Ikea Supply Chain
INTM 543 PURCHASING
IKEA SUPPLY CHAIN
November 2012
1. INTRODUCTION
Ikea is a Swedish international home products company that designs and sells ready-to-assemble furniture. It was founded in 1947 by 17-year-old Ingvar Kamprad, who currently is one of the richest people in the world. He borrowed some money for his parents and create a small local furniture store, 65 years later Ikea is one of the leading home furnishing companies in the world with its vision to ‘’create a better everyday life for the many people’’ (Kamprad). The company’s 2011 sales jumped 6.9 percent to €24.7 billion and its net profit rose 10.3 percent to €2.97 billion ($3.85 billion) (Local, 2012).
The Ikea concept is based on their market positioning statement ‘’Your partner in better living. We do our part, you do yours. Together we save money’’ and focuses on a commitment to product design, consumer value and clever solutions. By using inexpensive materials in a novel way and minimizing production, distribution and retail costs, their customers benefit from low process.
Consumers may be not be aware that before they find the product in a IKEA store, this product must be move from being raw material through several stages to became finished product. This process is known as the Supply Chain. IKEA has 250 own stores in 24 countries and 32 external franchisees in 16 countries also, there are 590 million visitors per year to its stores and 450 million visitors are tracked entering the Ikea website. Due to this facts a well design and effective Global Supply Chain is necessary.
2. SUPPLY CHAIN PROCESS
Supply chain in Ikea was mainly make-to-stock (MTS), which means that the production is matched with the consumer demand forecasts (The Logistics $ Supply Chain Management Society). This method forecasts demand to determine how much stock should be produced. In Ikea only a few products are made to customers orders.
Traditionally, stores had a high level of freedom
IKEA SUPPLY CHAIN
November 2012
1. INTRODUCTION
Ikea is a Swedish international home products company that designs and sells ready-to-assemble furniture. It was founded in 1947 by 17-year-old Ingvar Kamprad, who currently is one of the richest people in the world. He borrowed some money for his parents and create a small local furniture store, 65 years later Ikea is one of the leading home furnishing companies in the world with its vision to ‘’create a better everyday life for the many people’’ (Kamprad). The company’s 2011 sales jumped 6.9 percent to €24.7 billion and its net profit rose 10.3 percent to €2.97 billion ($3.85 billion) (Local, 2012).
The Ikea concept is based on their market positioning statement ‘’Your partner in better living. We do our part, you do yours. Together we save money’’ and focuses on a commitment to product design, consumer value and clever solutions. By using inexpensive materials in a novel way and minimizing production, distribution and retail costs, their customers benefit from low process.
Consumers may be not be aware that before they find the product in a IKEA store, this product must be move from being raw material through several stages to became finished product. This process is known as the Supply Chain. IKEA has 250 own stores in 24 countries and 32 external franchisees in 16 countries also, there are 590 million visitors per year to its stores and 450 million visitors are tracked entering the Ikea website. Due to this facts a well design and effective Global Supply Chain is necessary.
2. SUPPLY CHAIN PROCESS
Supply chain in Ikea was mainly make-to-stock (MTS), which means that the production is matched with the consumer demand forecasts (The Logistics $ Supply Chain Management Society). This method forecasts demand to determine how much stock should be produced. In Ikea only a few products are made to customers orders.
Traditionally, stores had a high level of freedom
Bibliography: Banker, S. (2009, November 5th). In-Store Logistics at IKEA. Logistics View Points . Bartlett, C., Dessain, V., & Sjoman, A. (2006). IKEA 's Global Sourcing Challenge: Indian Rugs and Child Labor. Harvard Business School . Ikea. (2011). Sustainability Report. Ikea Jonsson, P., Rudberg, M., & Holmberg, S. (2008). Global supply chain planning at IKEA. Kamprad, I Local, A. (2012, January 20). Ikea assembles record profits for 2011. The Local . Pibernik, R., & Sucky, E. (2007). An approach to inter-domain master planning in supply chains. International Journal of Production Economics , 200-212.