Improving Supply Chain at IKEA

INDIVIDUAL REPORT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
1. Scenario evaluation and the identification of the issues in IKEA supply chain......................3
2. Recommendations to IKEA for improving its supply chain...................................................5
3. Project Plan and Risks.............................................................................................................6
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
The report will focus upon the case study of IKEA which is the most successful company
which deals in furniture. The case scenario will be evaluated and on the basis of which the issue
and problem will be identified. Various recommendations will be given in order to solve those
issues. A project plan and risk plan for improving the supply chain at IKEA will be made.
1. Scenario evaluation and the identification of the issues in IKEA supply chain
IKEA, being the most successful retailer of furniture, the company performs its operations
in 443 established stores which are located in almost 53 countries (Ikea, 2020). Though, the
company has managed its special way of selling the furniture and the layout of its stores force
the customers to stay at the stores for a longer time as compared to the other retailers’ shops. The
stores of IKEA are well designed which helps in facilitating the customers’ smooth flow which
starts from the parking to the ordering and goods picking. The company also focus on the special
needs of the children and for that they have made special area where they can play, small cinema
and baby and parent room where they can spend time.
If the child faces any problems then, their parents are called via loudspeakers. All the
furniture products have ticket along with the code number attached to it which makes it easy for
the customers to find the product in the warehouse. The customers are also provided with best
facilities at the checkouts where a conveyor belt is used to move the purchases to the checkout
staff. Also there are service points and loading area which makes it very easy for the customers
in bringing the cars from the parking and loading the purchases (Fernando and et.al., 2018).
The supply network of IKEA is very strong having a network of 1600 suppliers from about
55 countries along with having some sub-suppliers and operations of wholesale and transport.
The company considers its supply network very important right from purchasing of raw
materials to the arrival of finished goods to the customers’ houses. IKEA believes in developing
stronger relationship with its suppliers so that the efficiency of the ongoing supply and the
development of the new product can be achieved. The SCOR (Supply Chain Operations
Reference) model can be used to describe the supply chain decisions. It lays emphasis on five
areas i.e., Plan, Source, Make, Deliver and Return.
Plan: In this step, the planning of demand and supply is done. IKEA determines the business
rules for improving and measuring the efficiency of supply chain.
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Source: This explains the infrastructure of sourcing and the material acquisition. Under this,
IKEA focusses on the ways for managing the inventory, supplier agreements, performance and
the network. Also, it examines the way to handle the payments of the supplier (Costa and et.al.,
2019).
Make: The main emphasis in this step is on the manufacturing and production. IKEA in this step
involves various processes like activities of production, packaging, staging product and its
release. Also, it consists of production network management, facilities, equipment and
transportation.
Deliver: This step includes managing the orders, warehousing and transportation. IKEA
considers the orders from the customers along with invoicing them after receiving also in this
step. It also includes the finished inventories management, transportation, assets, product life
cycles and the import and export of requirements.
Return: IKEA is prepared to handle the containers return, packaging or defective products. This
also involves the business rules management, return inventory, transportation and the
requirements of the regulatory.
Rapid success in the companies bring various problems and issues along with it. The main
problems with IKEA is that its customers become much frustrated with the overcrowding due to
which they have to wait for so long. Customers hate the shopping experience at IKEA such that
they feel they are herded like sheep around the long routes at stores. Also, majority of the IKEA
customers are unhappy with its way, online experience and the service (Tseng and et.al., 2019).
The online experience at IKEA has never worked well as the virtual was not able to be connected
to the online stores and also the delivery charges are very high as compared to the other retailers.
The company faced most of the struggle in the time of Pandemic of COVID-19 when the
customers were seeking for the products online and there were many issues in the supply chain
of IKEA in terms of distribution and delivery (Nakandala and Lau, 2019). The company faced
many difficulties while operating the online business model and meeting all the demands of the
market and the customers. The people were also unsatisfied with IKEA as it reopened its shops
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