IKEA Supply Chain Analysis

IKEA began in 1943. It was founded by Ingvar Kamprad. According to Bloomberg, he was the richest person in Europe as of 2013 (as cited in Mukazhanova, 2014, p. 4). Today, the company is owned by for profit and non-profit organizations. The corporate structure is composed of “operations” and “franchising”(IKEA, as cited in Mukazhanova, 2014, p. 5). It offered home furnitures, interiors and utilities with tasteful designs and affordable pricing schemes. The company’s vision statement is to: “Create a better everyday life for many people.” Its business concept pertains to reaching wide number of satisfied customers through its “well-designed” home products and low prices. Its market positioning concept is reffered as follows: “Your partner in

4). Meanwhile, Dahlvig, the former CEO of IKEA, related the historical background and the significance of the supply chain of IKEA. In the 1950s, IKEA first started by procuring products in Poland. It managed its supply chain by maintaining a few product range. As the product range diversified, the company used the vertical integration approach to manage its resources, processes and over all supply chain. Meanwhile, in 1990, the company imposed an ideal strategy in purchasing. It transferred its production in Asia, where wages were low, yet the number of suppliers where substantially reduced. As a result, competition intensified among different suppliers that came from various countries. In 1991, IKEA acquired Swedwood, which was a manufacturer that had factories in Europe. It was a challenge for the company in managing fragmented activities in the supply chain. In order to resolve this, the organization shifted from a functional approach toward a process-oriented model. It was one of the formidable decisions of the company in the last ten years (Dahlvig, as cited in “Strategic Supply,” 2013, p.

The global plan establishes processes that are related with sales and demand forecast. The forecasted data is then used for global sourcing plan of materials, which is also associated with production capcity of suppliers and availability of global resources. The plan is also used in delineating demands in the “distribution supply chain,” wherein transport, storage and retail plans are connected (Jonsson et al., 2013, p. 15). Under the old planning scheme of IKEA, demand planners and material planners are not segregated in terms of responsibility. On the other hand, under the new concept of supply chain planning, demand planners have sole responsiblities in forecasting and planning for demand. Material / need planners, on the other side, have separate responsibilities in sourcing out raw materials and other needed resources in the global settings (Jonsson et al., 2013, p.