IKEA

Inventory Management
Operations & Supply Chain Management
ROHAN AGARWAL, C004

PRUTHVIRAJ DHINGANI, C014

YOGESH HITASHI, C024

TANMAY KHANOLKAR, C033

SRIKAR PONNAPALLI, C043

TANYA SHARMA, C053

LAKSHM VEDULA, C063

Group IV | DIVISION C 3/15/20 Prof. Abhijit Nag

Contents
IKEA- Vision turned operational ................................................................................................... ..........2

Inventory Management ............................................................................................................................3

Importance of inventories ........................................................................................................................4

Effective inventory managing ..................................................................................................................4

Operational Strategy .................................................................................................................................5

Recording Keeping ...................................................................................................................................5

Variation reduction ...................................................................................................................................5

Lean Operation .........................................................................................................................................5

Supply Chain Management ......................................................................................................................5

Methodology ............................................................................................................................................6

Strategies used by IKEA ..........................................................................................................................7

Sustainable relationships with suppliers ..................................................................................................7

IKEA products are manufactured all over the world ...............................................................................8

Do-It-Yourself assembly lowers packaging costs ...................................................................................8

Streamlining the IKEA supply chain .......................................................................................... .............9

Hedge stock .............................................................................................................................................10

Anticipation stock ....................................................................................................................................11

Cost-per-touch inventory tactic ...............................................................................................................11

In-store logistics ......................................................................................................................................13

Maximum/minimum settings as a proprietary system.............................................................................14

Maintaining Stock levels ........................................................................................................................16

Usage of high-flow & low-flow warehouse facilities .............................................................................16

Conclusion ...............................................................................................................................................17

References ...............................................................................................................................................19

Plagiarism Check......................................................................................................................................19

1
 IKEA

Journey from Visionary to Operational

The IKEA name combines the initials of IKEA founder, Ingvar Kamprad, (IK) with the first
letters from the names of the farm and village where he grew up – Elmtaryd and Agunnaryd
(EA). IKEA has grown into a global retail and business leader. From its first store in 1943 to
422 stores across the globe in 50 countries with 18 new stores opened in 2018. The IKEA
Concept starts with the idea of providing a range of home furnishing products that are
affordable to the many people, not just the few. It is achieved by combining function, quality,
design and value - always with sustainability in mind. The IKEA Concept exists in every part
of the company, from design, sourcing, packing and distributing through to their business
model.

“The floor is where we learn still today, be it in the store or in the factory.” said Ingvar
Kamprad, IKEA founder

IKEA retailing started as an idea in the woods of southern Sweden more than 70 years ago.
What today is the IKEA Concept has evolved during many years and is still improving. IKEA
went from the woods of southern Sweden to being a major retail experience in 50
countries/territories around the world.

The world’s largest home furnishing retailer has 422 stores in 50 countries. It ranks Number
40 on Forbes’ esteemed World’s Most Valuable Brands list and took in $39.3 Billion in sales
in 2017. IKEA has certainly come a long way in its 75 years of business since its 1943 founding
in Sweden. The vast business is not the only major attraction for this business; it also boasts
some of the major inventory management and supply chain techniques. It has helped IKEA be
leader in this field by providing high quality product at affordable ranges to the end customers;
all the while keeping retailers’ profit in mind. IKEA has a clear vision supported by
complementary cross-functional logic. This not only differentiates IKEA from its peers, but
also provides it with a competitive advantage that is difficult to duplicate at other organizations.
Company operates at a global scale with strategies

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Each IKEA store is huge and holds more than 10,000 products! How in the world does IKEA
offer so much at such a low price while always being able to keep items in stock? This report
aims to provide information on strategies used by IKEA and the way it complements the
business. To understand a distinguished part of a supply chain management which is Inventory
Management; various areas are to be focused as separate entities as inventory management
today is decided on various factors than traditional approaches. IKEA is considered as a role
model when supply chain management is considered; reason for which are the unconventional
and modern approaches towards understanding the entire supply chain that begins with a
material supplier to the end; a happy costumer.

