IKEA Supply Chain Management: Logistics, Issues & Solutions-MGT 6801

This report provides an analysis of IKEA's supply chain management, examining key aspects such as customer service, inventory management, transportation, warehousing, and capacity management. It explores how these elements contribute to IKEA's competitive advantage, utilizing the VRIO framework to assess resources like talent management, brand image, and financial resources. The report identifies critical issues, including communication and coordination challenges, and evaluates IKEA's out-of-market strategy. It further suggests improvements by aligning company structure with supply chain policies, enhancing communication, and adopting strategies to meet international demand effectively. The analysis underscores the importance of strategic supply chain management for IKEA's sustained success and competitive positioning.

Supply chain management

Table of Contents
INTRODUCTION...........................................................................................................................1
Supply Chain Management In IKEA ..............................................................................................1
Customer’s service and inventory ..............................................................................................1
Transportation.............................................................................................................................2
Warehouse and capacity management........................................................................................3
competitive advantages. .............................................................................................................3
Critical issues emerging in IKEA ..............................................................................................5
Way to respond to emerging issues.............................................................................................6
Finding and suggestions..............................................................................................................6
CONCLUSION ...............................................................................................................................7
REFERENCES................................................................................................................................9

INTRODUCTION
Every successful business have ensures that its offering should reach to the market at
right time and at right quantity so that value for customers could be increase on constant basis.
Supply chain management is define as the flow of goods and services along with the all the
procedures that are utilised for transferring products from the place of production to the final
customers. This is associated with the streamlining and organising all the activities that are
related to supply of products and service which allow company to enhance customer's value
along with the build strong competitive advantage within market place(Chase, Shankar, and
Jacobs, 2018). It provides support to the company in increase its profit and longer sustainability
through making access of the products to the customers in way which generates higher revenue
for the company. A manager of supply chain has been consisting of the responsibility to manage
and coordinated all the logistic of supply chain that is associated with strategic planning,
sourcing of raw material and manufacturing and delivery of products to the customer. This report
is based on the IKEA which is an Swedish based multinational conglomerate company which is
specialise in designing and selling read to assemble furniture. The below is consist of the
analysis of how logistics and supply chain management is conceived, support deliver and
developed within the organisation. Moreover this also includes the concept and models for
supply chain management and relevant management.
MAIN BODY
TASK 1
Supply Chain Management In IKEA
Customer’s service and inventory
Customer serviced is refers to the act which is undertaken by the company in order
provide support to potential and existing customers. It involves face to face and telephonic
conversation by the respective of the company which solve queries of customer on behalf of
entity. This is one of the key factor that is used by company to satisfy customer their queries
along with this, it also an mechanism of taking feedbacks so that products and services could be
improved as per their needs and requirements(Kshetri, 2018). With support of such initiatives
company will ensures higher customer's satisfaction so that they will engaged with firm for
longer period of time. As it is associated with providing assistance to people that are being
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buying products and services from company and fulfil their demand. For the good reputation and
brand image it is necessary for the company to strengthen its customers service department with
hep of formulation of effective strategies and approaches.
Inventory management is refers to the step in supply chain which is an systematic approach of
ordering, storing and utilising inventory for better products and services. This is concerned with
management of raw material and its components, finished goods, warehousing and products of
the items. Meeting needs and requirement of the customer is the basic mission of the company
and in this inventory management play vital role as this has been balancing product availability
against anticipated market demand. There are several methods and techniques which are used by
the company for inventory management and some of them are discussed below:
Just-in -time inventory management: This is one of the great way to reduce inventory
cost, as in this company has been receive the inventor on time when it is needed rather ordering
too much in advance(Tiwari, Wee, and Daryanto, 2018). This eliminates the risk of dead stock
that cannot be sold or used by customers.
Economic order quantity: This is define as the formula that is used for ordering quantity
of inventory with the set of variables like total cost, demand rate etc.
Transportation
Transportation is define as the mode of delivery which is undertaken by the company in
order to transfer their goods from the place of production to market for the purpose of sale. it is
also refers to the only source for delivering offering to the potential customers in return of
generating higher profit. The cost which is involve in the transportation is also include by the
company in price of products and services which are required to paid by customers(D'Eusanio,
Zamagni, and Petti, 2019). There are various option that can be chosen by the company for the
transportation such as road, railway, sea ways etc. in this IKEA has chooses the railway
transportation mode for transferring goods from manufacturing factory to it physical stores that
finally deliver to customers at market place. The main aim behind choosing this transportation
mode is to reducing, replacing and rethinking a great agenda in the company's principles and
policies(Russell and Taylor, 2019). IKEA has been contentiously trying to reduce the usage as
high as possible in order to decrease the negative impact of pollution on environment. IKEA
Company motive is restore fossil fuels for the sustainability of environment along with reducing
carbon emission in air which induce from airways transportation. This company as been aims to
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work for the obtaining CO2 depletion with alternative use of transportation mode such as sea and
railways.
