IKEA Supply Chain Management

Introduction:

IKEA is a Swedish company. The vision of ikea is “to create a better everyday life for the many people”. IKEA aims to provide low priced products to the consumers without sacrificing the quality of the product. IKEA offers a wide range of home furnishing products which are very well designed at very low prices. In this way it makes the life of ordinary people better off. Most of the IKEA stores are located outside the city centers. The reason is to avoid exorbitant land cost and traffic. IKEA stores work 24/7. Repairs and maintenance is done throughout the night. Moreover, IKEA most of IKEA stores include restaurant which serve Swedish dishes. Furthermore, IKEA stores have a small grocery store which sells Swedish styled groceries.

Retailer delivers the products to the end user. Very few products are made on customers demand. Therefore, the supply chain works primarily on forecast of the products. Moreover, the regional departments are given local autonomy to make their planning decisions. The regional departments can themselves make their request for replenishing stock. Therefore planning by each individual regional department does not give holistic view of IKEA decision making. Regional planning leads to the fragmentation of data. Moreover, there is a lot of manual intervention done by workers. The forecasting of stock is not precise across IKEA’s supply chain. It results in surpluses and shortages. Shortages and surpluses further magnify the bullwhip effect. In some stock surplus stock was available. The demand was low. As a result the stock had to be stored which resulted in stock becoming obsolete. On the other hand in some stores there was shortage of inventory for long period of time. It dented IKEA’s image. Another problem encountered in IKEA’s supply chain was that there is lack of transparency in IKEA’S functioning. IKEA faces lot problems in managing the data. Therefore, it needs to find ways for the data base management. Fragmented information does not help supply chain partners in making right

Moreover the inventory level of the stock can be easily determined. This software also helps to identify the mode of transportations to be used for delivering goods. The supply chain planning software provides an important function of demand planning. The demand planning function will help ikea to determine which product will satisfy customer demand. This will help ikea to forecast demand accurately and will also help to reduce the buffer inventory. Supply chain execution systems ensure that the product has been delivered to the intended user. This software tracks the physical status of goods.it also provide the financials to all the parties. Therefore this supply chain management system will help to improve the demand forecasting and provide more accurate information to the users. SUPPLY CHAIN OPERATION REFERENCE MODEL includes five dimensions. They are plan, source , make, deliver and return. IKEA can also use the FORWARD SUPPLY NETWORK makes forecasting simply and easy. It has clear and standardized distribution channels. Moreover the inventory management is consistent in the forward supply network. It help IKEA to avoid shortages and surpluses in the stores. Most importantly real time information is available to the users. It helps to make timely and accurate decision making by users. It also allows forecast to be relatively