Inventory Management

Importance of inventories

Inventories are vital to business, not only for the operations of the business but for increased
consumer satisfaction. The major source of revenue for retail and wholesale business is sale of
merchandise. Inventories are in fact the biggest asset in monetary terms for a business. The
different kind of inventories include:

1) Raw materials and purchase

2) Work in progress goods

3) Merchandise or finish goods

4) Tools and supplies

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5) Maintenance and repairs inventory

6) Pipeline Inventory (Goods in transit for distribution)

To understand the importance of inventory in modern day business and understand the
requirement of inventory management:

• To meet anticipated customer demand

• To smooth the production requirements

• To segregate the operations

• To mitigate risk of a stockouts

• To set a maximum limit on inventory

• To leverage sale via bulk discounts

• To hedge against future procurement

Above are some of the major benefits of inventories and a growing concern for business to
manage and maintain them. Management has two basic concern with respect to inventory
management a) Counting inventories b) Reorder time and units

Effective Inventory Managing

Inadequate control over inventories can result in under or overstocking of inventories. Hence,
the overall objective of inventory management is to balance the levels of customer satisfaction
and keep the inventories within reasonable bounds. To be effective, management must have
following in place:

➢ Inventory tracking

➢ Demand forecasting

➢ Lead times and lead time variability

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➢ Inventory holding costs, ordering costs, and shortage costs

➢ Classification system for inventory items

IKEA has realized the potential benefits of improving inventory management on a strategic
level. For IKEA as a market leader in the home furnishing business, an efficient supply chain
and proper management of inventory is of crucial importance in order to support their business
idea of offering low priced products to the many people. Inventory management at IKEA is
characterized by an ad-hoc and reactive approach. A new way of working proactively,
including clear responsibilities, with inventory management is therefore needed to guide IKEA
employees on how to organize, store and replenish inventories and ultimately keep an adequate
supply to secure availability of their products.

Operational Strategy
Inventories are an asset to any organization. It is considered to be an important investment.
Hence, holding more or less the required amount inventory is considered as an ineffective eco-
system. Business consider inventories as key performance indicator for the very same reason.
Following are the areas that can improve effectiveness in effective inventory management

Recording Keeping

Inventory counting systems are crucial to be up to date and accurate. Good predictions can be
made based on correct information. Estimates of holding costs, ordering costs, procurement
costs are updated based on this information. Demand time and lead time are reviewed on a
timely basis and updated as required.

Variation reduction

Lead time management and forecast errors are two important drivers that impact inventory
management. Analysis of variance and variation reduction can yield significant improvement
in inventory management.

Lean Operation

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Lean systems are demand driven, which means that goods are pulled thorough system to match
demand instead of being pushed through the system. Lean systems are sometimes referred to
as Just-In-Time (JIT) due to their highly coordinated activities and providing goods just as they
are needed. Lean systems believe in smaller lot sizes than traditional systems, as it considers
inventory as a waste. It is also due to the belief that holding costs for an inventory are higher
and partly as an effort to reduce ordering and setup costs by improving and standardizing
internal processes. Benefits of the approach are minimal inventory at hand so low carrying and
holding costs. Its helps in coordinating the workflow, problem recognition and increased
feasibility for innovation.

Supply Chain Management

Working closely with suppliers to coordinate shipments, reduce lead times, and reduce supply
chain inventories can reduce the size and frequency of stockouts while lowering inventory
carrying costs. Blanket orders and vendor managed inventories can reduce transaction costs.
The goal of supply chain management is to match the supply with its demand effectively and
efficiently. It requires mutual trust, information sharing, a collaborative planning and
forecasting. It also means to manage risk, revaluation of outsourcing and supplier relations.

Good inventory management is an important indicator of a well-run business. IKEA is a

pioneer of world’s best supply chain management due to their efficient usage of advance
techniques and strategies that have made them a unique and a global giant in the field of retail
and home furnishing. IKEA’s inventory management despite its global scale operations and
distribution of product with varied range is maintained at regulated levels; minimizing stocking
yet satisfying costumer needs. It has been possible due to the strategies and techniques that it
follows as explained in this report.

Methodology
The purpose of this report was to identify the inventory management system which IKEA is
using and analyse its strategies. To achieve the purpose of the thesis qualitative data is collected
and interpret, as well quantitative data should be collected but are not as important in this report.

