Abstract

The case examines the supply chain management practices of IKEA, Sweden based furniture retailer. IKEA, the world’s leading retailer by sales had its presence across the globe. The company focused on providing its customers affordable yet stylish and functional furniture. It made efforts to eliminate several activities that added to the final cost of the furniture but could be avoided. Its USP lied in its packaging. IKEA designed its products in a manner to disassemble the whole unit and transport the parts of the furniture in flat packages. That saved IKEA huge costs in transport. The case explains the evolution of IKEA’s business model, expansion strategies, supply chain planning process, relationship management with its suppliers, warehouse operations and store design. It highlights the measures taken by the company to make its supply chain cost efficient. The case is designed to achieve the following teaching objectives.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Understand IKEA’s business model
• Examine the supply chain management practices of IKEA
• Appreciate IKEA’s innovative method of designing and packaging of products
• Identify the strengths and weaknesses of IKEA’s supply chain
• Evaluate how the efficient supply chain system helped IKEA in maintaining low prices.

Keywords

IKEA, Operational efficacy, Supply Chain Planning, Supplier Relationship management, Flat Packaging, Warehouse operations, Store design, IWAY, Supply chain management, Transportation and warehousing costs, Ingvar Kamprad, Stackable products, Trading service offices, Strategic forecast, Tactical forecast, Forecasting, Business areas, Replenishment, Landing price, Lead time, Distribution centers, Automated retrieval system, Warehouse Management System, Vendor Managed Inventory, Pallets, Flat trolleys, RFID Technology