Warehouse and capacity management
Warehousing is define as the procedure of storing raw material and finished with safety
and security for the motive of future sale. Warehouse is the place which is used by company to
store its goods as stock. Company could be having it own warehouse or can e store their products
to other warehouse through providing them rent or can take on lease. Big and multinational
companies have consist of their own warehouse as because they have been associated with the
large scale operations and productions (Nunes, Causer, and Ciolkosz, 2020). With support of
this company manage their stock and make it available within market whenever customers
customer demand for the goods and services and supply do not fall short. The warehouse
capacity of IKEA is of storing more than 9500 items in it. The company has been comprises of
the low and high flow warehouse under its own name. The company is having more than 400
stores across the globe in which 40 stores is in United State.
 With help of this warehousing company get central location for storage and provides
support to decrease the production gap.
 This improves order processing, it means that whenever consumer place a order that time
products are available for shipping.
 It is stands for the better storage management, through this company ensures better
production quality as this is also utilised track raw material and finished goods.
Capacity management is define as the action which is undertaken to maximize its
activities and operations along with the output from production process. The capacity of the
company has been evaluated that how much a company can achieve, produce or sell its products
and service within the stipulated period of of time which help in the enhance the sales for the
company.
competitive advantages.
To stand higher and different from the rival entities within organisation, it is necessary
for the company to maintain strong competitive advantage(Hong, Zhang, and Ding, 2018). As
this is the factor which provides chance for attaining better and more than firm working on the
same level, within same industry and in similar products. With support of this, company brings
higher revenue, strong brand image and more market share and act as a advantage for entity.
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Companies has been analysing their competitive position within market through VRIO analysis
framework which evaluate internal resource which help company to maintain its competitive
edge. VRIO analysis for IKEA is explained below as:
Resources Valuable Rare Imitable Organisation Competitive
Advantage
Talent
management
√ √ X √ High
Competitive
advantage
Brand image √ √ X √ High
Competitive
advantage
Customer
rating
√ √ X √ High
Competitive
advantage
Human
Resource
√ X √ √ Sustainable
Competitive
advantage
Financial
resoiurces
√ X √ √ Sustainable
Competitive
advantage
Talent management: This is define as the attracting and retaining talented and skilled employees
through providing them motivation and training and development programme.
For IKEA its talent management quality is valuable for the company which is also rare
and cannot be imitated by nay other firm along with this, it is also well organised which reflects
high competitive advantage.
Brand image: It is refers to the reputation of the company and the position that company holds
in mind of customers.
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IKEA's brand is the most valuable resource which makes it popular worldwide, this
cannot be imitate by other companies so this stand as high competitive advantage for entity.
Customers rating: This is one of the important concern for every company for the higher
customers base, sale and competitive advantage(Mosteanu, and. et. al., 2020). This is shows the
customer's point of view for products and services along with the company.
Human resources: This is defined as the workforce of company that work together to achieve
common goal of an organisation.
Human resource in IKEA are the well organised and act valuable for company but this
resource is not rare that can be copied by other firms, thus represent sustainable competitive
advantage.
Financial resources: These are in the monitory which is needed to perform activities effectively
and smoothly.
These resource are valuable for IKEA as this is main resource which is needed to conduct
any business along with this, it is organised but not rare and can be copied by nay rival firm.
TASK 2
Critical issues emerging in IKEA
A critical issues which is associated with IKEA is the lack of communication and
coordination which has direct impact over the effectiveness of the procedure of supply chain and
its selection. For maintaining effectiveness and adequateness within the functioning so that
delivery of products and services can be done effectively, it is necessary for the company to
communicate and maintain coordination among departments and activities involve in supply
chain of a company. Coordination is the phenomenon that provide support to enhance or improve
the performance for better outputs(Queiroz, Telles, and Bonilla, 2019). This is can be only
obtain with the through sharing of resources along with the adequate flow of information so that
employees within the organisation can achieve the common goal with targeting to to raise
customers value for the whole supply chain. Communication is two way process which has been
take place within the organisation to share information, idea or suggestions while ensuring the
clear meaning of messages. This is the essential basis for the decision making and planning along
with the smooth and efficient working of an organisation. In addition to this IKEA adopt out-of-
market strategy within its supply chain so that it can take best usage of manufacturing. But this is
not a effective strategy as this is only serve to meet local demand with less customisation and
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restrict company to fulfil international demand with high competitive advantage at the global
level which enables company to attain the growth and success.
Way to respond to emerging issues.