6
This is because the analysis of management system will be on macro-level more than on micro-
level. To identify the current system and routines at IKEA the report was divided into two parts.
The first part was to collect secondary data by accessing documents from IKEA about the
structure of IKEAs organization and general information. The second part assumed the role of
analysis of every strategy interpreted and analysed in the secondary information gathered
above. The analysis provides a deeper and discrete insight as to understand managing systems
on a global scale.

Strategies used by IKEA

IKEA is well aware that many of the problems experienced are related to strategic inventory
management and not operational (mathematical). Directions of how to properly steer and plan
inventories on a higher level, taking the entire supply chain into account. Following are some
of the major strategies collated with respect to supply chain in perspective.

Sustainable relationships with suppliers

Key part of IKEA success lies in its relationship with the supplier; the first objective of any
supply chain. IKEA is high volume retailer with connection to more than 1800 supplier in 50
countries with more than 42 trading offices across the seas. IKEA takes care of the right prices,
quality material and socio-economic conditions. IKEA has effective communication and
bonding with its materials suppliers and manufacturers, which fetches it great prices. It signs

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up for long-term contracts, thus supporting long-term business relationships, which helps in
further lowering the product prices. Although the prices are lowered, IKEA does not
compromise with any of its business principles because it wants its customers to enjoy low
prices but, with the best in quality products.

The market driving approach is gaining an increasing attention in recent marketing and
management literature. A market driving approach can often be expected to require that the
firm restructures the activities within the value chain and the relationships to different types of
factors providing critical recourses. Such a proactive approach, aiming at strongly influencing
the structure of the supply chain and the relationships to different business partners also
suggests a link to the network perspective.

All IKEA products are designed in a specific way in accordance with their code of conduct
“The IKEA Way on Purchasing Home Furnishing Products” (IWAY). The suppliers before
starting a relationship with IKEA must fulfil basic requirements such as legal concerns, labour
compliance, external environment and forestry management. Suppliers also have to prepare an
action plan with the time schedule for meeting other criteria of IWAY demands. Relationship
with suppliers are build on a personal level, with IKEA authorities helping suppliers with their
supply chain, operations, processes and sometimes human resources management as well.

Along with meeting standards and helping improve efficiency with the suppliers, the inhouse
R&D works on the best possible materials sourcing and testing to reduce the global footprints
of their products. Recently the company has developed a specialized kind of cotton to be used
in sofas and cushions. Such innovations provide supplier ample opportunity to provide required
raw materials at the right time reducing lead time.

IKEA products are manufactured all over the world

When IKEA sources suppliers to manufacture IKEA products, the aim is to find those who can
produce products of good function and design at the lowest possible price (although not at any
price). Some of these, in the Swedish forests around the birthplace of IKEA, have been working
with IKEA since its earliest days. Others have their production plants in China, Poland or
Germany. But no matter where in the world its suppliers are, IKEA is always committed to
long-term cooperation and does its best to cultivate close and cordial relations. IKEA buys
production capacity rather than product quantities. In other words, they order 10,000 hours of

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production from their suppliers rather than 10,000 bookcases. Average supplier relationship
with IKEA is around 11 years.

Do-It-Yourself assembly lowers packaging costs

IKEA furniture is shipped in part for customers to assemble. These parts are made so that
assembling the on the customer’s behalf. The pieces are placed in flat packaging, in an efficient
manner which takes very small space in the truck minimizing order fulfilment costs. These flat
packaged products take up less space in the warehouse decreasing the holding costs. The unique
packaging also takes up less space in warehouse bins and reserve racks, allowing for more
room to stock additional items for order fulfilment. What the company saves in fuel and holding
costs is passed on to customers. The design also helps in storing more products in less space.
The design of home furnishing products at IKEA starts with an understanding of people’s
everyday needs at home, especially the needs of the majority of people, who have limited
incomes and limited living spaces. This is how IKEA succeeds in offering well-designed,
functional products at low affordable prices to meet customer needs.

In order to make products saleable and right for the IKEA identity, IKEA co-workers in product
design and product development focus on price and quality, design and function, environment
and health. They scrutinise every product idea with regard to the best use of raw materials and
manufacturing opportunities. This is why elements of the design are often decided on the
factory floor, where designers and manufacturers work together.

