• Report on IKEA

IKEA is one of the most successful home furniture company in the whole
world. The success mantra of IKEA is accepted and adapted by other
organization all over the world. The aim of IKRA is to provide the customer
products at the lowest price. At the same time, they have to maintain high
quality and does not harm the environment. Since it is a furniture company
there will be a question rises. That is, without harming the environment how
could they produce furniture. The answer is, they are producing furniture
with about 70% of their products after it’s life is getting recycled. Also,
they are getting raw material from all over the world. Together, their brave
engineers and designers are developing designs and features that could
provide the user with same experience with less raw material.
The supply chain system of IKEA is very wide. They have almost 1300
suppliers in 50 country. This broad supply chain itself defines how large is
the organization IKEA. Also, they have 260 stores in 36 countries. In all
countries they do not have production. However, their huge supply chain
makes all their product available in every store in the world. Also, they have
42 distribution centers Maintaining a large supply chain like this is a hard
job. Although, they could maintain a strong customer relationship with their
suppliers. This is achieved through carrying an audit called IWAY audit. For
this, employees of IKEA inspect documents and records of suppliers directly
visiting the site several time. Through this the company could ensure the
quality of raw materials providing, source of raw materials, whether they
completely following the guidelines of IKEA or IWAY code of practice etc.
these are all done as a part of quality management (Huy, 2018).
Sustainability strategy of IKEA is People and Planet Positive. This was
launched in 2012. Every year till now the organization updates it’s
sustainability strategy. In 2020 the People and Planet Positive concept
company is planning to use sustainability to drive innovation, transform the
business, and shape the investment and finding new opportunities in
business. The aim of this strategy is to strengthen the competitiveness
through securing the availability of raw materials, relation between supplier
and customers, workers and customers relationship, and increasing the
productivity etc. Also, they are not focusing more on the luxury of products
instead giving priority for design, function, quality and low price (BSR, n.d.).
From the case study I could understand that IKEA is using the LEAN
manufacturing system for their successful production process. The
methodology that focuses to reduce various wastes in production is called
lean manufacturing. IKEA could recycle 70% of the life end products. They
are aiming to increase that to 90%. They completely removed plastic bags in
their stores, their special designs are making the transportation cost lesser,
less usage of raw materials. Hollow legs in furniture and honeycomb paper
filling materials instead of solid wood are examples for their vision in lean
manufacturing. The main wastes in lean manufacturing such as unnecessary
transportation, excess inventory, over production, defects, over processing
etc. precisely removed in IKEA’s broad view.
The business strategy of IKEA is its operating model. The supply chain,
inventory management, design of products, packaging of products etc. are
main reasons for the success of IKEA. We have already talked about the
supply chain of IKEA. The long-term supplier relationship plays a good role
in building quality products. Availability of raw material has made very easy
for every production unit or retailer unit since the broad chain all over the
world. Next is inventory system. 95% of the inventory will be in stock.
However, they use their own inventory system for the smooth availability of
products. This is called maximum/minimum setting. Minimum setting means
minimum number of products available before recording and minimum
setting means maximum amount of a particular product to order at one
time. The design and packaging are another notable feature of IKEA
organization. The product designers not only focus on the visual beauty of
the product but also the factors that are going to affect by the design and
production of the final product is deeply studied and inspected. The factors
that could affect the design are environmental, transportation facilities,
usage of raw materials etc. The faith of customers is achieved through
delivering them quality products and services is the result of a good strategic
plan. The organization designs and develop the products considering the
future generations.
Here from the case study we are aiming to talk more about the supply chain
management. About 60% of IKEA’s suppliers are from European countries.
They have huge market in China and Poland. The aim of IKEA is as we said
is to produce products of low price in socially responsible and
environmentally friendly way. All the activities in IKEA is done according to
the code of conduct developed by the company. Also, their concept of IWAY
has a great share in maintaining the strong relationship between the
suppliers. IWAY was introduced in the company in 2000. They have sharp
eyes to avoid corruption in the business too. The company creates a free
race among the suppliers. This will make the availability of raw materials at
low cost.
Logistics of IKEA is saying that “they will not transport air” means they will
try to fill all the empty spaces in containers with products. Their product
design is also having a great influence in achieving this.
Their do it yourself assembly furniture is also plays a vital role in reducing
the price of product.
The customers have to pick the product from the shelves. IKEA concept uses
the top shelves for storage purpose. Through this the company could save
plenty of cash from warehousing and transportation cost from warehouses to
retail stores.
If we do a SWOT analysis, we could identify the Strength, Weakness,
Opportunity, and Threats in the business (Commerce, 2018).

Strength of IKEA
• Market research: IKEA know the ins and outs of the customers very
well.
• Various designs that could donate advantages in other sectors and
there by profit in the business.
• Cheap products of Ikea with good quality and performance
• Awareness in the environmental problems. This comes in the code of
conduct of IKEA (sustainability_report, 2011).

