Supply Chain Management Challenges and Solutions

This assignment delves into the crucial role of supply chain management for business success. It highlights the importance of effective quality control and pricing strategies within supply chains. The text discusses various challenges companies face in managing their supply chains efficiently. Despite these risks, it emphasizes how successful businesses like Ikea effectively mitigate them. The assignment draws upon several academic sources including books and journals to provide a comprehensive understanding of supply chain management principles and best practices.

Logistics and Supply Chain Management

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Supply chain management theories........................................................................................1
Importance of the strategic wheel in developing a supply chain strategy..............................1
Comparison of different organisations/supplier relationships and their supply chains..........2
TASK 2............................................................................................................................................2
TASK 3............................................................................................................................................2
Improving the logistics’ practices in organisations................................................................2
Information technology that can be used to integrate different parts of the supply chain.....3
Assessment of information technology that can be used to develop the relationship between
organisation and its suppliers.................................................................................................4
Management of possible barriers to achieve an integrated supply chain strategy.................5
Strategies to mitigate the risks associated with information technology in SCM..................5
TASK 4............................................................................................................................................6
Assessment to secure competitive advantage by implementing SCM strategy.....................6
Analysis of the logistic practices in Ikea................................................................................6
Contribution of IT in managing supply chain management in Ikea.......................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................1

INTRODUCTION
This assessment is about logistics and supply chain management where different
organisations adopt various methodologies to improve the business and its performance. The
logistics and supply chain are very crucial factors for numerous companies to be in competition.
This assignment will focus to understand what supply chain management is and how it is
important for the large as well as small organisations (Christopher, 2016). It helps to keep up the
economic demands. This report will also cover various supply chain theories and their strategic
management in context of IKEA.
TASK 1
Supply chain management theories
From the last decades, various researchers are focussed on supply chain management
(SCM) theories. According to them, it is the approach to minimise cost to manage flows among
different stages of any business which includes management of numerous products, their
information and also upstream and downstream in this chain. By SCM, companies like Ikea gain
lots of benefits in its business. It is basically a proper management of networks that interconnect
different businesses. The supply chain management is a process that spans with bringing raw
materials from suppliers, then manufacturing products to make them reach to its consumers. The
entities like Ikea must have effective supply chain network to be regularly competitive in market.
Now, it has become very crucial in order to make a business successful (Some theoretical
foundations of Supply Chain Management and Supply Networks: the role of social networks in
selecting partners, 2004). It has also become a backbone for the growth of organisations.
However, SCM is being more complex and dynamic with time due to globalisation and
expansion of other big companies. If an entity is managing effective supply chain then it will
prove to be a successful company.
Importance of the strategic wheel in developing a supply chain strategy
Strategic wheel of SCM is an essential tool to create unique values in the world of tough
competition. It is a technique that helps to form a clear picture of creating values. For instance,
in any business context like Ikea, the wheel of strategies help for product development, sales and
services that reached to customers. In other words, it helps entities to know how to win over
other organisations managing strategic approaches towards SCM (Mangan, Lalwani and
1

Lalwani, 2016). It is important to apply various strategies using strategic wheel in company.
This will help to make any company stand out from others and attract more customers. Rim of
strategic wheel shows unique activity configuration and resources. Every wheel differs from
each other in terms of value creation because each organisation has different purpose and unique
activities to drive the purpose (Stadtler, 2015). Ikea is a manufacturing company that sells home
and kitchen appliances, furniture, accessories, etc. to customers. This entity follows strategic
wheel to get robust success in this field. By using this wheel, any firm can achieve its goals and
objectives in a practical way.
Comparison of different organisations/supplier relationships and their supply chains
It is essential for organisations to manage healthy relationships with their suppliers to
maintain the supply chain for long term. There are companies like Ikea, Tesco, etc. that have
different relations with their suppliers. By this, companies can keep the quality of products and
get time to time delivery of various goods and items.
Supplier relationship of Ikea: This organisation is a multinational manufacturing entity that is
known for selling goods related to home and kitchen appliances, furniture, etc. to its customers.
It has maintained healthy relations with its suppliers. Due to this, it is able to perform well in
market till now and through this, Ikea is getting a firm’s growth and profits.
Supplier relationship of Tesco: This firm is a large supermarket retailer but still, it does not
have a remarkable relation with its providers of goods and other products. The entity tends to
find new suppliers now and then to reduce its manufacturing and supply costs (Jacobs, Chase
and Lummus, 2014). It is not good for the entity due to making so many variations regarding
suppliers and losing their trust.
TASK 2
Covered in PPT
TASK 3
Improving the logistics’ practices in organisations
Ikea impresses its consumers with affordable, high quality furniture and competitors with
its unique supply chain and inventory management techniques (Rushton, Croucher and Baker,
2014). Points which contribute in improvement are:
2

