Swedwood Value Chain Analysis

IKEA uses several tools in its inter-organizational relationships of which Swedwood is a part of. When choosing appropriate SIOMA tools, it has to be considered that the systems have to be consistent with the strategy and the structure. This chapter presents selected SIOMA operating tools that might be used in the daily business in the Swedwood value chain which suit and refine the strategy.

Due to IKEA’s and Swedwood’s low-cost strategy, the usage of tools like Cost Tables, Cost Split-Ups and Cost breakdowns represent adequate cost management tools. All of those methods focus on cost comparison but reveal a different level of detail. The purpose of cost tables is to compare different suppliers and their respective costs (Andersson&Larsson,

For some of them their brand is the most important asset (Hart & Rosleder, 2002). Therefore it seems to be logical that the use of Brand Value which serves to evaluate the financial worth of a brand is steadily gaining popularity. Since IKEA is not the only but by far the most relevant client of Swedwood for them their brand value is not of a high priority and they probably will not need to use this tool. Nevertheless, it is notable that they might have changed their name to IKEA Industries in order to benefit from the reputation of IKEA and improve their acceptance. In contrast, it might be interesting for IKEA to be aware of their brand strength and its development. Otherwise IKEA is a well-known manufacturing company which is not as dependent on the intellectual capital and brand value as other firms for example in the IT and technology sector. As a result the use of Brand Value depends on cost-benefit considerations of the responsible

It describes a far advanced state of the implementation of SIOMA which requires the reconciliation of strategic objectives, the integration along the value chain and a high degree of trust between all involved parties (Alenius, Lind, Strömsten, 2015). Due to the fact that Swedwood is owned by IKEA it is obvious that there will be an Open Book accounting, at least from Swedwood to IKEA. Furthermore, it is very likely that IKEA has access to the data of its other suppliers as well. There are substantial benefits for the organisation as for instance the management of the supplier’s relationships and the restructuring of production and distribution processes (Alenius, Lind, Strömsten, 2015). This might lead to significant cost reductions and efficiency increases. Moreover it offers the feasibility to implement a benchmarking procedure between the suppliers as well as between external partners and Swedwood. Of course some tensions and a conflict of interest could emerge, owing to the circumstance that many of the information are very confidential and companies do not want to share them. Suppliers could fear that they would lose too much room for negotiation and feel used. For this reason it is essential that IKEA clearly states to their suppliers that this step is crucial in order to improve the competitiveness of the