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Hidayat Heydarov

Martin Wichmann
• 10000 products by 1600 suppliers at
186 Stores(Supply Facing
• 27 warehouses
• 31 distribution houses (Demand
facing warehouse)
• Aim of IKEA:
– a global distribution network
– large volumes
– flat packages
– low costs

• Both Anticipatory & Responsive
Business Model

• Outsourcing 90% of production
– Low-Cost Structure
– Better Economies of Scale
– Focus on Core Business
• IKEA is Multi-National Company
• Domestic Marketing and Delivery
• Strategic Distribution points
• Global Sourcing
– From countries with low wage
– Many sources through domestic
suppliers in low-cost countries
– Facilitation of sales in the
international sourcing country
• The supply chain is mainly make-to-stock and only a
few products are made to customer orders.
• SC is heavily dependent on forecasts.
• Stores have local freedom in terms of planning and
placing replenishment requests. This led to
fragmented supply chain planning with local
optimisation and a lot of manual intervention with
plans throughout the supply chain.
• Due to frequent shortage situations, some regions
purposely overestimated demand to ensure delivery,
which in turn has led to imbalance in terms of
demand coverage. Hence, some markets have suffered
from stock-outs during long periods, whereas other
markets have ended up with obsolete inventories.
• For Procurement they have: Alternative Strategies of
procurement: Buyer Involvement and Consolidation of

• Do-It-Yourself Assembly Lowers
Packaging Costs

• Quick Response (QR)

• Vendor-Managed Inventory (VMI)

• Cost-per-touch

• In-store logistics personnel
• IKEA Stores= Warehouses
• Economic Benefits of Warehouses:
– Break-Bulk
– Cross-Docking

• Service Benefits:
– Spot-Stocking in strategic markets.

• For handling they use:
– Forklifts
– Conveyors
– Corusels

• Corporate Management making
Sales Forecast
• Front-end&Back-end chain
• Efficient Supply Chain
• Applying Six Sigma
• Lean Operations
“We offer the lowest price,
ease of shopping, the ability to
take your furniture home the
same day and – last, but not
least – helpful, friendly and
knowledgeable co-workers
when you need help”

• Tests During Development Stage

• Third-Party accredited test lab

• Certified Products from Supplier
• renewable electricity supplies
• promote Forest Stewardship
Council (FSC)
• IKEA Foundation supports
programs that improve the lives
of children in need through
health, human rights and