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Shashank answered on
Jun 11 2020
Supply chain strategy of ikea
Abstract
The report examines the supply chain management strategy of IKEA, Sweden based furniture retailer which has achieved global success by following sustainable practices. The company has been leading in sales and expand in various parts of world by maintaining the quality and low-price concept. To understand the supply chain strategy, the report gives an insight on the practices that IKEA followed which helped them achieve high quality in their products with the aim of lowest price. Various supply chain network design has been discussed which is required to fulfill different business requirement and also how they play strategic importance in business. Analysis of IKEA supply chain has done by understanding the end to end to flow with a supply chain map. Sustainable practices followed by IKEA helps in understanding the ways they have been able to handle various risks associated with the business practice. The risk analysis has been done of the methods that have been followed and how they have been affecting the organization at large. Ikea supply chain design has been modified during the expansion phase which has supported their initiatives at the time of global expansion. The report ends with conclusion and recommendation on the future strategies that can be adopted by IKEA to continue with the sustainable practices and follow the path of growth by facing minimum challenges.
Introduction
Sustainability has been a center to research on supply chains, very little has been discussed and researched when its impact on supply chain performance is considered. Sustainable supply chain practices not only impact companies’ performance but also make impact on how they interact with the external environment. The stakeholder have started showing keen interest that their organization take measures to follow sustainable supply chain practices which can help them to growth in sustainable manner for the coming years ahead. (Beamon, 1999)
The report provides an insight to user in understanding what kind of strategy world largest furniture retailer IKEA has been using and how following sustainable practices has impacted their business. The business scenario changes dramatically when the global supply chain is adopted by organizations. This helps in understanding the changes which IKEA adopted to continue making profits by offering low price in their products. It shows how sustainable practices in supply chain can boost up the performance of the company by maintaining good standards across the organization. Also, IKEA adoption of centralized decision making provides example of handling global supply chain in efficient manner. (Lewis, 2005) Various partnerships done by the company has helped them gained competitive advantage and also
ing creating in approaching their customers. In the end, conclusion is drawn and recommendations are made to counter the challenges and follow a path of growth as a part of future strategy for IKEA.
Literature
Supply Chain Management and its strategic Importance
Supply chain management is one of the verticals of operation management which is essential part of business for its smooth working. Supply chain management consist of three parts i.e. production management, logistic management and supply management which caters to demand planning, transport management and strategic sourcing respectively.
Supply chain management is a process to manage the activities which involves moving of product and its supporting services (eg installation, maintenance etc.) from ultimate supplier to ultimate customer. The motive is do it in the manner which can maximize the economic value of the product. From the underlying principle of supply chain management, benefit to the customer result from increasing efficiency, making the process reliable, high flexibility and adopting innovation. Collaboration might also be considered as a principle which is necessary but not sufficient alone. By keeping the supply chain efficient, it not only helps the organization in optimizing the cost but also helps in better future planning of business. Making the process reliable helps in
ing consistency in quality or product and services being delivered to customers. This is done by continuous process improvement program which synchronize the demand and supply at nodes of supply chain. Ultimately, it helps the business by making the process simple,
inging down the cost and high level of customer satisfaction. Sometime, business have to cater to large customer demand and act in situation which are not very comfortable for the supply chain. Bringing flexibility not only
ings ability to ramping up production at ease but also improves the supply relationship,
ings customization and streamline the data flow. Organizations which try to make the process efficient by setting rigid rules and parameters often face difficulty when there is change in customer requirements and fluctuation exist on supply or demand side. Apart from this, creativity is an aspect that organization cannot ignore for longer periods. Competitors often overtake by
inging innovation in the product and services they are delivering which leads to failure of efforts in making the supply chain efficient, reliable and flexible. Hence, it is important that business needs to be innovative and follow self-regenerating approach by creating sustainable advantage for the company.
There are various type of supply chain network design which companies follow according to the business requirement. These designs are grouped together into categories for better explanation.
a. Flexible Supply Chain Design: To cater the consumer changing demands and adoption of lower lead time, supply chain needs to be flexible enough. For companies producing large variety of product are generally adopting this style in order to handle the changing external business environment. This makes the process of supply chain efficient as large variety of products can be manufactures in single production line simply by
inging changes to adjust the characteristics of different products. (Jacobs, Chase and Lummus, 2014) Hence, it provides freedom for mass customization of products. Some of the best example which adopt this kind of design are furniture
ands or sports companies. By adopting this methodology help in gaining competitive advantage as the overall process becomes cost effective and profits can be generated even at lower volume of production. For apparel companies or sports
ands which have adopted this process are using it to its advantage by producing wide range of products which is cost effective in ling term. In markets, where customer demands are handled on the basis of order this process helps meeting the requirement with maximum efficiency. This is also because of the company capacity of handling peak load movements...