Employees and managers play vital role in responding to issues in order to serve
customer in more better way. In this manager is key personal which consist of the responsibility
for managing all the departmental activities and functions. It is the duty of manager to find all the
issues and problems prevailing within the company along with their solutions to bring work on
track with the effectiveness(Sodhi, and Tang, 2020). Manager in IKEA of supply chain has
respond to the above mentioned problems through formulation of various strategies and
techniques for better working and strong competitive advantage. The strategies adopt by the
managers in IKEA is explained below as:
Aligning company's structure with its supply chain: This is the strategy which state that
supply chain policies and strategies are have to be align with the organisational structure. The
main driving force behind this is to have smooth functioning of organisations along with all
departments so that a better competitive edge can be attain over rival entities within the same
industry(Kot, Goldbach, and Ślusarczyk, 2018). For the better coordination it is necessary that
there should be proper alignment so that employees have better understanding about the targets
and how they are going to be achieved.
Transparency: There should be a transparency in the supply chain for its smooth
functioning but before that it is essential that it is also applies to overall business for the quality
of information which is serve as the basis of decision making process. Supply chain manager
need to make sure that suppliers and partners are properly notified with the company's policies
and procedure so that they can uphold them to end.
Build relationship: For better coordination and communication, it is the responsibility of
the manager to build and maintain positive environment that provide support to developed better
relationship among which induce better communication and coordination. After this, manager
also focus on the building relationship with suppliers as they are the one which connect
customers with company and play vital role in engaging customers.
Finding and suggestions
As per the above analysis it has been measure that all the above problems are restricted
the success of the company and effectiveness for gaining competitive advantage. As IKEA has
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been using various strategies and approaches so that these problem can be resolve effectively
and working of supply chain again come on the track(Pirabán, Guerrero, and Labadie, 2019).
But there are some recommendation which has been addressed for making supply chain more
proficient and capable for generating higher revenue. Manger of IKEA should kept regular
monitoring over the departmental activities so that if any problem occurs, actions can be taken
timely for resolving problem without affecting outputs. Along with this, manager should also
maintain he coordination among the employees and functions so that targets and goals will be
achieved through bringing value to the supply chain. Moreover, manager could also develop
strong collaboration with suppliers and partner for the contentious flow of production along with
supply of products and services.
CONCLUSION
As per the above analysis it has been concluded that supply chain management is refers
to the flow of goods and services from the place of production to market place for sale. It is
associated with managing all process and activities related to supply chain effectively. This is
the regular and never ending process throughout the business along with this, it is core for
making relationship with the customers through providing great customer services. Supply chain
procedure is consist of the various functions such as warehousing, inventory management,
transportation to final customer and attaining competitive advantage within industry. It also
analysed there are various problems associated with the supply chain that need to be resolve on
time so that organisational goals can be achieved effectively and efficiently through increasing
sales and maximization of profit along with gaining competitive advantage.
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REFERENCES
Books and Journals
Chase, R.B., Shankar, R. and Jacobs, F.R., 2018. Operations and Supply Chain Management, 15e
(SIE). McGraw-Hill Education.
Kshetri, N., 2018. 1 Blockchain’s roles in meeting key supply chain management
objectives. International Journal of Information Management, 39, pp.80-89.
Tiwari, S., Wee, H.M. and Daryanto, Y., 2018. Big data analytics in supply chain management
between 2010 and 2016: Insights to industries. Computers & Industrial
Engineering, 115, pp.319-330.
Russell, R.S. and Taylor, B.W., 2019. Operations and supply chain management. John Wiley &
Sons.
Nunes, L.J.R., Causer, T.P. and Ciolkosz, D., 2020. Biomass for energy: A review on supply
chain management models. Renewable and Sustainable Energy Reviews, 120,
p.109658.
Hong, J., Zhang, Y. and Ding, M., 2018. Sustainable supply chain management practices, supply
chain dynamic capabilities, and enterprise performance. Journal of cleaner
production, 172, pp.3508-3519.
Mosteanu, and. et. al., 2020. Sustainability Integration in Supply Chain Management through
Systematic Literature Review. Calitatea, 21(176), pp.117-123.
Queiroz, M.M., Telles, R. and Bonilla, S.H., 2019. Blockchain and supply chain management
integration: a systematic review of the literature. Supply Chain Management: An
International Journal.
Sodhi, M.S. and Tang, C.S., 2020. Supply Chain Management for Extreme Conditions: Research
Opportunities. Journal of Supply Chain Management.
Kot, S., Goldbach, I.R. and Ślusarczyk, B., 2018. Supply chain management in SMEs-Polish and
Romanian approach. Economics & Sociology, 11(4), p.142.
Pirabán, A., Guerrero, W.J. and Labadie, N., 2019. Survey on blood supply chain management:
Models and methods. Computers & Operations Research, 112, p.104756.
D'Eusanio, M., Zamagni, A. and Petti, L., 2019. Social sustainability and supply chain
management: Methods and tools. Journal of Cleaner Production, 235, pp.178-189.
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