IKEA product anatomy is rather critical to the inventory management especially in terms of
flat packaging system. All the IKEA products are genuine and designed by IKEA designers in
Sweden. An important conceptual element into designing is the final product specification. It
means smallest possible level to miniscule the product enabling it to fit into a flat packaging
system. The product innovation also is discussed at the IKEA Concept Centre. IKEA possesses
a special role called a packaging technician.

IKEA products are specifically designed in a fashion that requires similar kind of raw material
which ranges from a regular nut-bolt to an iron angle. Plus, the product is specifically designed
as an easy to assemble on the part of the customer. Just as all IKEA products are tested to
ensure quality and to find ways to improve, IKEA is always interested in improving the living
IKEA Concept. It tests lots of new and innovative ideas at the IKEA Concept Centre. These
ideas can be suggested by IKEA itself or in-house The IKEA Concept Centre is also home to

9
specialists who, in co-operation with the IKEA retailers, find and identify good ideas and
solutions. New solutions are developed, documented and analysed from a conceptual
viewpoint.

Streamlining the IKEA supply chain

Supply chain relate to the location of inventories, speed at which the inventory moves through
the supply chain and dealing the demand variabilities on inventories. The location of the
inventories in the supply chain is important for effective material flow and order fulfilment.
One approach is to use centralized inventories, which results in lower overall inventory.
Another is decentralized inventories, that can provide faster delivery and lower shipping cost.

Every IKEA store has a warehouse on the premises. On the main showroom floor, customers
can browse for items. They then obtain the products themselves from the floor pallet location
with racking as high as the typical person could reach, where furniture can be purchased and
taken home. Additional products are stored in reserve racks above these locations. IKEA stock
is let down to the lower slots at night. About one-third of the lower level is comprised of a
warehouse off limits to customers. This space contains items too bulky for customers to load
without help from the staff. Since IKEA wants as much self-service as possible, it works to
minimize the number of items in this bulk storage area.

An average IKEA store sizes around 320,000 sq. ft. Huge size is a result of the fact it possesses
a warehouse along with the regular store. The warehouse is made to support the in-house
logistics. The warehouse provides distinct advantage to the IKEA supply chain and especially
inventory management in following way

1) Consumer can directly pick up the product from the warehouse

2) Serves as a storage unit near the store

3) Reduced transportation cost which is transferred to customer

To facilitate above feature to end consumers; IKEA store prints product ids to specific products.
The consumer at the IKEA store is provided with a paper to write the product id and then locate

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the same product in the warehouse. The products in the warehouse are prepacked in their flat
packaged concept. The customer can then directly purchase the product at the counter.

Above approach is a decentralized location approach by IKEA. To mitigate risk of overstock

/understock IKEA does a strategic buffering of inventory. Various practices followed by IKEA

Hedge stock
Hedge stock is additional stock with the purpose to shield from extraordinary uncertainties.
These are unknown events that may or may not occur and are not covered by the system
calculated safety stock. Examples of situations that hedge stock may be kept for are

• Uncertain sales potential during catalogue release and news

• Uncertain transport restrictions caused by traffic bans

• Uncertain production capacities for news

• Strike risk (DT, Transport, Customs etc.)

Anticipation stock
Anticipation stock is inventory produced earlier than the scheduled need to cover for known
restrictions. Situations for when anticipation stock is kept include

• planned shut downs at supplier • production limitations in relation to strong seasonal sales
pattern (e.g. outdoor furniture)

• transport limitations (e.g. European Christmas)

• receiving limitations at selling units

Cost-per-touch inventory tactic

In terms of logistics and inventory management, one of the greats in manufacturing and retail
that does this particularly well is IKEA. The furniture retailer conceived of the philosophy cost
per touch and incorporated it into its warehousing philosophy, according to e-commerce firm

11
Wiser. Basically, the principle centres around the idea of touch that companies are very familiar
with: Namely, each hand that touches a product is a step in the supply chain process. Therefore,
the more hands that touch a product before its purchase, the higher the cost. Handling costs are
the costs of holding goods in stock. They are typically expressed as a percentage of your
inventory value. While technically handling costs include everything from insurance and
storage to taxation and obsolescence, a more obscure handling cost you should be aware of was
made famous by furniture maker IKEA: cost-per-touch. IKEA implemented a cost-per-touch
inventory strategy after understanding that every time a product is touched (whether by human
or machine), that touch costs money.

