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Supply Chain Management IKEA - Assignment

   

Added on  2020-04-15

11 Pages2746 Words879 Views
Supply Chain ManagementIKEA

Table of ContentsIntroduction................................................................................................................................1The key flows in Supply chain...................................................................................................1The Make process......................................................................................................................3SCOR model for the supply chain of IKEA...........................................................................5The Supply chain forecasting.....................................................................................................5Conclusion..................................................................................................................................6REFERENCES...........................................................................................................................71

Introduction IKEA is a multinational group which was found in southern Sweden in 1943 by IngvarKamprad. The company has been the largest retailer of furniture in the world. The companyis well known for its modern designs for different types of furniture and appliances and alsofor its interior designs as they are simple and eco-friendly. The firm is also known for itsfocus on cost control, ongoing development of the product, corporate power and the details ofoperations. In November 2017 the company has owned and controlled around 410 stores in49 nations (IKEA Official Website, 2017). The range of products is about 12,000 on the website of the company. The company isaccountable for 1% of consumption of wood product which makes it one of the biggestconsumers of product in the retail sector. The vision of the firm is to build a better daily lifefor a large number of people as possible and to help them to build their dream house at thereasonable cost possible (Fröding & Lawrence, 2017). The herewith report analyses the effectiveness of four critical flows in supply chainmanagement of IKEA and to evaluate its making process and supply chain forecastingtechniques. In the end, the company is offered with some recommendation in the form ofsupply chain theories that can be applied to IKEA’s supply chain process.The key flows in Supply chainIKEA has the biggest supply chain management in the world in terms of furniture products.Moreover, the company gives first priority to collaboration and coordination beforeconducting operations or activities. Thus, in case the policy does not match the organizationalstructure, it can create an adverse impact on the organization as a whole. Since, IKEAcontains a flat structure in which they provide priorities to each employee (Stadtler, 2015).There is the presence of upper management in functions as well as locations to align thestrategies with structures in order to run the supply chain management smoothly andefficiently.The supply chain of IKEA is inclusive of a production flow. It encompasses raw material,production, distribution, suppliers and to the ultimate customer. Raw material developmenttakes place in the initial sector in which IKEA designs and develops its product in Sweden.1

While the process of designing, IKEA do verification of that commodities whether they aremeeting the requirements of customers. IKEA is based on rare and exceptional products. It uses in-store logistics personnel so as toaddress stock management at store locations. Every in-store has a logistics manager who isliable for the ordering procedures and a product manager who is liable for material addressinglogistics at each store of IKEA (Ntabe, et al, 2015). Once the product is selected andpurchased by the customers, then they are required to head to the warehouse or store toassemble the product by themselves. As the product is picked up by the customer, IKEA hasno need to employee labour thatwould otherwise assume such a responsibility. Thus, thisassists in reducing labour costs for IKEA.For conducting an effective distribution channel, IKEA makes the calculation of the exactquantity to do a production of the same in order to meet the demands of customers. It ensuresminimum wastage of resources during production and warehousing. The company has aglobal distribution channel it can do delivery in large quantities and can make use of flatpackages at a very reasonable cost. This can be considered as a feature of their distributionsystem as their mission is to provide right commodities at right time and place (Seuring,2013). IKEA make a reduction in transportation costs by doing flat packaging. Further, largequantities can be packed easily and transported at a single time. In flat packaging, customersare required to assemble the transported product by themselves only. For IKEA, services ofdistributions play a role of the wholesaler. They help in protecting local space for storage plusdealing with the supplier on an international basis. IKEA is said to be a leading retailer in terms of maintaining good relationships withsuppliers. They make negotiation of prices with suppliers, checking quality measures andfocusing on working and social environment. The code of conduct of IKEA is known asIWAY which stands for IKEA Way of Purchasing Home Furnishing Products. It is inclusiveof minimum rules and regulations that further assist producers in reducing the effect of theiroperations on the environment to make it sustainable. The requirements present in IKEA liftup standards by conducting sustainable activities within the business and placing positiveinfluence on the environment (Ellram and Cooper, 2014). 2

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