Weakness of IKEA
• Since the Business has spread all over the world, the controlling and
maintaining the standard and quality will be difficult.
• Since the business needs the contribution of multiple countries to
produce a product, the situation like corona will hit the business very
hard.
• Sustainable competitive advantage is not attained through the
demographic design concept (sustainability_report, 2011).

Opportunity for IKEA

• Even the company is well known in the whole world, their presence is
only in 38 countries. They could blindly expand their business since
people have already accepted the brand.

Threats for IKEA

• Increase in cash: people are getting richer. So, people hesitate to buy
cheap products because they could think like cheap products will have
less quality.
• IKEA is explaining their success mantra to others, this will be a great
threat for the business. The opponent companies will imitate the same
mantras and they could overtake the IKEA’s market (Fletcher, 2009).

• Climate change and supply chain

Supply chain Management is the management of flow of goods ad services.
The processing and transformation of raw material in to finished goods is a
part of supply chain management. The contribution of supply chain
management in a business is inevitable. Typically supply chain functions like
a centrally operated production, shipment, distribution, and inventories of a
product (load).
We can list thew functions of a supply chain as follows
• Sourcing of raw materials
• Manufacturing
• Delivery and logistics
• Return system
Supply chain is not a single department however they co-ordinates various
areas like supplies, manufacturers, distributers, wholesaler, retailers. If the
stages of chain increases, it will become more complex. There are several
factors that affect supply chain management. They are
• Supply chain structure
• Inventory control
• Information sharing
• Customer demand
• Forecasting method
• Climate
In all above factors except climate all others can be controlled by us. Climate
change can not be predicted by us. We can predict the changes but not able
to control the change.
In this report we are discussing about how climate change affects the supply
chain management and how the business are taking actions to overcome the
effects of this change. Climate change affect every human around the globe.
The climate factors that affect supply chain management are floods,
drought, fires, climate hazards etc. these factors have already made
disruptions in supply chain in previous years. Through this report we could
get a clear vision about the supply chain during the climate change. In the
case study they have selected nine major impacts on supply chain in major
geographies. They are,
• Liability and workability
• Food system
• Physical asset
• Infrastructure services
• Natural capital
Here we are explaining the effects of various factors on the above impacts
(HAYES, 2020).

Effects of draught in supply chain

Draught will affect the supply chain of business where goods are transported
through waterways. When the water level becomes low ships will not be able
to sail. At that time, the only option for the business is select another way of
transportation or postponing the delivery. Both the ways will be more
expensive than the normal way. Histories are showing good examples for
this. The loss due to this effect is not small. Just 10% drop in one of the
chemicals pharmaceuticals in Germany costs additional $220 million for the
company for its logistics. The reasons will be increased road distance, fuel
cost, maintenance of vehicle, safety issues etc (Mishra, 2020).

Effects of flood in supply chain

Most of the companies will be near to the river or any water bodies. This is
for easy availability of water. And for easy logistics if the transportation is
via water. Most of them will be strong enough to withstand during flood and
other natural calamities. But a disaster like flood could hinder the
transportation. Since the road and other land transportation will be affected
by flood, they must choose other method of transportation which will be
more expensive. In some cases, the nearby areas will not be in flood area,
but any place in the root of transportation would be in flood area. This will
also force the business organization to choose another longer root. This will
cause them more fuel expense and labor charge. More than that the delivery
will not be able to place at right time. This will lead to lose the trust of
customer. So, these kinds of problems could affect the business not only one
time but also for ever its affect could exist.
Warehouses are the part of supply chain management. During flood, the
warehouse would cause so many loses. This will affect the supply chain
management.
Communication lose will be other problem. Now a days most of the
communication and power cables are made under the earth. Flood could
severely affect the communication between the vendors, customers etc. The
destroyed buildings, warehouses, factory, vehicles, machineries etc. will take
time for the reconstruction. Till that time the business will be low. In mean
time their customers could find other vendors. The business-like mining,
construction etc. will be severely affect by this kind of natural calamities
(B.V, 2016).

Effect of hurricanes in supply chain management

Under extreme weather condition like hurricane could cause supply chain
quickly in severe disruptive manner. Transportation will be completely
hindered at those times. This will affect all ways of transportation (air, land,
and water). In the case study it is clearly shown that the hurricanes are
increasing annually. Increased hurricanes are increasing the rainfall causing
the flood also. The forecasters are expecting that in 2040 the location where
the probability of hurricanes is 1% now will be 2 or 3%
(nationalretailsystems).

