Analysis of IKEA's Supply Chain Management (MGT6801 Report)

This report provides a comprehensive analysis of IKEA's supply chain management, examining key aspects such as supply chain relationships, risk mitigation strategies, and sustainability initiatives. The report delves into methods to improve relationships with suppliers, including effective communication, issue resolution, and the implementation of supply relationship management programs. It also explores how IKEA mitigates supply chain risks through the PPRR risk management model, cyber security measures, and risk assessment software. Furthermore, the report investigates IKEA's efforts to enhance supply chain sustainability by mapping the supply chain, fostering communication, and integrating sustainability into its overall management practices. The analysis incorporates relevant concepts and models to provide a detailed understanding of IKEA's supply chain operations and strategies.

Supply chain management

INTRODUCTION
Supply chain management is referred as the procedure that is connected to run flow of wares and
services from one position to a different as well as it contain the procedure of convert raw stuff
into finishing products (Michalski, 2018). It helps out industry to run every one provide
performance in effectual method, improve client worth and make easy to gain sustainable
competitive advantages in competitive market place. Supply sequence organization represent as
the systematic activity of preparation, functioning, observe and domineering of provide sequence
activities in order to create value, leveraging logistics and maintaining competitive infrastructure.
In this report the chosen organisation Ikea which is a Swedish multinational conglomerate which
deals in scheming and trade easy to bring together fixtures products and kitchen appliance.
Individual organisation is founded in 28 July, 1943 by Invar Kamprad (Lechler and et.al., 2019).
It provides its services in 445 locations. In this report means that better give chain relationship
and factors that reduce risk and cost related to supply chain is discussed. Apart from that various
factors that improves sustainability is covered in this plan report.
TASK
The ways in which supply chain relationships can be improved.
Supply chain relationship: supply chain relationship is referred as the relation between both
suppliers and customers who connect them in efficient manner so they can easily exchange
information, demands various data and ensures the proper visibility of status (Soheilirad and
et.al., 2018). As it seen the organisations recognize the requirement of each item. Effective
supply chain relationship facilitates to reduce cost, help in understanding capacities and
capabilities as well as improves quality of respected process. The organisation must improve the
money saving in the design of the furniture. There are various factors and ways that improve
supply chain relationship between customer and suppliers that affect business performance and
profitability. These factors are discussed below:
Repeatedly correspond with provider: IKEA put together different communication means that
make easy respective organisation to stay in contact with provider. Transparency in
communication and various organisational activities help to create trust and understanding
between the partnerships. Effectual supply chain relationship facilitates to know them and stay
away from all communication goes down (Papetti and et.al., 2019). Throughout uphold effective

relationship business ensures the availability of materials and other resources that help to attain
all defined goals and objectives in effective and efficient manner.
Resolve issues quickly: As provider and business have their own goals and objectives so,
the act or perform all activities accordingly. Suppliers want to sale materials at high process on
the other hand business want to buy the material at lower price that creates issues between them.
So, Ikea resolve all issues and conflicts in efficient manner as well as maintain effective and
strong relationship. Properly resolution of makes trust among business and supplies better quality
material at appropriate market price.
Maintain appropriate agreement: Maintaining appropriate agreement between suppliers
and business is the most important step that is essential to build effective relationship. IKEA
prepare a clear crafted contract in which all terms and conditions are described clearly. It
eliminates conflicts, disagreement and problems that are occur between business and suppliers. It
facilitates to maintain effective relationship as well.
Supply relationship management program: To make effective relationship with supplier various
strategies and programmes are required (Ansari, 2017). IKEA organisation determine various
goals and objectives that are established through using different parameters such these goals
must be specific, measurable and achievable within defined period of time. All activities are
listed by the respective organisation that appropriate process, goals and roles are established that
only achieved by the support of suppliers. Suppliers are important factor that plays essential role
in business success through providing better quality material which is utilised to produce final
products.
Apply new technology: IKEA adopt various new technologies and automations to keep tracking
all relative information about their suppliers such as supply management software and purchase
order management software (Silva and et.al., 2019). This software are uses by the respective
organisation to create, process and order that simplifies the work of suppliers as well as create
effective relationship. These supply relationship management technologies provide visibility to
suppliers and respected organisation that make it aware about all supply chain impacts and
mitigating all risk as well.
All these factors and ways are analysed properly by the IKEA organisation and
implement them in order to maintain effective and strong relationship with suppliers. When
organisation has strong relationship with suppliers than they provide better quality materials to

