Supply Chain Management and Ikea

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CONTENT
Introduction – IKEA’s background……………3

IKEA’s Supply Chain Analysis……………….3-4

IKEA’s Logistics Activities……………………4-6

IKEA’s Internal Environment…………………6-7

IKEA’s External Environment…………………8

Problems and Solutions……………………….8-10

Conclusion…………………………………….11

References…………………………………….12

Introduction
Since first founded in 1940s, with its mission statements to “create a better everyday life for the many people”, IKEA’s business idea has achieved great success. In this report, we would mainly focus on IKEA’s logistics function, We begin by analyzing IKEA’s supply chain, adopted strategy, the internal and external environment. Second, we investigate into IKEA’s logistics operations. At the last part, we discuss the problems of business and logistics aspect IKEA faces, and give our advices to solve them. IKEA’s Supply Chain Analysis

For the IKEA’s supply chain, it includes suppliers, manufacturers, retailers and customers. Firstly, IKEA has thousand amounts of suppliers provide raw materials and components for the manufacturing acticities globally. It also has cooperation with a number of suppliers as joint owners or financiers in Poland, Slovakia, Russia and China such as Konakovo factory (Russia) providing four different items for IKEA’s Moscow store, Priozersk factory (Russia) providing five different chair models, RPOFIm (Poland) providing three different types of office chairs etc. This can ensure the continuous flow of manufacturing services and maintain a better customers service to keep existing customers. Secondly, for the design and manufacturing parts, IKEA owns its whole of the design part and outsources a part of manufacturing process to other companies to produce. Swedwood is one of the outsourcing company to manufacture wooden furniture and components for IKEA to sell. Thirdly, IKEA cooperates with third parties logistics firms that transport a part of products to different countries globally. For example Cardinal's logistics develops and implements innovative solutions to use the shortest route and time to deliver products to retail stores in United States.

IKEA’s Logistics Activities
1. WAREHOUSING
Warehousing is a part of the physical flow of goods and materials which is talking about to store, repackage, stage, sort and centralize goods or materials. Having an efficient way in warehousing can bring a lot of benefits to business such as reduce transportation costs, improve operational flexibility,shorten customer lead times and lower inventory-related costs. Ikea already did a great job in warehousing, it is using three types of systems to enhance the efficiency of warehousing. First, assortment warehousing that means the warehouse is held close to the source of demand in order to shorten the customer lead time. For the ikea , its warehouse attached to their retail stores. In some countries, Ikea would have showroom upstairs with the marketplace and warehouse downstairs in order to provide products in the shortest time.

Second, postponement warehousing that means the firm put off final assembly of goods until the last possible moment. So that ikea’s product is designed to be assembled by the customers rather than being sold before assembled. Its products provided with flat packages in order to minimise the space of store and delivery. The system of postponement warehousing will reduce the transportation costs and increase the flexibility of products. Third, break-bulk warehousing which is a form of cross-docking that means break the inbound shipment into some small outbound shipment. For the ikea, it uses cross-docking to receive large shipments from different suppliers and resort the goods into small shipment, which is meet the requirement of the individual store, to individual stores. This type of system achieves the benefits of reduce the transportation costs and enhance the customer satisfaction due to the customized shipment would shorten the lead time and...
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