Cost-per-touch tactic means having customer select the product and have it retrieved
themselves. IKEA focuses on this guiding principle as it reducing various cost such shipping,
handling and order retrieving. IKEA achieves this feat due to its flat packaging product that
helps customer possess it by themselves as it takes up less storage.

For example, imagine when someone selects a piece of furniture to buy. The item is then
ordered, shipped from the manufacturer, moved from the delivery truck into storage in the
warehouse, moved from the warehouse to the customer’s vehicle or delivered by the furniture
retailer to the customer’s home. Every time the product is shipped, moved, and loaded; it costs
money. The fewer times someone moves or touches the item, the fewer costs are associated
with it. IKEA saves costs with this guiding principle to minimize touches because it doesn’t
have to pay the customer to retrieve the furniture and take it home.

When a customer orders, for example, a couch, the manufacturer must first ship it to a
warehouse for distribution. Then the store loads it onto a truck and delivers it to the person’s
home. Every part of the process increases the cost to both the manufacturer and the retailer.
IKEA resolves this by reducing the cost per touch in different ways. One of them is to allow
customers to assemble the furniture themselves when possible. Moreover, they can purchase
and bring a product home the same day in their cars, thus reducing the need for delivery trucks.
To help integrate the process better, IKEA stores tend to function as warehouses as well,
allowing customers to access inventory as necessary.

Cost-per-touch is now a commonly tracked metric. As a rule of thumb, one can estimate $1-2
per touch for a product and $3-4 per touch of a pallet. Those costs apply to both inbound and
outbound deliveries, as well as movement around a warehouse. Obviously, actual numbers will

12
vary per product, per industry, and per company. To give a ballpark range across industries,
the cost-per-touch for a product is 2-5% of the inventory value.

This particular tactic features all the major inventory costs such as

1) Purchase cost

2) Holding or carrying cost

3) Ordering cost

4) Setup cost

In-store logistics
In-store logistics involves the operations that manage the inventory flow from the store’s
receiving dock to the point of sale, passing through the stock room (or store warehouse).

The final delivery to the store cannot be considered the last step of the retail logistics process.
The final link of the supply chain should be shifted from the store’s incoming dock to the point
of use.

Retailers should consider new ways of working together across functions. In-store Logistics
staff can focus on supporting merchandiser and sales team by taking charge of in-store
replenishment, inventory management, space optimization, inter-store transfers and
multichannel web/store logistics operations.

Poor execution in performing daily logistics procedures is one of the reasons a store fails in
meeting its targets. It is due to a lack of specific knowledge about logistics best practices and
techniques by the store staff. More and more retail executives are recognizing the huge benefit
in assigning the logistics tasks to selected personnel.

Managing in-store logistics is now particularly essential in shops which adopted a

merchandising layout optimizing the sales space only with sample products on display, while
the related inventory is in the stock room. This particular store layout/appearance is perceived
as highly appealing.

13
In this kind of shops, the staff can be connected via voice-based wireless communication. Sales
staff stays on the sales floor with customers while in-store logistics staff quickly locate the
requested SKUs in the stock room, pick and move the items to the selling floor. This improves
employee collaboration and maximizes sales opportunities

IKEA also relies on something rare and unique concerning its logistical management of
reordering products – it employs in-store logistics personnel to handle inventory management
at its stores. There is an in-store logistics manager responsible for the ordering process and a
store goods manager responsible for material handling logistics at all IKEA stores.

The duties of the logistics personnel are to monitor and record deliveries, carefully check
delivery notices, sort and separate the goods, and get them off to the correct sales area or
designated overstock locations. Overall, they ensure an efficient flow of goods within IKEA
stores, which is essential to maintaining high sales and enhancing customer loyalty.

