Inventory Management Strategies of IKEA and H&M

Running Head: MANAGEMENT 0
OPERATION MANAGEMENT

MANAGEMENT 1
Brief –
IKEA and H&M are the two manufacturing organisations selected for analysis in this
assignment. IKEA is one of the biggest home furnishing retailer having its operations
internationally. The company was founded in Sweden in 1943. The company have around
313 IKEA stores in 38 territories (Lieber, 2019). In most of the IKEA stores, it is possible to
lodge around 12000 products effectively. The company ranked number 40 as the World Most
Valuable Brands in Forbes list. IKEA furniture is loved by many consumers around the globe
due to their superior quality and affordable prices. Along with this, various exceptional
inventory management techniques are also employed by the enterprise that amazes both
consumers and rivals. As IKEA operates at international level, the company is responsible for
delivering high-quality products at a reasonable price internationally.
H&M was initiated in 1947 and today it becomes the second largest clothing retailer
all over the world. Considering Gartner Supply Chain, the company also attain number 4 rank
as best performing enterprise in Europe. H&M has around 4,433 stores in 61 countries. H&M
also use an investment management strategy which helps the company to take out maximum
stock control. In addition, H&M outsources all production with having more than 700
independent suppliers (Arrigo, 2010). The suppliers have their own subcontractors. The
supplier's operations are reviewed by more than 30 Code of Conduct auditors who operate at
H&M production offices. As company follow effective retail inventory management
technique, it helps them to get more favourable open market, compact inventory lead time
and more cost-efficiency in manufacture of goods.

MANAGEMENT 2
Sol –
Both IKEA and H&M employ varied sort of strategies in relation to inventory
management and it is differentiated by kinds of inventories managed. Inventory is considered
to be an item of value that a firm plans to sell for profit. It includes goods ready for sale
including any physical resource used in the production of finished goods (Pakdil & Leonard,
2014). Hence, the three different types of inventories rise include i.e. finished goods, raw
ingredients and work-in-progress. All these three sorts of inventories are managed by IKEA
and on another side, H&M presently manages finish products only.
Each company have adopted some of inventory characteristics that help them to
maximise profit and reduce costs. The major two different categories of inventory
management procedures that are employed by IKEA includes Cost-per-Touch inventory
management and in-store logistics personnel handling inventory management. In Cost-per-
Touch inventory strategy, customers are allowable to select the furniture that they need and
take the bundles by self. In-store logistics personnel handling inventory management is also
used by IKEA which also consists of in-store logistics manager accountable for the procedure
of ordering and a store goods manager holds material handling logistics at all stores of IKEA.
(Banker, 2009).