Global supply chain planning at IKEA

From supplier to store

- A case study and analysis.

Nikunj Rana
ME INDUSTRIAL
(GCET)
 IKEA’s supply chain has a global spread
with growing sales and purchasing in all
major regions of the world.
 This article outlines IKEA’s global supply
chain planning concept and describes the
roles of the planning organization, data
quality and software support in the concept.
Its cornerstones are mutually integrated
planning processes, a centralized planning
organization, focus on data quality, use of
advanced software support and structured
change management during implementation
 296 IKEA stores in 36 countries.
 27 distribution centers.
 11 customer distribution centers in 16

countries.
 41 trading services offices in 30 countries.
 1380 suppliers in 54 countries.
 Purchases most of its supplies from Europe
 9500 products
 Sourcing materials close to the supply chain
to reduce transport costs.
 Building its DCs closer to seaports so that it

can use more of ocean transport and less of

road transport.
 Delivering products directly from the

supplier to IKEA stores. This slashes

handling costs, reduces road miles and
lowers the carbon footprint.
 Warehouse attached to their retail stores.
 Using flat packs, packaging is designed to
maximize the cube of ocean containers and
domestic over-the-road trailers.
 This allows IKEA to ship more units at a time which
has direct impact in the reduction of their overall
landed costs.
 A better use of stock and warehouse space
 Transporting goods where possible by rail and
sea.
 Utilizing fuel-saving techniques that allows to

be cost-effective and environmentally friendly.

 ◦ Less than 1% is air freighted.
 The aim is to constantly increase the
proportion of goods transported by rail.
 1) Supply chain.
 2) Planning concept.
 3) Sales planning.
 4) Demand planning.
 5) Need planning.
 6) Supplier capacity planning .
 In order to realize the new global supply
chain planning concept, it has been possible
to identify four main enablers for the
implementation i.e.:
 1) Planning organization
 2) Data quality
 3)Software support
 4)Project and change management
 http://www.ikea.com/ms/en_GB/about_ikea/press_room/distribution.
pdf
 http://www.3plwire.com/2005/09/30/ikea-logistics/
 http://www.thetimes100.co.uk/case-study--swot-analysis-
sustainable-business-planning--110-368-1.php
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Advanced Planning – Concepts, Models, Software and Case Studies,
3rd edition, Springer