How Ikea dismantles cost
I read very recently about Ikea’s clever business strategy from 10 years ago in cutting costs and selling the Ektorp sofa (a popular model) and it was a clever supply chain business revelation.
By reducing the package size of the sofa by 50% in 2010, Ikea reduced the overall trucks used to transport these units by 7500 trucks and in the process cut the sale price by 14%. I created a simplified visual representation below to understand more about the process.
Though the complexity of such operations cannot be captured in a small slide, the idea remains. While Ikea is a trailblazer in all aspects of business and no single article can capture the magnanimity of their achievements with brevity, how we perceive innovation in business matters and I think innovation lies in simplicity and is it not a beautiful experience?
Innovation is not a word!