Transition from project to

functional organization
The IKEA journey
by Peter Larsson and David Neyret
 Agenda

• IKEA facts & figures

• OTM turning into ITM – the STMS program
• Receiving ITM in functional organization – the top five
challenges
• Lessons learned and Q&A

3
 Agenda

• IKEA facts & figures

• OTM turning into ITM – the STMS program
• Receiving ITM in functional organization – the top five
challenges
• Lessons learned and Q&A

4
 IKEA – our vision Our vision
“To create a better everyday life for
the many people.”

•
Our business idea
“We shall offer a wide range of well-designed,
functional home furnishing products at prices
so low that as many people as possible will be
able to afford them.“

5
 IKEA FY14
€28.7 147,000
billion
Total number of co-workers 9,500 Products 700,000
in our range
Total sales Solar panels
716 million on our buildings
store visits to
IKEA Group stores

1,002 Suppliers

2,9 million Meatballs sold

every day
212 million copies of the
IKEA catalogue

6
 IKEA Group figures

EUROPE RUSSIA
NORTH 222 Stores 14 Stores
36 IKEA Industry 5 IKEA Industry
AMERICA production
51 Stores production ASIA
units units 23 Stores
1 IKEA Industry
production unit 2 IKEA Industry
production
units

AUSTRALIA
5 Stores

59%
of production takes
place in Europe

7
 IKEAs ambition...

To reach €50 billion

in sales and 1,5 billion
visitors by 2020

8
IKEA SUPPLY CHAIN
13 CDCs
In 9 countries
32 DCs in
17 countries
400 carriers
1002 suppliers in 52
countries 370 stores
in 40 countries
>700 million customers

33.000 routes

25 material areas
36 categories > 14.5 million customer deliveries

50 million m3 transported
1.5 million shipments

9
 Distribution center 2

Store 3
LAND FLOWS
Supplier 1
Distribution center 1
Store 2

CP/ Cross-dock
Supplier 2
Store 1
Supplier 4

Port 1
IMT 1 Store 4
Direct sender-receiver delivery
Port 2 Distribution center 3
Multi-stop & mid-receiver delivery
Combined delivery options
Direct multi-leg ocean delivery
OCEAN FLOWS
Multi-leg mid-receiver delivery

10
 Transport – a vital part of the IKEA concept –
low prices also means low costs

Products developed to… …fit flat packages… …optimized for pallets…

…optimized to load into equipment that can… …be unloaded directly to the point of sales

11
 Agenda

• IKEA facts & figures

• OTM turning into ITM – the STMS program
• Receiving ITM in functional organization – the top five
challenges
• Lessons learned and Q&A

12
 OTM turning into ITM – the STMS program

• STMS (Supplying Transport Management Solutions)

started in 2010, ending mid 2017 (consisting of seven
different projects)
• ITM (IKEA Transport Management) is the IKEA name of
the configured OTM standard software
• One of the biggest IT connected projects at IKEA

13
 IKEA want OTM to support…
• Increased product availability for customer
• Lower costs
• Reduced environmental impact

... and enable

• Growth

14
 STMS scope
Purchase
order

Transport Consignment & Shipment

Need Network Logistic Management
planning Management Order
Management
and
Delivery
Optimise Transport Network Delivery Event Management,
Planning
Transportation Sourcing Track & Trace

Contract Buy Service

Management against Settlement
contract

15
 Delivery planning live in ITM July 2015
Baltic cluster Italian cluster Pacos (PT)

31 suppliers 10 suppliers 2 suppliers

138 receivers 87 receivers 10 receivers
19 countries 10 countries 7 countries
1.390.000 m3 617.000 m3 20.000 m3

Scandinavia Royal Leerdam (NL)

DP Pilots ongoing
10 suppliers 1 supplier
Praha (CZ)
13 receivers 10 receivers
Ocean (6
8 countries 10 countries relations)
115.000 m3 73.000 m3

Shanghai North America Other Pilots ongoing

7 suppliers 12 suppliers Visibiliy

5 receivers 22 receivers Events mgt
1 country 2 countries Document mgt
170.000 m3 130.000 m3

16
 OTM turning into ITM – the STMS program timelines
R1.2 R2.0 R2.1 R3.0 R3.1 R4.0 R4.1 R4.2 Global rollout
Sept 2013 Feb 2014 May 2014 Sept 2014 March 2015 July 2015 Jan 2016 June 2016 ending mid 2017

Delivery
planning #1
Pilot NOW
Delivery
planning #2 Pilot
Delivery
planning #3
Pilot
Global rollout
Service Settlement & Visibility #1 Pilot
Pilot &
Service Settlement & Visibility #2
Rollout
Consignment & Shipment mgmt Close Legacy
#1 Pilot
Consignment & Shipment mgmt
#2
Pilot

