International Supply Chain Management

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INTERNATIONAL SUPPLY CHAIN MANAGEMENT – BSB20123-7 Written Examination Stimulus Material Case Study – IKEA About IKEA Since its 1943 founding in Sweden, IKEA has offered home furnishings and accessories of good design and function at low prices so the majority of the people can afford them. IKEA’s vision is to: “Create a better everyday life for the many people” Its business idea is "To offer a wide range of well designed, functional home furnishing products at prices so low that as many people as possible will be able to afford them" The IKEA concept is based on their market positioning statement “Your partner in better living. We do our part, you do yours. Together we save money” and focuses on a commitment to product design, consumer…show more content…
IKEA buys production capacity rather than product quantities. In other words, they order 10,000 hours of production from their suppliers rather than 10,000 bookcases. Local offices near to the suppliers The operative purchasing work is divided up among four trading agents, supported by 31 trading service offices in 26 countries. This means that IKEA is always close to its suppliers, which is one way of creating good business relations between the companies involved. The trading service office’s employees can make frequent visits to suppliers and follow the production process closely, enabling new ideas to be tested and regular quality controls to be made. They are also responsible for the important task of monitoring working conditions, social conditions and the external environment around the factories, and for checking that these are constantly being improved in accordance with the code of conduct in The IKEA Way on Purchasing Home Furnishing Products (see Appendix 1). The suppliers, in turn, can have confidence and faith in IKEA. While IKEA know they are a demanding customer, they also feel that they are fair, professional and honest in their dealings. China – number one on the IKEA purchasing list Today the majority of IKEA products (66%) are purchased from manufacturers in Europe. However, the largest single country for purchasing is China. Top 5 purchase countries • China 18% • Poland 12% • Sweden 9% • Italy 7% • Germany
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