Warehouse Inventory and Management

This study material provides insights into warehouse inventory management, including sustainability, IWAY standards, inventory management policy, pillars of inventory management plan, cost-per-touch, maximum/minimum replenishment, flow, high flow, the beer game, and the efficacy of WMS. It also includes a case study of IKEA's warehouse in UAE and its impact on sustainability. The study material explores the warehouse management system and its effectiveness in improving operations. References are included.

WAREHOUSE INVENTORY AND
MANAGEMENT
Warehouse Inventory and Management 0

Warehouse Inventory and Management 1
Table of Contents
Introduction......................................................................................................................................2
Sustainability with warehouse.........................................................................................................2
IWAY standards..........................................................................................................................3
Inventory Management Policy.........................................................................................................3
Pillars of inventory management plan.........................................................................................3
Cost- Per-Touch.......................................................................................................................4
Maximum/Minimum Replenishment.......................................................................................4
Flow.........................................................................................................................................4
Low Flow.........................................................................................................................................4
High flow.........................................................................................................................................5
Beer Game.......................................................................................................................................5
Efficacy of WMS.............................................................................................................................6
Conclusion.......................................................................................................................................6
References........................................................................................................................................7

Warehouse Inventory and Management 2
Introduction
IKEA is the largest home furnishing company. IKEA has adopted the strategy of sustainability to
focus on the efforts of its full value of chain from its raw material related to the lifestyle of IKEA
customers (Port, 2018). The policies of IKEA is based on wood. This also provides the 60% of
the Group’s total requirement in volume. This is the level of key of the organization to enhance
its good impact on sustainability. Dubai (UAE) is the new distribution center of IKEA that
represents one of the largest warehouse investment in the region (Detwiler, 2014). Appropriate
systems of warehouse, processes, inventory management theory, concepts, information systems
and inventory operations has been covered in the following discussion.
Sustainability with warehouse
This organization is the word biggest house furniture retailer has 298 stores in 37 countries.
Every store of IKEA is big and have more than 9500 products. IKEA have more than 1300
customers worldwide.
IKEA store supports the facilities of high flow and low flow of warehouses that are manual.
IKEA facilities of high-flow warehouses, it have retrieval systems and automatic storage to drive
down its costs-per-touch. This strategy of IKEA have present it the world’s most leader retailer
of furniture (Minh, 206).
Example – The warehouse of IKEA in UAE is a colossal piece of engineering. There are more
than 200 employees in the warehouse. This holds capacity to handle 120000 cubic meters in
conventional racking on eight levels of storage. The storage of the store is 100000sqm. This is
split in two sections with 180 parking spaces and 134 loading docks. The reason behind the
development of store is to bring IKEA closer to the local market, and shortening the supply chain

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for its stores and reducing the cost. The time of lead is now much shorter. Sales are better and
cost of transportation is cheaper as these increased the availability of the stock.
IWAY standards
IWAY document of IKEA is based on the ten principles of the UN Global Compact 2000. IKEA
has led the charge, in terms of companies at global level, developing the standards of ethics are
the standards of operating for all of its vendors. Traemand is enthusiastically IWAY complaint
and they believe the standards of IWAY have made a better company. IKEA recognize that their
business has an impact on planet and people at globally and locally. This organization also
follows the guiding principles (Gecko, 2016).
Inventory Management Policy
IKEA impresses its customers with affordable high quality furniture. This organization also
impresses with chain of supply and techniques of inventory management. Each store of IKEA is
big and have more than 9500 products. Management of inventory is function of IKEA is to
support its distinctive proposition of value. Management of inventory of IKEA is a systematic
approach to storing, obtaining, and profiting from finished goods and raw material. IKEA
follows the concept of the right stock, at right levels, in right place, and at right cost (Lu, 2014).
This is the part of the supply chain, which includes the overseeing purchases and controlling.
Pillars of inventory management plan
Pillars of inventory management plan are coordination for performing the vital operations (Rai,
2014).

