Supply Chain Management Practice of Ikea †MyAssignmenthelp.com

Question: Discuss about the Supply Chain Management Practice of Ikea. Answer: Overview Of The Case Supply chain management is regarded as the process of managing all interrelated business activities through which flow of goods and services are managed. Further, it is considered as the chain through which products are purchased for production purpose and ultimately it reaches to the target markets who are the ultimate buyers(Waters Rinsler, 2014). For every type of business operating in the market, it is necessary to manage its supply chain in an effective manner so that right kind of good can be offered to the customer as per their expectation. The present report is based on analyzingsupply chain management practice of Ikea where the company has 27 trading offices in 23 countries, 15 customer distribution centers and 33 distribution centers. The Company is headquartered in Netherlands that is indulged into the practice of designing and selling ready to assemble furniture, home accessories and kitchen appliances. The environment where Ikea operates is highly competitive, and its main competitors are online and retail furniture stores(Sandybayev, 2017). The main focus of the organization is on offering the wide range of products that are of high quality. Considering the supply chain practice of Ikea, it undertakes different stages and involves primary, secondary and tertiary sectors that are involved in procurement of raw material, production, distribution, retail sales, etc. Competitive Strategy Of Ikea Considering the supply chain practice of Ikea where operations are carried out with the help of three different stages that involves primary, secondary and tertiary. Through effectivemanagement of supply chain, the key goal of business is to ensure customer satisfaction and providing them remarkable purchase experience. In the stores of Ikea different products are available where they can easily choose the best product that meets with their requirement. The packaging of the product is also done in the different manner that contains instructions and all the necessary information regarding products. Along with this additional facilities are provided to the customers that involve children play area, food court, mini cinema, etc(Jonsson, Rudberg, Holmberg, 2013). This strategy allows the company to influence purchase behavior of its customers. The key competitive strategy undertaken by Ikea is product diversification and cost leadership which has been considered with the help of its supply chain practice. The company strongly focuses on decreasing cost of production with the help of reducing wastage, decreasing operational error, integration of stakeholders, etc. Apart from this product diversification as one of the strategy is also employed where with the help of innovation new furniture items are developed. So, this competitive strategy has allowed the company to deal with the issue of competition prevailing in the market(Stadtler, 2015). Supply chain practice of Ikea starts with sales and demand planning followed by marketing planning and supplier capacity and load planning. All these activities are undertaken with the motive to provide proper convenience to the target market, and it has enhanced the overall performance of Ikea in the market. Key Points Of Ikea Supply Chain Above shown is the supply chain of Ikea that highlights the key activities involving central planning, distribution services, and retail. The suppliers of the company are present in 50 countries, and Ikea has developed the strong relationship with them through trust, transparency and another form of aspects(Sezen, 2008). The key points associated with the supply chain practice of Ikea are as follows: Purchasing and logistics activities are integrated within the business Segregation of the process into primary, secondary and tertiary sectors that is engaged into production, distribution, raw material and retail sales to the end customers. Emphasize on key aspects such as sustainability and quality, affordability, accessibility etc. At the time of dealing with partners main stress is on efficient production and working a lot to reduce logistics cost(Mangan Lalwani, 2016). Raw materials are sourced from the suppliers in the market at lowest price. Suppliers adhere to the IWAY code through which quality standards are met by the company. Adoption of automated system to manage inventory and this leads to efficient utilization of the main resources of the business. Activities that are associated with the order fulfillment process are carried out by Ikea range and supply where main tasks are plan, source, make, deliver, return and enable Ikea relies on e-wheel tool with the motive to evaluate the environmental impact of its products. Around 50% of Ikea 9,500 products are manufactured with the help of wood or wood fibers. This is one of the most effective resource form sustainability point of view(Lockamy III McCormack, 2004) Many designs of the products are developed by the company where the main motive behind the same is to reduce the use of materials. For instance some tables are manufactured with the help of recycled plastic etc. Stores of the company add value to the produced goods and this allows in providing remarkable experience to the customers in every possible manner. So, these are some of the key highlights of the Ikeas supply chain that makes it different from other companies operating in the market. How Company Delivers Value In order to deliver remarkable value to the customers, various strategies have been employed by Ikea. For determining the level of customer satisfaction, various aspects are undertaken by the company such as returned products, number of products and the recommendations received from the customers(Jacobs, Chase, Lummus, 2011). The company delivers value by providing proper assistance to the target market in the form of facilities such as food court, mini area, supervised children play area, etc. This supports in providing the high level of experience to the customers in every possible manner and enhances company performance. Apart from this, packaging of the products is done conveniently through self-assembly flat packs that contain necessary instructions. The main strategies of the company involve cost leadership and product diversification. This is the main reason due to which majority of the customers are highly satisfied with the product range of Ikea and in turn company is able to gain the competitive edge through this(Halldrsson, Kotzab, Skjtt-Larsen, 2009). The actual value is delivered to the target market with the help of high-quality product of different designs that are manufactured with the help of advanced technology. So, these are some of the key methods employed by Ikea in order to deliver value to the target market. Order Processing Strategy Of Ikea The order processing strategy of Ikea takes into consideration various tasks that are carried out by Ikea. The plan is the first stage where Ikea identifies the production requirement as per demand for its products in the market and determining the relevant cost along with the logistics required. Next crucial stage is the source where company orders the raw materials required from different suppliers(Ganesan, George, Jap, Palmatier, Weitz, 2009). Make is the next stage where the resources present are allocated in the production process where manufacturing takes place in line with the quality along with the quantity requirement. Further, deliver is another stage where large numbers of distribution processes are undertaken with the motive to deliver products to the sales outlets, storage units to the end customers(Ayers, 2006). Return is another stage where customers are provided warranty for the products they purchase. In case if any product has any default then it is possible for them to return the goods and through this company provides them appropriate convenience. At last is the enable stage where integration of all the members in the supply chainmanagement process takes place, and it is ensured whether IWAY code is appropriately followed or not(Chopra Meindl, 2007). All the staff members are involved in the innovation process, and this contributes a lot to the success of the enterprise. These are some of the key stages of the ordering process of Ikea through which company is able to deliver appropriate products to the target market and has allowed performing better as compared with other companies operating in the market. Summary Of The Case And Recommendation The entire case has supported in knowing about the supply chain management practices of Ikea that are quite effective. The key stages such as primary, secondary and tertiary are effective through which right kind of product is delivered to the target market. Apart from this, for delivering high value to the target market additional facilities are rendered to the customers such as mini cinema, children play area etc. Further, company welcomes suggestions from its customers that are associated with the product development. Moreover, some effective ways are present through which Ikea can improve its supply chain practice and they are as follows: Ikea supply chain strategy must be more flexible so that it is possible to change its supply chain practices frequently and in lesser period of time. Heavy reliance must be on advanced tools and techniques so that efficient production can be carried out that can save cost and in turn product of unique design can be developed easily which is beneficial for the company and customers also. A Large number of factors are present that influences supply chain strategy of Ikea and it is necessary for the company to ensure well in advance that all the influencing factors are well maintained and satisfied too. References Ayers, J. B. (2006). Handbook of supply chain management. Florida: CRC Press. Chopra, S., Meindl, P. (2007). Supply chain management. Strategy, planning operation. Das summa summarum des management , 265-275. Ganesan, S., George, M., Jap, S., Palmatier, R. 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