Today, many pieces of furniture are purchased for home assembly.
Their transport packages are designed to work as the best and most
cost-effective packages and each part has a well-defined place in the
package so that there is no empty space left.
As a cherry on the cake, the furniture assembly instructions lists for
example the parts needed to assemble the shelf down to the smallest
screw, so that the end customer can conveniently assemble the shelf at
Before Ikea entered the Finnish market, furniture was expensive and
options were few. However, Ikea did not change the furniture industry
in Finland not only with a new kind of marketing and concept, but also
purely with price. This low price was made possible by a fine-tuned
end-to-end supply chain, where every single product was broken down
into small parts also at the beginning of the supply chain. In other
words, a real bargain price has been calculated for each screw, plate
and part. This means that anyone who sells or wants to have their
product sold to Ikea has to build up their own production processes in
a cost-effective way, without compromising on quality.
So what does this have in common with the DBC should cost application?
The fact that even the smallest parts of the product are important for
the profit margin.
Every process step and waste piece in the making of even the smallest
part is crucial when it comes to the final price. Therefore, the
manufacturing process of each part must be in order, as must the
process of purchasing its small part. The devil is in the details…
Ikea changes suppliers incredibly boldly and flexibly.
It’s possible because their own purchasing processes are fine-tuned
from top to bottom because they know what they want. If you want to do
business with them, you have to be able to do the same.