Operational Logistics of Ikea

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1. Introduction
IKEA is a Swedish company which was founded in 1943 with its headquarter in Denmark. IKEA succeeded on its low cost strategy which is able to offer a wide range of stylish home furniture with good design and functional at competitive pricing. It carries a range of nearly 10,000 products and is well known across the world. IKEA is also recognized as a socially responsible and environmental friendly company. Currently, there are 287 IKEA stores in 26 countries. In year 2011, IKEA has gained the total sales of 25.2 billion (in EUR). IKEA was also the first company in the world to realize the benefits of flat pack furniture in 1956. With this flat pack method its does not only help to save material, but is also saves the transportation costs with efficient distribution and warehouse storage space. Franchises are part of IKEA expansion plan. All the franchised are granted by Inter IKEA System B.V.The IKEA Group which has over 267 stores in 25 countries and franchisees outside IKEA Group in 16 other countries/territories. The Swedwood Group is part of IKEA Industry Group to manufacture and distributes wood and controls the entire value chain. Consisting of some 50 production units and offices in 10 countries across the continent. They are driven by their vision of achieving excellence in transforming wood into quality furniture and focused on continuous improvements in order to maintain competitiveness in the market.

2. IKEA Global Supply Chain
IKEA is also recognized as a global strategic firm as most of the IKEA’s stores operations are under Ingka Holding BV which is located in the Netherlands. IKEA has an excellent supply chain management with the latest information technology system which is able to gather all the information across their worldwide retail stores, manufacturers, suppliers as well as the distribution centres. IKEA has adopted the integrated JDA software which has increased their overall supply chain visibility and efficiency. In this way, IKEA is able to have more forecasts planning for supplier, warehouse and transportation capacities. IKEA has a large number of suppliers of both furniture and furnishings across the world. IKEA plays an important part to build up good relationships with its suppliers as its helps to create a huge capacity for producing the product through the worldwide suppliers. Today, IKEA operated more than 28 distribution centres and 11 customer distribution centres in 16 countries across the world. Its main function is to support stock replenishments program. As the location of production facilities focuses heavily on transportation costs, IKEA is able to efficiently distribute mass products with short lead times by concentrating manufacturing in large factories and in specific countries.

3. IKEA Franchising
Franchises are part of the IKEA expansion plan. All the franchised are granted by Inter Ikea System B.V. The IKEA Group is the biggest group of franchisees which has over 267 stores in 25 countries. They also have some franchisees outside the IKEA Group in 16 countries. 3.1. IKEA United States

IKEA store has one of its franchises in the United States. They own a total of 38 stores which are served by 10 distribution centres in North America. 3.2 E-Commerce on IKEA Atlanta
IKEA is also adopting the Business-to-consumer (B2C) ebusiness model. It is an online retail store where customers can do the shopping at anywhere anytime. IKEA USA on-line shopping is also able to provide well-selected items which are similar to the promotional theme of “from living room to bedroom’ and etc. Customers are able to find suitably priced and stylish home furnishing solutions that suit their needs. This sales method mainly targets end-users.

4. NETWORK DESIGN
IKEA has opened biggest logistics Distribution Centre (DC) in Shanghai for Asia-Pacific region, taking advantage on its geographical, government’s support and management. China is the...
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