Supply Chain Management of IKEA

Running head: SUPPLY CHAIN MANAGEMENT OF IKEA
Supply Chain Management of IKEA
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SUPPLY CHAIN MANAGEMENT OF IKEA1
Table of Contents
1. Introduction........................................................................................................................2
2. Discussion..........................................................................................................................2
2.1. Company Background.................................................................................................2
2.2. Supply Chain Management and Competitive Strategy...............................................3
2.2.1. Elements used in strategic view...........................................................................3
2.2.2. Supply Chain........................................................................................................4
2.3. Supply Chain strategies of IKEA................................................................................5
2.4. The process of Creating Value for the customers (through Supply Chain)................6
2.4.1. Environmental Scanning (SWOT analysis).........................................................6
2.5. Forces of Change that influence the supply chain strategies of the company.............7
2.6. Order Fulfilment processes..........................................................................................8
2.6.1. Order fulfilment processes as per SCOR model..................................................8
2.6.2. Sourcing processes of the company.....................................................................8
3. Conclusion..........................................................................................................................9
4. References:.......................................................................................................................10

SUPPLY CHAIN MANAGEMENT OF IKEA2
1. Introduction
Supply Chain Management (SCM) refers to the process of management of an
interconnected business network that provides services and goods to the customers. It
includes all the processes that transform the raw materials into the final products and involves
active streamlining of the supply side activities of the business for increasing customer value
and gaining competitive edge over the others in the marketplace (Brandenburg et al., 2014).
In this context, this paper shall shed light on the way in which the SCM processes in IKEA,
the largest retailer company that deals with furniture appliances, takes place. It shall critically
analyse the supply chain management of IKEA and how it engaged in the distribution of its
furniture products and other household items, by means of focusing on the business purpose
of the company. It would shed light on SCM and its competitive strategy, the customer
fulfilment, supply chain processes thinking and order fulfilment.
2. Discussion
2.1. Company Background
IKEA is one of the international renowned furniture retailing company that was
established in the year 1943 by Ingvar Kamprad in Sweden (Helmefalk, 2015). The product
line of the company include furniture appliances, children items, bathrooms articles,
bookcase range, home accessories, upholstered furniture, curtain accessories and kitchen
articles. On the basis of these products, IKEA earns the greatest revenue and has become
famous at international level because of the quality of the product. At present, IKEA has
about 338 stores in 43 different nations, majority of which are present in Europe and the rest,
in United States, Australia, Asia, Romania and Canada. All its products and services respond
to the different tastes and needs while retaining the accessibility and functionality feature.

SUPPLY CHAIN MANAGEMENT OF IKEA3
2.2. Supply Chain Management and Competitive Strategy
2.2.1. Elements used in strategic view
a) Environment- The furniture industry and market of about a billion euros, is
rapidly increasing by 10% and this is supported by the booming construction and
the processes of imports and exports (Grzegorzewska, Nizialek & Olkowicz,
2014). The main competitors of IKEA in this market comprise of both the online
and retail furniture stores. Home Deopt, Pottery Barn and The One are the major
retail competitors of IKEA. On the other hand, Alibaba Group and Amazon are its
major online competitors. It is also to mention that despite of the fact that majority
of the designs of IKEA’s goods are designed and produced by Sweden and the
manufacturing has been outsourced in China and other different Asian nations.
b) Resources- The outlets of IKEA all around the globe have different features that
allow both the customers and the company benefitting by means of different
shopping activities. With the same, the company has about 27 trading service
offices in about 23 different nations and 33 distribution centres with 15 customer
distribution centres in 17 nations. Also, there are 43 industry production units in
11 different nations (Sandybayev, 2017). IKEA provides its staffs with high
training to make sure that they maintain the quality in overall SCM processes and
keep up the reputation of the firm (i.e., the processes of procuring, storing,
delivery processes and manufacturing). Also, IKEA always hire competent and
experienced professionals.
c) Objectives- As most of the IKEA stores are located in the developed European,
Asian, Middle Eastern and American nations and this is why, it focuses on the
operation of highly lucrative markets. The key objectives of IKEA are- ensuring
high quality products and business operations, increasing customer attention