Challenges Associated with Global Supply Chain Management

CHALLENGES ASSOCIATED WITH
GLOBAL SUPPLY CHAIN MANAGEMENT

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK ..............................................................................................................................................1
Management of global supply chain...........................................................................................1
Areas of concern of supply chain risk and associated mitigating strategy.................................4
The utilisation of new technologies which can create more resilient supply chain within the
IKEA...........................................................................................................................................6
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Supply chain activities are the essential part of business unit. Effective management of
supply chain support the firm in maximizing customer value and gaining competitive advantage.
In the globalization era it becomes very difficult for the entities to sustain in the market for
longer duration. It is because they have keep their manufacturing cost low so that they can
generate profit in other location (Petersen and Lemke, 2015). Apart from this they need to
concentrate on sourcing of raw material and quality of products. Supply chain management helps
the corporation in reducing inventory cost and helps in improving process integration.
Current assignment is based on IKEA which is the leading manufacturing firm. Mission
of the firm is to attract new consumers and provide them high quality products to the global
consumers. Current study will discuss global supply chain management of IKEA Furthermore, it
will explain risk associated with supply chain and mitigating strategies. In addition, report will
discuss utilization of new technologies in creating more resilient supply chain.
TASK
Management of global supply chain
In the manufacturing industry supply chain management plays significant role. This
sector invests huge amount in order to manage their supply chain well. It helps the organizations
in getting raw material on time with quality (Wiese, Zielke and Toporowski, 2015). IKEA
operates its business globally, it is engaged in selling of furniture, home accessories and other
kitchen appliances. Company has more than 340 stores in more than 28 countries. IKEA is the
leading brand which pay more attention on providing quality products and services to its
consumers. Company analyses needs of consumers and accordingly offer them products so that it
can be valuable for them. Its all physical outlets are capable to generate high profit (Wong and
et.al, 2015).
One of the main agenda of IKEA is to effective utilization of resources and reducing cost.
so that it an offer quality furniture products to clients at affordable rates. Supply chain network
of IKEA is very strong which has supported the firm in providing satisfactory products to
consumers and making them loyal towards the brand (Hajmohammad and Vachon,2016). Supply
chain management of IKEA is described as below:
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Illustration 1: Supply chain management of IKEA
Source: (IKEA supply chain- how does IKEA manage its inventory, 2017)
Primary sector
IKEA main agenda is to develop strong relationship with its suppliers., it has supported
the entity in increasing supply chain network. These suppliers provide the company quality raw
material at the desired price. Company concentrates on the standard of manufacturing industry
and purchase raw material which are environment friendly. Company has more than 1300
suppliers across the world (Ivanov, Tsipoulanidis and Schönberger, 2017). But it concentrates on
the fact that it buy material from the outsourcing supplier which offer them goods at lower
prices. That is why it has many suppliers in more than 50 countries. Main suppliers of IKEA are
Baosham Iron & Steel, Timber & Timber, Steel stone co. Ltd etc.
Secondary Sector
Employees are the assets of the organization, company treats its workers well so that
skilled employees stay in the workplace for longer duration. IKEA takes support of value chain
analyse in order to make its supply chain management more effective. IKEA is taking support of
hollow legs in its furniture manufacturing products. It supports the firm in minimizing
unnecessary uses of resources (Kurniawan and et.al, 2017). Apart from the employees use
honeycomb-paper filling materials which are supplied by low cost suppliers. It supports in
enhancing quality of the products. Apart from this supply chain management of the firm also
applies IWAY code of practices that helps in manufacturing quality goods for the consumers.
Employees pay attention on supply chain system so that entity can accomplish its objective.
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