Push And Pull Strategy In IKEA

Exercise 3

Introduction

Push and pull are strategic supply chain decisions can that are as a results of the impacts of operational, product and demand related variables (Wanker and Zinn, 2004). The push strategy moves products based on planning or forecasting whereas the pull strategy moves products as a results of real demand (Ballou, 1992). Thus in a push system, the products are pushed through the supply chain channel right from production to the retailer. The manufacturer builds its production based on historical ordering patterns and forecasting. Due to this it takes a longer time for this system to respond to changes in demand which results in overstocking, bottlenecks and bullwhip effect in the system. Pull system on other hand are based

Ikeas supply chain is highly efficient in terms of the way its sells its goods. The stages of IKEA’s supply chain are the supplier, manufacturer, distribution centre, retailer and the customer. Ikea has over 1400 global suppliers with China and Poland being the largest market and 42 distribution centre. Despite the fact that Ikea has long lasting relationship with its supplier it has ownership of all their products which allows them to easily change a non performing supplier. IKEA retailers shops also serve as their warehouse for their products.

Customers typically choose what they want to buy at IKEA. Then the customer arranges to picked them up themselves at IKEA warehouse. There exists less difficulty when it comes to the transportation of goods as a results of how the packaging of goods takes place. Also customers usually assemble their purchased goods with little or no assistance from IKEA staff or third parties. Thus customers become part of the supply chain (self-delivery). This is because customers in actual sense undertake the tasks that would usually be done by the supply side.

Figure 5: Pull and Push

Even though customers demand met is based on their respective orders, IKEAs meet such demand based on their already stocked inventory and hardly does it produce from scratch based on such individual customised orders. Sometimes customer’s specifications are met individually (e.g. building of a kitchen based on a customer 's measurement and arrangement) but IKEA only make an adjustment in already produced kitchen stocks available in the shop. This might somehow fulfil the characteristics of pull strategy because it is based on the customer’s demand for that product and not forecasted demand. But as stated above, in all IKEA does not typically focus on the pull strategy but uses push strategy throughout it supply