Effect of extreme temperature in supply chain management

Global warming is one of the major problem worlds is facing now. Increased
carbon dioxide is the reason for that. The result is increased temperature.
draught is the result of extreme temperature. However, the extreme
temperature increases the sea level and dries the water in the land at the
same time. Physical deformation is one of the problems of increased
temperature. There will be products that need to be cooled or not to be
affected by heat. This situation will force the supplier to do extra secure
shields to safe their products. Fuel loss is also other problem (WWF).

How can we mitigate the effects of climate change in supply chain?

• Organizations need the capacity to see the ongoing situation. They
 could regulate readiness before the catastrophe strike to augment
productivity and fulfill client request. For this all the participants in this
scenario should be on the similar stage.
• Changing the inventory system in the organization. There are several
inventory systems. Inventory systems like JIT will be a best method
for time like this. For this also we could forecast the changes up to a
limit.
• Changing of business strategy depending on the climate change (plan,
2010).

Conclusion
This case study clearly describes the effects of climate change in supply
chain management. Billions of dollars are destroyed because or aftereffects
of this climate changes. Climate change is predictable only up to a limit or
it’s prediction is not 100% accurate. So, taking actions to those
approximate predictions is very risky.
This case study also refers the risk in managing a supply chain management.

• Case study report on Foldrite Company

The case study is related to the demand surge for the chairs and tables of
Foldrite Furniture and how the company meets the demands. The company
was on the way of improving their product quality and company’s
efficiency. They removed all the factors that were causing poor features. As
a result of the good strategies, the demand for the products rose than
predicted level. The availability of new design and featured products and
their new program that enables customize their orders are also have
contribution in this increased sale. Among this U.S. and Europe shows the
greatest rate of sale. To control the increased demand, the production
manager Kelsey developed new plan which could control at all level. This
include manufacturing, inventory, costs, risk etc. There are seasonal
demands for some kind of chairs were found in this company. For example,
high demand for folding chairs in summer, stackable chairs, and table in
holiday periods etc (Wheelwright, 2010).

Strategic changes made by the company

The company focuses on environmentally friendly products. Feed backs from
the customer has given great priority. The idea of replacing the material with
recyclable materials and foam, and plastic parts has also a great share in
reducing the price of product. also, there by total waste in the environment
can be reduced. For finishing also, they used some different methods like
water based and low volatile organic components. The company completely
eliminates the use of PVC, since they are causing health and environmental
problems.
The company tried to reduce the number of products. Instead they enabled
customization. This enable the customer to choose the color and material,
seat cover pattern, etc. of products. Their fast shipping ability is also a
competitive strategy (Wheelwright, 2010).

Manufacturing procedure
In case of operations and manufacturing procedure of the company, they
tried to maintain a strategic inventory of fully assembled products and
partially assembled parts. This could meet the demand for the forecasted
period. Since the company is keen in maintaining the quotation or contract
with the vendor, they could avoid the inventory of raw materials. The stock
of unpainted parts helps to easily customize the products depends on the
demand of customer. This make the customer feel like fast delivery of
quality products.
Planning is the main idea of this fast growth of firm. They plan and do
meetings on every week ends for the next week. All the employees are
included in the meeting. This will help to get an idea about the need and
requirements of company.
By making slight changes in the working hours also added the advantages
for the business. The shift made to ten hours and four day and rest of the
three days are made to holiday.
In case of labors, the labors are specially molded for working at any
department without any disruption in the work. Creating flexibility is a
challenging task, but once we could create such employees that will change
all the business to another level. Even the employees have to pay extra
payment for the extra time or over time, the profit will be more compared to
previous time. The company made the employees their loyal employees by
providing them all the allowances like incentives, medical insurance, bonus,
profit share in to bonus etc. this also made less absenteeism in the profile of
employee. The company tries to hire their family members into the
company. This could make the employees a family nature. We know that all
people love to do anything for family. Here also by this method the company
focuses on the same idea (Leadershipnow, 2020).
They also focus on the technology. They are using most sophisticated
technologies, adapting engineering science for every purposes.
The company could reduce the cost in some cases. Like, they are using
similar parts for several products. As we said simple assembling or
fabrication differences will totally change the final products.
The company consist of a quality department where all the product will be
checked and verified visually.
Managing all the branches of the company is not an easy task. Kelsey will
collect all the required data from different managers for calculating for the
future requirements. Forecast of Foldrite is for next six month. The forecast
is made based on the various factors like cold call enquiry, purchase history,
competitors’ sales study etc.
So, the aggregate plan of Foldrite company cannot be considered as a single
one theory but consist pf various decisions and demands made by the
company. However, even these strategies are having positive sides, theory
is also causing some negative sides also. For example, overtime of staffs will
lead to job fatigue, quality of products could reduce etc. however, by the
successful management the company could meet all their requirements
without any hindrances for their production and sale. At the same time the
result of their successful aggregate strategic plan is a successful organization
called Foldrite (solutions, 2010).

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