Move of Integrations

17
 Agenda

• IKEA facts & figures

• OTM turning into ITM – the STMS program
• Receiving ITM in functional organization – the top five
challenges
• Lessons learned and Q&A

18
 Move from project to functional
organization at IKEA IT
Project Management
• Running all programs and
projects
• Defined scope, time and
budget
• Practical Project Steering with
decision points
• Formal handover to
functional organization at
Decision Point 7
19
Service Management
• Receiving new IT services
from programs and projects
• Running Business –
Application Maintenance &
Support and Enhancements
• ~350 IT services
• Robustness and
maintainability focus
ITM in Functional organization Solution and
- Top five challenges Technical
documentation
Choice of
Manual effort functional run
need in the ITM partner
solution

Agile project to
Incident and waterfall
problem functional
management organization

20
ITM in Functional Organization – Top five challenges
1. Incident and problem management
Project problematic Project Solution Functional problematic Functional Solution
• OTM new tool at • Pilot and coordination • More than 10k users • Defined way of handling
IKEA meetings • Extensive amount of problems at IKEA
• User feedback • Direct communication incidents expected • Global Helpdesk
needed into project • 24/7 Support
• Parallell • Problem implementation
development by project

Functional mitigation and lessons learned Use of

• Reduce person dependency Service Accept project
Functional approach, require
Transition
• Conscious decisions organization long term plan
from start
• Service Level Agreement
• Stakeholder Management

21
ITM in Functional Organization – Top five challenges
2. Manual effort in the ITM solution
Project problematic Project Solution Functional problematic Functional Solution
• Scope – time • Acceptance of manual • Maintainable solutions • Focus on problem root
constraint work for end users and risk avoidance cause correction
• Limited effort on • Acceptance of • Resolve dependency • Define process around
backlog workarounds by AM&S solving problem
from AM&S
• Provide solution with
• Master data • Some system support • Avoid time consuming needed support for
for master data manual work in solution master data

Functional Mitigation and lessons learned

Service Dedicate time for
• Identify and analyze problems based Functional Transition
on facts and figures problem correction in
organization project
• Total cost of ownership perspective from start
Importance of
Master Data

22
ITM in Functional Organization – Top five challenges
3. Solution and technical documentation
Project problematic Project Solution Functional problematic Functional Solution
• Limited time in project • Business value over • Outsourced AM&S – • Document solutions in a
scope documentation need of similar WoW streamlined way
• Constant pressure on • Focus on document • Reduce person • Identify and prioritize the
delivering on time design and dependency documentation
• Underestimating of requirements • Needed information
• Involve run partner in
should be available for
documentation effort all stakeholders implementation stage

Functional Mitigation and lessons learned

Service Make sure that the
• Functional organization support Functional Transition documentation level
creating documentation organization is agreed as early
• Clear requirements on from start as possible
documentation

23
ITM in Functional Organization – Top five challenges
4. Choice of functional run partner
Project problematic Project Solution Functional problematic Functional Solution
• Need of extensive • Core knowledge at the • Outsourced AM&S • Participate in project to
OTM expertise implementation partner develop the competence
• Works for the many,
• Implementation partner but not all IT solutions • Identify and secure
involved in incident critical competence
• Strategic partner and
handling
niche competence

Functional Mitigation and lessons learned Total cost of

Service
• Staff AM&S team with resources Functional Transition ownership
from implementation partner organization perspective
• Clear requirements on knowledge from start Secure inhouse
transfers and documentation functional expert
• Ensure long term partnership with implementation partner role

24
ITM in Functional Organization – Top five challenges
5. Agile project to waterfall functional organization
Project problematic Project Solution Functional problematic Functional Solution
• Time to market • Integrate setup of test • Enable involved • Clear responsibility and
• Leadtime of handling environments, functional actors to onboarding of functional
test environment, deployment capability perform as per the actors
deployments and and OTM infrastructure processes • 24 well defined
competence in project
infrastructure • Need to align to legacy processes
support solution release cycle

Functional Mitigation and lessons learned Service Transition

• Scale up functional organization for Functional Agile when a lot of
transition dependencies?
organization
• Try to reduce project integration of from start Anchor roles and responsibilities of each
other actors responsability actor in both project and functional
• Involve functional actors in project organization

25
 Overall lessons learned and Q&A
As a receiver: Be there
from the start!
As a project: involve the
receiver from the start!
Put your requirements
early in Service
Transition and follow up
regularly

Support project
approach, and secure
long term robustness at
the same time

26
 Home is the most important place in the world

27
 Contact details
Peter Larsson, peter.larsson8@ikea.com
David Neyret, david.neyret@ikea.com

28