Name: Ali Murtaza Bhatti

Section: E
ID: 17U00699
IKEAs Supply Chain
SCM Assignment
Qno1:
IKEAs vision is “To create a better everyday life for the many people”, this is the IKEA vision.
Our business idea is ‘to offer a wide range of well-designed, functional home furnishing products
at prices so low that as many people as possible will be able to afford them’. Our vision also goes
beyond home furnishing. We want to create a better every day for all people impacted by our
business.
We believe that every individual has something valuable to offer and we strive to have the same
values in the way we work.
 Togetherness
 Caring for people and planet
 Cost-consciousness
 Renew and improve
 Different with a meaning
 Give and take responsibility
 Lead by example

Qno2:
IKEAs biggest competitive advantage of its supply chain is maintaining Long-Term
Relationships with Sustainable Suppliers.
To start, IKEA boasts a strong commitment to efficient distribution and environmental
sustainability that begins at the design stage of each product. They’ve even developed their own
tool, the e-Wheel that helps to assess the environmental impact of every product to ensure it
meets stringent quality control criteria for efficient distribution, quality, and social impact. IKEA
also sources recycled plastic and textile clippings to manufacture its products, and even designs
them so that they stack easily on top of one another to maximize shipping loads for fuel
efficiency.
Similarly, IKEA sets strict criteria for the suppliers it chooses to work with — the retailer
doesn’t offer the widest profit margin, but it does specialize in long-term, high-volume
relationships with choice suppliers who share the company’s commitment to the environment.
Those criteria are summed up by the IKEA Way of Purchasing Home Furnishing Products
(IWAY), a manifesto that details basic guidelines to help manufacturers create sustainable and
environmentally-friendly operations through waste avoidance and regulatory compliance.
While its design and production processes value sustainability over profit margins, where IKEA
really starts to cut costs is during the sales process. While the bulk of furniture retailers rely on
floor salespeople who attempt to match customers with high-end products, IKEA has pioneered
an alternate model wherein customers browse a warehouse-like space for products that require
assembly at home.
The retailer has adopted an approach to selling based on “cost-per-touch,” a common business
principle dictating that for every hand that touches (or adds value to) the product, the more costly
it will be. Accordingly, IKEA store staff specialize in a kind of micro-logistics that works to
create an optimal flow of goods and people into and within the store. These employees’ record
and monitor incoming stock and ensure that all deliveries are directed to the right place in the
store, giving customers a quick and easy shopping experience that boosts both customer loyalty
and sales numbers.
But perhaps the most ingenious part of IKEA’s model is the final stage: the purchase and
assembly of its products. During a visit to the showroom floor of an IKEA store, customers are
able to choose products for themselves and place them on a trolley, very much as they would in a
grocery store.
The “do-it-yourself” mentality that underscores the IKEA shopping experience is summed up
best by one of their advertising slogans: “You do your part, we do our part, and together we save
money.” The company’s warehouse-style stores are stocked with compactly packaged products
to ensure that customers can easily transport their purchases home. This has the added benefit of
allowing each IKEA store to stock a larger inventory with reduced shipping costs.
Finally, there’s the most famous (and to some, frustrating) part of IKEA’s business model: the
DIY assembly of nearly every piece of furniture they sell. Thankfully, for customers who don’t
want to spend their precious weekend assembling a sofa, the store does offer an in-house
assembly service. It’s only the finishing touch on a long, eccentric, and deeply innovative supply
chain that has helped what was once a tiny Swedish furniture maker grow into one of the most
recognizable brands in the world.