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Cost- Per-Touch
Other meaning of the cost per touch is to means more steps by using the more focuses means
more footsteps. IKEA uses location of retail for warehousing. This is the easy way of
warehousing for customers to serve and navigate. This has the result for saving on delivery,
shipping, etc. The customers has the facilities to select the products from warehouse and go
home. This makes IKEA to maintain the low prices (Warn, 2016).
Maximum/Minimum Replenishment
Locations of IKEA have and in store logistics manner. The manager of IKEA by using the
system of inventory can view the levels of stores. This kind of system presents store-level points
of reorder. IKEA stores may different in selling partners. This presents level of stock. This
maximum and lesser replenishment helps IKEA to maintain the optimum stock. These levels
presents set of the stock that needed for single day. This kind of references helps to catch the
deviation (Logy, 2017).
Flow
The facilities of IKEA at organization are either low-flow of high-flow (Schofield, 2016).
Low Flow
This presents the items has the lesser capacity of sell. These items has the lesser movement. This
is related to back to cost per touch. The employees of the organization are moving low flow
items, this drive the cost up. As there is, less movement so there is necessary requirement of
manual process. By using the system of inventory, organization uses labour efficiently.
Employees of IKEA not needs to waste the time on further activities as this organization
provides the facilities towards having the products in the right place.

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High flow
The high-flow presents the 20 % of the SKUS that make up 80% of the IKEA volume of
inventory. These products are accessible for tracking and self-services of inventory. There is no
need the help of person to move items that saves time. Storage at automatic level reduces the cost
and cost per touch. Products at IKEA are easy to grab and find than the chances are there is at
high flow.
Inventory management of IKEA has shown the pay off. The system of IKEA reduces
replenishment, aids, costs, and increases efficiency.
Beer Game
Beer game is a popular tool in teaching supply chain dynamics. This concept also confirm the
widely discussed bullwhip effect. This is developed by sterman. This distinguishes four entities:
A factory, distributor, retailer and wholesaler. Whether computers may play game without
human invention and even whether computers may qualify as supply chain at least in this
restricted environment.
It is assumed that only order quantities are shared between the decision makers at the point of
sales. There is no information shared by them. In the every procedure of the game, the managers
have the right to decide the size of the order. The size of order communicate to suppliers. The
game shows the effects of delays in transferring the materials, information and missing
information exchange. This shows the stability towards the demand of customers, backlogs,
inventories, and the cost of associated incurred by the four companies vary considerably.

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This game teaches the impact of the decisions, made without proper information, on all of the
members of supply chain, and in visualizing the effect of bullwhip.
Efficacy of WMS
IKEA is changing their way into being a multi-channel retailer. This secure the growth. This
present the passionate about the operation of distribution in WMS. Warehouse management
system is the way of supporting the availability, maintenance, and configuration the system.
Warehouse management system of IKEA is highly automated that uses the effective systems like
retrieval, automated storage, and conveyer belts (Harris, 2019). This improved the operations of
warehouse. The system of warehouse management has developed the sophisticated cranes that
established the handle pallets without any damage. This system has improved the stores in the
nature of stored in racks or to transfer out pallets.
Conclusion
The group of IKEA established its solidarity with the management of warehouses. This
organization also follows the standards of IWAY that helps to manage the system of IKEA in a
effective manner. The policies of inventory management brings the new strategies for the
organization to make the beneficial impact. The beer game is also in the nature of supporting the
supply chain of the organization. The warehouse management of IKEA is also in the nature of
more effectiveness that presents the systematic approach of the IKEA.

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References
Detwiler, P., 2014. Approach of Sustainbility. IKEA, I(07), pp. 37-47.
Gecko, T., 2016. Inside Analysis. IWAY Standards, I(69), pp. 220-228.
Harris, A., 2019. System of IKEA. WMS, IX(69), pp. 20-29.
Logy, B., 2017. Business Management. [Online]
Available at: https://businesslogisticssite.wordpress.com/2017/10/20/inventory-management-
ikeas-strategy/
[Accessed 18 05 2019].
Lu, C., 2014. Inventory Management System. Supply Chain, I(69), pp. 50-69.
Minh, L., 206. Warehouse of IKEA. IKEA, III(63), pp. 62-68.
Port, H., 2018. Analysis of IKEA. [Online]
Available at: https://bohatala.com/tag/introduction-to-ikea-company/
[Accessed 16 05 2019].
Rai, A., 2014. The IKEA Way. Standards of Business, VII(89), p. 02.
Schofield, J., 2016. IKEA. Flow, VI(89), p. 02.
Warn, D., 2016. Inventory management. Pillars of Management, X(56), pp. 09-16.