IKEA in store logistics is driven via the company values imbibed within the culture. The value
system is innovation and continuous improvement(kaizen). The in-house logistics manager
does not just work as a supervisor counting inventory system but inculcate work presence with
innovation unique to Ikea such as

1) Laptop cycles- to encircle around the big warehouse and still do the basic functions

2) Work culture- use of space provided in the warehouse for socialization, communication and
cooperation

3) Incorporate lean operations within the warehouses

4) Resolve conflict of interest within the workforce

IKEA stores are big in sizes hence the in-house logistics personnel serve as point of contact for
the coordination of activities and help the company inculcate change management at a floor
shop level. 11

14
Maximum/minimum settings as a proprietary system
There are two basic decisions for managing inventory; how much to reorder and when. To
determine a suitable solution for this, manager could use a few simple calculations. Today these
decisions are added with where and what inventory should be held. Inventory decision has
become more complex, this is because organizations are working to manage inventories more
effectively and lower cost. There are different approaches for inventory demand and the most
suitable approach depends in what market the organization operates in. Basically, the more
complex the situation is for the organization, the inventory approach has to be more
sophisticated

An important aspect of inventory management systems is that all the product in inventory are
not of equal importance in terms of money, profits, volumes or stockout risks. It would not be
fair to give equal attention to all the products. Instead, a reasonable approach would be to
allocate control efforts according to the relative importance of the inventory.

The in-store logistics managers use an inventory replenishment management process

developed by IKEA called ‘minimum/maximum settings’ to respond to store-level inventory
reorder points and reorder products.

Minimum settings: The minimum number of products available before reordering.

Maximum settings: The maximum amount of a particular product to order at one time.

There are numerous variables that might come into play when setting Min / Max levels which
makes giving a general rule of thumb difficult. Some of these include:

• Variation in usage

• Cost of item

• Item shelf life

• Physical size and storage costs

• Time frame and ease of replenishment

• Cost associated with running out (ease of substitution)

15
Since all IKEA inventory is only stocked at night after opening hours, the logic of its min/max
settings is based on the number of products that will be sold from the reserve stack of the bin
in a single day or two-day period. The process meets customer demand while minimizing
ordering too few or too many products. Using IKEA’s proprietary inventory system, logistics
managers know what is sold through point-of-sale (POS) data and how much inventory comes
into the store through direct shipping, and from distribution centres through warehouse
management system data. Using this data, they can forecast sales for the next couple of days
and order in the suitable number of products to meet that demand.

If the sales data doesn’t match the projected number of items that should have been sold that
day, the logistics manager goes directly to the pallet and bin to do a manual stock take. Its
process and system allow for the right goods to be in the store with greater certainty, and at a
lower cost, than the traditional retail forecasting and replenishment process.

Maintaining Stock levels

The employees working in SSS explain that the Sale Response System (SRS) is a system that
IKEA is using to control and maintain their stock levels at a local level. SRS have different
types of use, first it calculates the future demand and based on this calculation it orders
automatically the right amount to the warehouse. To calculate the sales demand, SRS is using
the initial forecast from IOS, historical data and seasonality from previous sales in the
Jönköping store. SRS also use moving average of three weeks to adjust the forecast; all these
factors are updated every night at the Jönköping store. Furthermore, the employees explain that
it can take up to 8 weeks for the system to respond to a change in demand; this is because of
the inertia in the supply chain. The employees can increase demand for a product for a short
period of time, this is because of change in products exposure in the store with better sales
spots. This is called a "sales jump" and this factor is included in SRS for the current forecasting
period, a sales jump is usually for 4-6 weeks. Before a sales jump the sales department uses
their own experience to adjust the forecast, usually the demand increases with about 30-40 %
for the current product.

Usage of high-flow & low-flow warehouse facilities

16
Warehouse as part of the supply chain can generate both good and waste for the company.
Waste generated affects operations and results in cost increase. To prevent having waste in
time, money, staff or area utilization it is wise to use Lean principle for the warehousing.

The specifics of the warehouse system provide the presence of reserves considered as an
essential factor in ensuring a certain level of customer service. In turn, consumers believe
causes the formation of reserves to ensure the continuity of the production process, the pursuit
of smooth flow and provide fast shipment at the unexpected demand of various products.
Logistics tends to minimization of inventory, so warehouses provide lifting mechanisms and
special devices for the storage of materials, in order to fulfil desires of logistics network.
(Langevin & Riopelle, 2005).