the business at low prices that affects overall production and operation cost as well as
organisational profitability. As quality of final products are depends upon the raw material
quality so, it is necessary for respective organisation to build effective relationship to gain
various sustainable competitive advantage than its competitors.
How does the organisation (managers) mitigate supply chain risk and reduce supply chain costs?
As it is seen in today’s modernized world that supply chain risk mitigation may be hard or
inconvenient due to potential and globalization cyber interference. An input division of
IKEA’s achievement is attributed to its connections and connection management with
resources dealer and producer to get high-quality value on what it obtains. By calculate a
number of points the risk can be condensed in production.
Leverage the PPRR risk management model: The PPRR risk management is considered
a famous world wide supply chain risk management strategy and is used by retailers
around the world. The full form of PPRR is prevention, preparedness, response and
recovery.
(a) Avoidance- Organisations have to take a good safety measure for the supply chain
risk mitigation.
(b) Attentiveness- The organisations have to implement and develop a contingency
plan is any kind of the emergency happens.
(c) Reply- It should be on the priority bases of the organisation to carry out the
unforeseen event plan in order to reduce the crash of the disorderly event.
(d) Recuperation- the corporation have to carry on operation and get possessions
running at normal capacity as soon as potential.
Management of the environmental risk chain in the organisation: this is significant for the
organisations to avoid environmental risk in the bring chain, the organisation should make plan
in advance only (Gupta, 2019). Supply chain risk assessment software enables the organisations
to take a protective approach to risk management by provided that the organisation with the
greater visibility into the structure of the supply chain. It’s also important that you develop an
unforeseen event plan sometimes that’s come up a few times, now.
The cyber supply chain risk management: As it is seen that so many transaction company, the
things which be appropriate on the internet and the other digital technologies play a huge role in
optimizing supply chain operations, but they also leave the business exposed to cyber security

threats, like malware, release ware, phishing, and hacking. Environmental risks can further
composite these vulnerabilities.
To observe the supplier’s economic stability: There are so many significant rating agencies
which offers prophetic economic immovability reporting on thousands of potential suppliers in
order to reduce the external business risk that comes with dealing with third –party vendors.
Although this won’t help you with existing vendors, it can help the organisations develop more
secure business relations and reduce your susceptibility to supply chain risk.
Track the right freight carrier metrics- As a retailers, the organisations rely on the
commodities received at the right place at the right time in order to make the companies selling
window, so it’s significant that the collaborator of a freight carrier that can deliver consistent
results, unfortunately not every carrier is up to the face up to, and even a single late delivery can
interrupt your complete chain.
Implement a logistic supply chain management: To the organisation it is important for the
company to work and analysis different supply chain management process. It is helpful for the
growth of the company to work and manage effective growth in retail industry to work and make
logistic in the event in supply chain management. This could be helpful for the growth of the
mitigate supply china risk to understand the supply chain management cost and work as per the
need of the company and its size.
Conduct Internal risk awareness training: management is not that helpful for the team
management as it could be related to work and manage the activities and resist the nature of the
company. Building a risk and make effective strategy to mitigate that risk is not that important
for the company. They should be able to make internal risk consciousness and make training
productivity to work and analysis on the management process. It would be helpful for the
company to make common supply chain organization, risk management practices, make
computer and risk related activities for the growth of the company. Further all of the strategies
are helpful to mitigate the risk and improve effective supply chain management cost in the
company.
Consistently monitor risk: this might be seemed difficult that company are not able to make
consistent eyes on the risk major activities. But it would not be that difficult, supply china
risk management company are really and helpful in protecting the data. One of the easiest
ways to promote and work on the data is use different growth and makes automatic data

