Ikea Supply Chain Analysis

Executive summary

This report depicts the various stages of IKEA’s supply chain flow, providing an elaboration of processes that take place at each stage. It also shows the dependency of the stages and how information flows through the supply chain.

After illustrating the supply chain flow process of IKEA, the report then moves on to analyze the company’s global supply chain strategies. It demonstrates how IKEA utilizes an intricate system of distribution to ensure timely delivery of products and maintain top customer satisfaction levels. It will also show the various strategic fits of IKEA, and the implementation of unique solutions in order to achieve its competitive strategy.

Towards the end, process improvements are also suggested to facilitate

Founded in Sweden at 1943 by Ingvar Kamprad, IKEA is a value-driven company with the vision “To create a better everyday life for the many people”. As of January 2009, the company became the world’s largest furniture designer and retailer.

Currently, IKEA owns and operates 351 stores in 43 countries across Asia, Europe, North America and Australia. The company’s product range consists of 9,500 home furnishing articles, of which they are known to be well-designed, functional and inexpensive. IKEA has about 1,220 suppliers in more than 55 countries around the world, providing the bulk of the company’s inventory. Furniture is sourced through an IKEA-owned manufacturer, Swedwood (now termed as IKEA Industry as of September 2013) as well. IKEA Industry is also the world’s largest wooden furniture manufacturer.

IKEA targets middle-class customers worldwide. Its largest target market is the members of Generation Y, as they are young adults who will be purchasing furniture for their future or current homes. Furthermore, members of Generation Y are family-centric, street smart and achievement-orientated. Therefore, offering a large variety of self-assembly furniture would attract the

For the company, it gets the raw materials like wood and wood fiber from its internal suppliers and other raw materials like metal from its external suppliers. At this stage, parties like IKEA Industry and IKEA’s external suppliers are involved. Since IKEA has to purchase materials from numerous suppliers, the company has 31 trading service offices in 26 countries so that new idea testing, production monitoring, quality checks and price negotiations can be carried out efficiently. This ensures that the material costs are at its lowest and at the same time, material comes in good