IKEA’s store operations are supported by high-flow facilities (focused on the 20% of SKUs
that account for 80% of the volume) and low-flow warehouses that are more manual. In its
high-flow warehouses, IKEA employs automatic storage and retrieval systems to drive down
its costs-per-touch. Products stocked in a low-flow facility are not in high demand, and
operations rely on manual processes since workers will not be shifting and moving inventory
around too much.

Blockchain at IKEA
On November 13, 2018, SOMA co-founder and chief marketing officer Jacob Andra will pitch
SOMA’s Heimdall Protocol to IKEA top decisionmakers at the company’s ‘IKEA Bootcamp,’
described in an invitation email as “a semi-remote pilot-focused start-up program for IKEA to
test real collaborations with 20 selected growth stage start-ups” by Carsten Brink, IKEA’s
“Lead start-up scout host” for the event.

Conclusion
Above strategies have made IKEA the world’s most successful furniture retailer with low
operating costs and high product demand. This allows the company to stay competitive in the
industry as it continually seeks more advanced methods to streamline supply chain
management. The report prepared with the limited data that was gathered via secondary
research. The strategies described are few of the major highlights that IKEA implements with

17
respect to its inventory levels. The strategies described and explained above are the reason why
they cannot be duplicated so easily.

The most important factor for the success of any organization is its vision. In order to achieve
success, you must have a clear vision of what you want to accomplish and you must work
towards achieving that goal. This is the strength of IKEA. Its vision is to provide well-designed
functional home furnishings at prices so low that as many people as possible can afford them.
It brings together all its team members involved in supply chain operations and inventory
management to support this objective.

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References
1. B, A. (Jan 2018). How IKEA continues to push the boundaries of Design. AD PRO, 1-
8.
2. C, E. (2018). The hidden cost of inventory. Retrieved from quickbooks:
https://quickbooks.intuit.com/r/operations-technology/hidden-costs-inventory/
3. Ida E., V. H. (June 2016). Strategic framework for improving inventory mangement
decisions at ikea. Lund university.
4. Jayakumar. (March 2016). Ikea's inventory mangement strategy. Jayem logistics.
5. K, S. ( 2010, March). International Supply Chain management.
6. Mahir D, D. Z. (May 2011). Forecasting system at IKEA. Jonkoping University.
7. Stevenson, W. J. (2018). operations management. In W. S., operations management
(pp. 78, 546-567, 604-606, 670-671). McGraw Hill.

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Results Query Domains (original links)
Unique Abhijit NagOperations & Supply Chain ManagementGroup IV | DIVISION CMarch 15, 2020Prof -
Unique Abhijit NagContentsIKEA- Vision turned operational -
Unique AGARWAL, C004PRUTHVIRAJ DHINGANI, C014YOGESH HITASHI, C024TANMAY KHANOLKAR,
C033SRIKAR
PONNAPALLI, C043TANYA SHARMA, C053LAKSHM VEDULA, C063Inventory ManagementInventory -
ROHAN AGARWAL, C004PRUTHVIRAJ DHINGANI, C014YOGESH HITASHI, C024TANMAY
KHANOLKAR, C033SRIKAR PONNAPALLI, C043TANYA SHARMA, C053LAKSHM VEDULA,
C063ROHAN AGARWAL, C004PRUTHVIRAJ DHINGANI, C014YOGESH HITASHI, C024TANMAY
KHANOLKAR, C033SRIKAR PONNAPALLI, C043TANYA SHARMA, C053LAKSHM

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VEDULA, C063Inventory ManagementInventory ManagementIKEAIKEAOperations & Supply Chain
ManagementGroup IV | DIVISION CMarch 15, 2020Prof. Abhijit NagOperations
& Supply Chain ManagementGroup IV | DIVISION CMarch 15, 2020Prof. Abhijit NagContentsIKEA-
Vision turned operational
.............................................................................................................. 2Inventory Management
..........................................................................................................................
3Importance of inventories ..................................................................................................................
4Effective inventory managing
............................................................................................................. 4Operational Strategy
...............................................................................................................................
5Recording Keeping ..............................................................................................................................
5Variation reduction
............................................................................................................................. 5Lean Operation
................................................................................................................................... 5Supply Chain
Management
................................................................................................................. 5Methodology
...........................................................................................................................................
6Strategies used by IKE

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