collection and makes risk management strategy to analysis basic effective growth in provide
and make security and peace of the mind in company.
Use data to model key risk event scenarios: it is very helpful for the companies to make
decision on the basis of prior risk management profile. But at the same time it could be helpful
for the company to work and manage their use of data and make model key risk event and work
as per the management in technologies (Pourjavad, 2018). Big data analysis are able to make
management of retailers, including and using scientific data and make productive analysis it
could be analysis and make imagination of the company.
Consolidate your data for easy access: with the help of management and ability to make much
solution it could be related to work and manage effective eco-system and work as per the growth
of the different sector (Cagliano, 2017). With the help of different data analysis and make
consistency in the data protection of supply chain management procedure. It could be related to
make effective supply chain management process and make mitigate the plan to work and
manage the high risk in the supply chain management process. All are very helpful and effective
for the achievement in the company to analysis and make sure to work and make different data
analysis in order to make strategic decision making.
How company can enhance its supply chain sustainability?
The IKEA Company has needed to work upon its supply chain management so that it helps
them in improving consumer experience. Slot in sustainability within company supply chain
management so that risk of company failure will reduce and leads towards company profitability.
Through these company can strengthen its market position in competitive environment. It aid is
enhancement of overall performance and profitability of company.
Map your supply chain- Company need to work upon where they are lacking and what are
the weakness of this supply chain management. Sometimes ineffective supply chain fills turn
around failure of company operations as well as business activity (Zhou and et.al. 2020). So by
ensuring sustainability efforts of supply chain they can easily manage competitive edge in high
competition environment. By addressing problems company must focus on key strategy in
formulating decision making that Help Company in building strong and effective supply chain.
After that continuous audit must be take place so that they easily address weak areas and its
strength in supply chain.

Converse- If Company want to maintain its sustainability in its supply chain organization
then there is perfect solution that is communicate with cultural and core values in its own
supplier and customers. Company can work upon fulfilling effective communication with well
organised code of conduct so that sustainability efforts of company management get improvised.
By this optimum utilisation will take place in order to guide supplier team so that practical
solution will be bring and lots of opportunity for company betterment. By maintaining proper
flow of communication leads towards creative solution that ultimately help in building strong
supply chain.
Supplier performance- Company need to established appropriate standard for their pre determine
selected target supplier (Lai, 2018). Benchmark of self-assessment will lead towards more deep
understanding to solve the problems that occur in supply chain management. By this burden will
reduced from the ends of supplier and as a result lost of valuable multiple solutions will be
delivered by supplier to manage sustainability of supply chain. Supplier performance is
necessary to gain sustainability in competitive market environment.
Develop training programs- For improvement supply chain with sustainability lost of
behavioural change has been seen by the company (Deng, 2019). Training facilitates best
practices of team that leads towards successful implementation of distribution with the help of
effective training supplier. From side to side effective training productive solution will be
delivering from the ends of supply chain management team. This help in improving relation of
supply team with company. It will fulfil all the requirement of supply chain team that is essential
for proper flow of management and deliver desired product to the consumer.
Focus on performance improvement- When effective supplier team improve their
performance through effective training then audit programme can easily measure continuous
improvement of each staff. Self-assessment programme communicate and building program that
resolve conflict face in supply management team. Company must involve the concept of
transparency in its effective team so that it will boost the morale of employee to improve the
performance.
Industry collaboration- IKEA organisation keeps in touch with relative suppliers in order to
make them important part of business to ensure sustainability of supply chain in competitive
environment (Dellino and et.al., 2018). Supplies also provide information about the current
market trends and other competitors that facilitates business to gain various sustainable

competitive advantages as well. Collaboration is required for the business to gat appropriate and
quality material on time that help to produce quality outcome that ensures sustainability of
business.
As IKEA expand various effective strategies and preparation to manage supply chain and
gain sustainable competitive advantages in effective as well as efficient manner. Respective
organisation communicates with their suppliers in order to assure the sustainability in
competitive market environment that provides competitive advantages to the organisation as
well.
Recommendation
To get a good hold in the market if the environment is changing then the IKEA also have to
change according to the circumstances which are taking place in the industrial market. Although
the administration should place the customers need on the priority bases.
Conclusion
This report includes the ways how the supply chain relationship can be improved in the IKEA.
Although this report includes the impacts which the above mentioned organisation has to face the
impacts related to logistics and the supply chain on the ROI (Jemai, 2020).And the clarification
or the proper study on the strategies used by the IKAE for the betterment of the organisation. On
the other hand the appraisement is also applied on the use of reverse logistics.

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