1. Proper Planning:
It involves procuring of goods, storage facilities and delivery of products to their location
(Coyle and et. al. 2016). Ikea's various functions work together to support its distinctive value
proposition.
2. Environmental-Friendly Products Based on Green Procurement:
IKEA uses an “E-Wheel” to evaluate the environmental impacts of its products. The
resources so obtained can be recycled and are renewable.
3. Sustainable Relationships with Suppliers:
IKEA’s success is credited to its communication and relationship management to get
good prices on what it procures (Adam Robinson, 2017). It takes care of employees while
following national and international laws.
4. Efficient Transportation:
Ikea may decrease the expenses by providing faster delivery of products. Following
factors should be considered for efficient transportation:
 A logistics firm should opt for the shortest yet safest route which saves money as well as
time.
 It need to use Cost-effective packaging that ensures low investment and safety of goods
and also Optimize packaging so that it occupy less volume and it does not increase the
weight of package.
Information technology that can be used to integrate different parts of the supply chain
All branches of IKEA (Franchisees) are connected to a common system networking
named “inter IKEA system”. The basic unit of information is provided by managers at local
stores (shift / branch/ area/ territory managers), all collaborating to disseminate information from
local up to international level. Human computer interaction results in cost reduction, deployment
of business, productivity transmission, integration and enhancement of business.
Data Security Control/ Biometric Control:
Employees are supplied with specialized computerized made IKEA identity cards. When
these are swiped on a card reader, they have a data of time in, working hours and time out. For
3

enhanced security, each card contains picture of employee (which a shift manager can check on
duty).
Radio Frequency Identification (RFID):
Newer technology enables remote and automated gathering, sending information
between RFID tags (attached with the products) and readers. RFID tag consists of an integrated
circuit having specific data which could range from a unique identity number up to a thousand
bites data.
All necessary informations get flashed at device when tags are shown to readers which is
connected with stores at local area networks and higher level management (at international level)
as communication satellites are in operation as well (Fernie and Sparks, 2014). So, information
propagating starts when a product is shown to reader without any delay. Ikea enjoys the
advantages given below:
 Data transmission, storage and analysis has become much easy
 No need to contact directly as Information between tags and readers is rapid.
 Easy access to inventory and stock level Sales accurate forecasts could be made
Enterprise Resource planning (ERP) tools:
ERP system (e.g. Baan, SAP, People soft, etc.) has become the core of many companies
for their IT infrastructure. This system has enterprise wide transaction processing tools which
capture data, reducing the manual activities and tasks associated with processing financial,
inventory and customer order information. ERP system has achieved a high level of integration
by utilizing a single data model, developing a common understanding of what the shared data
represents and establishing a set of rules for accessing data (Fernie and Sparks, 2014).
Assessment of information technology that can be used to develop the relationship between
organisation and its suppliers
IT can play an important role to build strong relationships in between the entities and its
suppliers. It establishes communication between the two. The information technology also
creates partnerships. It is helpful to develop strong relations through these points: By creating channels for communication: Communication is the main key to make any
relationship healthy. It creates transparency between persons who are communicating. IT
4

prevents missteps such as wrong inventory or missing orders. By communicating through
various IT tools, misunderstanding can be eliminated from both the channels. By creating transparency: When organisations like Ikea and its suppliers communicate
timely, it is beneficial for the two of them to build trust level. Information technology can
create and develop solid trust in both parties through filling the communication gap
(Schönsleben, 2016). In this way, two channels interact any time they want and resolve
any misunderstanding regarding product supply, transportation or quality of goods.
 Analysis: It enables manufacturing and supply chain options and after that, it helps to
maximise the best utilisation of assets.
Management of possible barriers to achieve an integrated supply chain strategy
Integrated supply chain: Meaning of integration in supply chain is maintaining
collaboration, decision sharing, sharing vision and trust between producer and consumers. It is
essential for a successful supply chain management.
There are many barriers in integrating supply chain management strategies. Some of
them are lacking visibility, lacking predictability, less information and optimisation. These are
the main obstacles to manage integrated Supply chain. To overcome these drawbacks, following
initiatives can be taken: Improving visibility: It means that entities need to enhance visibility throughout the
supply chain by sourcing of raw materials and deliver them to customers.
 Increase predictability: Ikea needs to increase predictability by creating transparency
with suppliers and consumers. It is the way to manage integrated supply chain in
company.
Strategies to mitigate the risks associated with information technology in SCM
There are various risks in implementing strategies of supply chain management. These
are the barriers in managing integrated Supply chain SC. One of them is the risk that is
associated with information technology (Govindan, Soleimani and Kannan, 2015). These are as
follows:
Inventory management risk: It is the risk related to inventories. If the problem of inventory
occurs then it is difficult to know how many inventories are there. So, it can be more challenging
knowing exact number of inventories.
5

