Ikea Supply Chain

IKEA is the world’s largest furniture retailer, the company was created in 1943 by Ingvar Kamprad, IKEA is the acronym of his initials (IK), Elmtaryd (E) the farm were he grew up and Agunnaryd (A) the village were he lived. Today, IKEA is approximately valued at 11.8 Billion, this number being only an assumption since the company is still in private ownership. Ingvar Kamprad has an estimated net worth of 4,2 Billion.

There are stores not only in Europe but also in North America, Middle East, and Caribbean and Asia- all are 253 stores in 24

Global sourcing is an important sourcing strategy for IKEA Company. According to Hultman, Hertz and Johnsen (2012), in 2008, IKEA has 54 different sourcing countries and 30 purchasing departments which were located all over the world. With the expansion of its market, IKEA was not satisfied with selling its product only in domestic and Nordic market instead it put its higher goal in global market. Therefore the sourcing market also expanded with the growing market. There were 64% of its products were sourced from European countries which were mainly in eastern part like Czechoslovakia, Rumania and Hungary; China with a 22% share of the supply was the largest single supply market, and Poland with a 16% share (IKEA 2007). However, IKEA also trades off the cost of raw materials and cost of transportation, hence IKEA combined the Global sourcing with local sourcing strategy to lower the total cost.

IKEA is a unique Swedish furniture company. The company we so widely recognize today for selling good quality budget friendly Scandinavian style furniture began in 1943 as merely selling pens picture frames and wallets. Ikea was founded by a then 17year old Ivor Kampard, of the farm Elmtaryd near the small village of Agunnard in Smaland, hence giving rise to the name IKEA. This area is know for its thrifty and hard working ethos and Kampard very much incorporated this into his business venture. His innovative idea was to offer home furnishing products of good function and design at prices much lower than competitors by simply using cost-cutting solutions that did not affect the quality of products.

IKEA is the worlds largest furniture retailer (in 2002), with sales approaching 12 billion dollars. They operate in 22 countries and have 154 full service distribution stores. IKEA is a highly differentiated service and product provider, emphasizing high-quality product at the lowest prices via non-traditional positioning strategies. In order to provide these low costs, the product came with virtually no customer service and ‘put it together ' and ‘transport yourself ' directions. In addition to these "strictly self-service" outlets, IKEA offered various amenities including, Swedish cafes and playgrounds for kids.

Another of Ikea 's core competencies is their ability to create a positive atmosphere and create enthusiasm within each store through effective design. Since the store is designed in a circle, the concept for the store layout allows one to see all the merchandise in the entire store by simply moving one direction. The aisles are wide to allow for merchandise inspection and constant flow of traffic, merchandise is fully assembled and displayed for viewing and product testing. Ikea also houses a restaurant, kids playroom, and staged room displays to allow for better visualization and overall atmosphere. Ikea 's work structure for employees also helps set the atmosphere and showcase employee dedication and enthusiasm. On a regular basis Ikea hosts Anti-bureaucracy Week, during which executives work on the shop floor and tend to the registers.

According to the above information about IKEA’s supply chain, IKEA definitely has one of the best successful global supply chains among all the global retailers. And it has a lot of company strengths in areas from sourcing to logistics, and inventory management and marketing strategy.

IKEA has 328 stores in 28 country (Inter IKEA Systems B.V. 2016). The countries includes North America, Europe, Russia, Asia and Australia. Europe has the highest IKEA stores in the world in which it has 229 stores and 19 distribution centre. Follow by North America has 52 stores of IKEA and 7 distribution centre. The third country that has the most IKEA stores is in Asia in which it has 27 stores in total and 5 distribution centre. Furthermore, Russia has 14 stores of IKEA company and 1 distribution centre. Lastly, Australia has 6 stores and 1 distribution centre.

IKEA 's store network has a worldwide spread with developing deals and acquiring in every significant area of the world. What makes its production network truly complex is that its stores are spread crosswise over numerous nations, that it has 1220 suppliers in 55 unique nations making its furniture and that the stores are supplied from 31 focal appropriation

Cater to all age groups and amenities of store visitors. IKEA provides all necessary family services for instance, play areas for kids, restaurants, rest areas, these facilities enable people to spend all day in their stores.

Today IKEA has grown to be a big international company that has more than 353 stores in over 46 countries with over 146,000 employees worldwide. The Swedish heritage can be seen in many of IKEA’s characteristics: from the design of the furniture. IKEA’s vision is to “Keep continuing for a better everyday life of IKEA’s customer”. (IKEA official website) In 1951, sales of furniture dominated the inventory and IKEA decided to focus exclusively on low-priced furniture. IKEA also recognizes edging up his competitive advantage it is later proofed that it is a keystone of IKEA’s later success. Concurrently on the same year, IKEA’s very first furniture catalogue was also published. IKEA also opened its first furniture showroom in 1953, which allowed customers to see and feel the items they were buying providing a “third home concept” which gradually forms into their organizational culture. Their concept was a huge success as most people enjoys handling and viewing a potential product before making a purchase. IKEA’s success is mainly based on strong brand and organization culture where employees regardless of superiority are treated fairly and equally, this is to provide customers with the best shopping

Ikea is a great company that starts from humble beginnings and has made an impact upon the world for almost a century. Ikea is a Swedish company that specializes in selling furniture and other housing products across a market of over 40 countries (IKEA history - how it all began, n.d.). The founder of the Swedish company was Ingvar Kamprad. Kamprad as a child would sell matches, pencils, and flower seeds to the people living around him. Even at a young age, it was evident that the young Kamprad was destined to become a great businessman. In the 1940’s, when Kamprad was just 17 years old, he founded Ikea and was able to create his new business through the money that was awarded to him by his father. What is interesting about Ikea’s name is that Kamprad combined his first two initials of his name with the first initials of the village and farm he grew up in in order to come up with the name, Ikea.

With its business formula based on low cost and affordability and IKEA have 2500 suppliers in over sixty countries. Having exclusive contract manufacturing with its suppliers, they are working closely with them to reduce costs and sharing technical know-how.

IKEA is a privately held, international home products company that designs and sells ready-to-assemble furniture such as beds, chairs, and desks, appliances and home accessories. The company is the world's largest furniture retailer.

IKEA then decided that it made more sense to work with suppliers in each of the company’s big markets to avoid the costs associated with shipping the product all over the world. IKEA prefers to locate complete value chains in selected countries, including raw materials, components, and finished products, although in some product areas, for example, solid wood furniture, this is not always possible because of the uneven global distribution of raw materials and the preferred locations of finished goods’ production. In 2008, almost two-thirds of IKEA’s global purchasing was in Europe, one-third in Asia, and 3% in America. The top countries included China (21%), Poland (17%), Italy (8%), Sweden (6%), and Germany (6%). As in many other industries, low production costs have contributed to increased purchasing from China, expanding from 14% of IKEA’s global sourcing in 2003. However, China’s increasing importance has recently stagnated due to rising production costs and longer lead times for finished products. Instead, IKEA has increased the share of products obtained from Europe, where Polish suppliers