SCM case study of IKEA

1. 1

2. IKEA’s
SUPPLY CHAIN
NOV – 2015 2
Ali Arjmand
University of Tabriz

3. 3
Table Of Contents
- About IKEA
- IKEA’s Supply Chain Framework
- Global Supply Chain Planning
- Concluding

4. 4About IKEA
- Founded in 1943 in Sweden by Ingvar Kamprad
- Vision : Create a better everyday life for the many people
- Business idea : To offer a wide range of well designed,
functional home furnishing products at price so low
that as many people as possible will be able to afford
them

5. 5About IKEA
IKEA Group at a glance 2014
Total sales EUR 28.7 billion
Stores 315 in 27 countries
Products About 9,500 in the range
Co-workers 147,000
Suppliers 1,002 home furnishing suppliers in 51 countries
Store visits 716 million
Web visits more than 1.5 billion
Catalogues 217 million printed in 30 languages
Production 59% of our production is in Europe

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Shorten the distance
between need of
customers and suppliers
Low cost
Low prices
High volumes
About IKEA

7. Supply chain framework
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8. 8
147000 co-workers
1350 suppliers
31 trading service offices
in 26 countries
315 stores
31 distribution center
in 16 countries
Framework

9. 9Framework
- Products are manufactured all over the world
- Local officers near to the suppliers
- Long-term agreements give low prices
Top purchase countries
China 18 %
Poland 12 %
Sweden 9 %
Italy 7 %

10. 10Framework
Distribution

11. 11Framework
- Large volumes + flat packs = low costs
- The hallmarks of IKEA distribution
From supplier to store :
- More deliveries by rail in future
- Global network
- Flat packs
- Large volumes
- Low costs

12. 12Framework
Producing for IKEA includes following requirements
- Legal requirements - Social & working conditions - Environment and Forestry

13. Supply Chain Planning Process
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14. 14Planning Process
FRAME OF REFERENCES
- Supply Chain Planning Process
- Centralizing planning functions
- Software support
(ASP)

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Overview of the planning concept
Planning Process

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- Overall sales forecast made by corporate management
- Aggregate level in terms of total sales volumes in monetary units
Sales planning
- Forecast include remaining fiscal year plus 5 years into the future
- Updated 3 times per year

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Demand planning
- Adapting information and forecasting a certain part of assortment

18. 18Planning Process
- Operational forecast is a manual forecast registered by respective units for the 3 weeks
( replenishment needs in the store)
- Tactical forecast is done on a rolling 84 weeks horizon on store level
Retail forecast group ?
Region ?
- DP should check the plan every week

19. 19Planning Process
Need Planning
- The forecasts are netted against current stock level, ss and also against goods in transient.- Need planner is the person that is responsible for need calculation
- So, volumes are divided between suppliers

20. 20Planning Process
Supplier Capacity Planning

21. 21Planning Process
IKEA’s Planning Process Enablers
- Planning Organization
- Data Quality
- Software Support

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One integrated
planning process
working-together
environment
detect and
deal with problems
Balanced SC

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