Risk of loss of data: Loss of data managed in database can impact negatively to the firm.
There are strategies to manage these risks in which main strategy is to keep the backup of
every data and information related to products and goods that can be used in case of any loss.
TASK 4
Assessment to secure competitive advantage by implementing SCM strategy
There are many strategies to be in competition and to be over other competitors. By
managing better communication between suppliers and companies, the centres of healthcare can
get success in its business. Additionally, it can be said that to retain customers and quality of
products. Ikea needs to manage IT risks so that it can be able to maintain all data and other
information and prevent from any loss.
Analysis of the logistic practices in Ikea
Ikea’s supply chain system is very strong. It has a strong brand image in the market. It
provides high quality services to the consumers. The healthcare centres maintains its logistics
very properly. This has put large investments to make better logistics and supply of goods. It
makes sure to deliver products to customers in a given time frame. In order to do this, they take
care for their transportation and communication with suppliers timely so that any
miscommunication or misplacement of products can be prevented (Prajogo, Oke and Olhager,
2016). This company has been consistent in managing logistics and gained robust success.
Contribution of IT in managing supply chain management in Ikea
The information technology plays a crucial role to manage supply chain in companies
like Ikea. It is a firm that sells furniture and home appliances to buyers. This is a large
multinational organisation to serve goods to customers. The entity uses IT to manage its supply
chain. It makes the use of information technology to connect with its suppliers and investors
(Rushton, Croucher and Baker, 2014). Through this, the entity easily manages a strong
relationship with its suppliers. Company is also properly maintaining the logistics by which it
moves goods from one place to another.
6

CONCLUSION
From the above report, it can be concluded that supply chain management is an important
factor to give success to any firm. It is also helpful in managing quality and pricing of products
in an effective manner. However, there are various issues occurred to handle it efficiently, still
companies like Ikea tackle the risks associated with it properly (Bhat, 2014).
7

REFERENCES
Books and Journals
Christopher, M., 2016. Logistics & supply chain management. Pearson UK.
Mangan, J., Lalwani, C. and Lalwani, C. L., 2016. Global logistics and supply chain
management. John Wiley & Sons.
Stadtler, H., 2015. Supply chain management: An overview. In Supply chain management and
advanced planning (pp. 3-28). Springer, Berlin, Heidelberg.
Jacobs, F. R., Chase, R. B. and Lummus, R. R., 2014. Operations and supply chain
management (pp. 533-535). New York, NY: McGraw-Hill/Irwin.
Rushton, A., Croucher, P. and Baker, P., 2014. The handbook of logistics and distribution
management: Understanding the supply chain. Kogan Page Publishers.
Coyle, J. J. and et.al., 2016. Supply chain management: a logistics perspective. Nelson
Education.
Bhat, K. S., 2014. Logistics and supply chain management (Vol. 1). Himalaya Publishing House.
Fernie, J. and Sparks, L., 2014. Logistics and retail management: emerging issues and new
challenges in the retail supply chain. Kogan page publishers.
Schönsleben, P., 2016. Integral logistics management: operations and supply chain management
within and across companies. CRC Press.
Govindan, K., Soleimani, H. and Kannan, D., 2015. Reverse logistics and closed-loop supply
chain: A comprehensive review to explore the future. European Journal of Operational
Research. 240(3). pp.603-626.
Prajogo, D., Oke, A. and Olhager, J., 2016. Supply chain processes: Linking supply logistics
integration, supply performance, lean processes and competitive
performance. International Journal of Operations & Production Management. 36(2).
pp.220-238.
Online
Adam Robinson, 2017, 6 Important Tips For Effective Logistics Management. [online].
Available through <http://cerasis.com/2017/05/12/effective-logistics-management/>
Some theoretical foundations of Supply Chain Management and Supply Networks: the role of
social networks in selecting partners, 2004. [Online]. Available through
<http://www.impgroup.org/uploads/papers/4572.pdf>
1