Question

Recommendation for IKEA inventory supply chain management.

Answer 1

Ikea reflect the basic business philosophy "cheap but not inferior" on the entire supply chain management, from various aspects of the design, production, suppliers, logistics, sales to the implementation reduce the cost. Design, Ikea reflected its low cost strategy on the design. For example, design product not only from the function and processing into consideration, early should be investigation for choice of raw materials, packaging and transportation factors. For example, try to use light color coating instead of brunet paint, because brunet paint expensive, design detachable easy to transport structure and so on, reduce transportation cost, and through the internal design team cooperation, muilti-sectoral public with discussion of product design program to reduce cost.

Manufacturing, Ikea using within global scope for manufacturing outsourcing way into production, to maximize reduce manufacturing cost. It creates the "horse race" mechanism for suppliers, and encourages the free competition among suppliers. In addition, Ikea annually to its suppliers will put forward fixed reduce production cost index, makes the manufacturing cost can enter a continuous decrease of virtuous cycle. So Ikea can concessions consumers at low price, in the market its more competitive. Logistics, Ikea is often said that "we do not transport air," Ikea adopt the "flat packaging" way to transport goods through the elaborate design logistics system, and maximize the use of the means of transport of the transportation space, reduce the ineffective transportation, at the same time transportation material used repeatedly. Sales, Ikea allow customers do-it-yourself assembly furniture, customer can choose pay shipping or do-it-yourself way to save money. Not only save the operation cost, and back to the customer a free relaxed space.

The size and scale of its worldwide business. This could make it hard to control standards and quality. Some countries where Ikea products are made do not appliance the legislation to control at work environments. This could signify a weak link in Ikea's supply chain, effecting customer opinions of Ikea's products. The IWAY code is backed up by teaching and checkers go to see factories to make sure that suppliers meet its requests. Ikea need for low cost supply. It needs to be balanced against manufacturing high quality. Ikea also needs to discriminate itself and its products from competitors. Ikea needs to retain good communication with its clients and other shareholders about its activities of environmental. The scope of the business makes this a difficult assignment. Ikea produces periodicals in print and online. Such as 'People and the Environment', and carries out key TV programs and radio propaganda to enable the business to connect with different target groups.

In short, Ikea's successful factors can boil down to its different theory. Ikea business concepts support the Ikea empire expanding growth, its global scale influence and value concept continuous reveal. Although it has towards globalization, but still did not forget localization, their strategies in an increasingly uncertain economic environment timely adjust. Based on the Ikea existing business model, supply chain, innovative product design and renewable raw materials, Ikea will get better in further. In the other hand, Ikea should pay more attention to its target groups who in metropolitan areas and universities, through making it easy for them to come to the store and make purchase. Because those areas where the populations are move house frequently. And it should build up high-value consumers, by staying in touch with them and encouraging them to return.