Question

Briefly discuss Ikea's Web-enabled Supply Chains

Answer 1

IKEA is the world’s leading retailer in the furniture industry. IKEA has about 373 stores in 47 countries. IKEA’s success is because of its impeccable strategic supply management. The founder Ingvar Kamprad’s vision was to provide stylish and modern furniture at modest prices. Every year the company management discontinues 2000 products and introduces 2000 products. The company has about 1000 suppliers in 52 countries in its logistics. To handle this complexity, IKEA has utilized many approaches. The main aim of the SCM is to control every bit of the supply chain starting from designing, to manufacturing and warehousing till the product reaches the retail stores. IKEA manages this supply chain through distribution centers. The company has 42 distribution centers across the world and the distribution centers are managed by robots and machineries. There is no need for manpower which is the largest cost savings for the company. Each product is tracked by bar codes.

IKEA has invested largely in managing the supply chain. The company has collaborated with Llamasoft to initiate the Supply Chain Guru which is a simulation software tool for supply chain. IKEA was able to identify the supply chain issues with capacity in retail stores with the help of the software simulation tool. The solution that the company implemented was increase in the number of external warehouses. This has increased sales.

To conclude, it is imperative to say that the success of IKEA lies in the cost effective management of its largest supply chain network through the use of software simulation tools and bar codes. The company's aim to manage every bit of the supply chain has great control over the supply chain.