement (Figure 9 left AppendixA): An order is collected from the customers Employees carry on an availability check with thesupplier, if the ordered items are available, the orderis processed. If the ordered items are not available,the order is changed or is ordered from themanufacturer causing extra delay. Once the order is processed, a confirmation is send tothe customer and a date is arranged for delivery. Order is complete Process mapping after improvement (Figure 9 rightAppendix A): An order is collected from the customers Employees carry on an availability check with thesupplier, if the ordered items are available, the orderis processed. If the ordered items are not available,notify the customer. The order is verified with the customer to check if theright order was placed. If the order was wrong, theorder is corrected. The order is confirmed with the customer, if thecustomer approves, a confirmation letter is sent to thecustomer. If the customer disapproves, the order ischanged. The order is reconfirmed with the supplier and a dateis scheduled for the delivery to take
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