ikea - operations and supply management

25.03.15Group BMIM_Sept_Section 1

F O U N D B Y I N G V A R

K A M P R A D , S W E D E N , I N

1 9 4 3

A LI'LL ABOUT IKEA

COMPETE BY USING A NEW

STRATEGY - COST REDUCTION

AND INNOVATIVE IDEAS

THE FIRST SHOPS OPENED

OUTSIDE OF SWEDEN

WHERE IN DENMARK AND

NORWAY

H E A D Q U A R T E R - N E T H E R L A N D S

S P R E A D A L L A R O U N D 4 6

C O U N T R I E S W I T H

3 5 1 S T O R E S .

IKEA DELIVERS OVER 250

MILLION CUBIC METRES

OF PRODUCTS EACH

YEAR.

IKEA POSITIONING 

"For price and design conscious customers all around the world,who are looking for a wide range of valuable products, IKEA with aScandinavian heritage, makes people's lives easier by offering themhome furniture with a form, function and affordability that featuresgood quality and innovative designs while welcoming customers

with a unique purchasing experience as IKEA allows them to touch,select, carry and assemble the best value for money products to their

homes, making their customers feel in-vogue and satisfied."

GROUP F - SMS1

“By offering a wide range of

well-designed, functional

home furnishing products at

prices so low as many people

as possible will be able to

afford them. Also by giving

people the possibility to grow,

as individual and in their

professional lives, to create a

better relationship with

customers. “

MISSION

BUSINESS MODEL

Shorten the distancebetween the need of thecustomers and thepossibilities of the suppliers.

Low cost in every operationdepartment, which will leadto low prices and highvolumes.

The IKEA Experience

OPERATIONS &

SUPPLY

BusinessIntelligence

Design

ExternalSupplier

Swed Wood

Bidcompetition

andProduction

BusinessIntelligence Design Trading

BusinessIntelligence Design

Production &

Trading

HOME VISITS

TRENDRESEARCH

FORECASTPRODUCTIONVOLUMES

BACKWARDINTEGRATION

ALLIGNED WITHMANUFACTURING

EASY CUSTOMERASSEMBLY

LOW COST

LOWTRANSPORTATIONCOST

SWEDWOOD

EXTERNALSUPPLIERS - 80%

Modularity

Modularity : a production concept widely used by IKEA

"Modularity is the degree to which a system componentsmay be separated and recombined"Eg: wheels of a table are the same like that of a chair

IKEA & it's Suppliers

OBJECTIVE : gain long-term relationships, encourage suppliers todeliver better quality

IKEA AUDIT : over every external supplier in order to meet their idealworking conditions, and avoid exploitation among their workforce.

Once IKEA commits to it's suppliers for a certain amount of units, it hasto take the delivery of those units - THERE'S NO GOING BACK

IKEA Way of Purchasing Home Furnishing Products (IWAY), helpmanufacturers reduce the impact of their activities on the environment.IWAY raise standards by developing sustainable business activities andleaving positive impacts on the business environment in which thesuppliers operate.

SUPPLIERS AROUNDTHE WORLD

Sweden9%

Italy7%

Germany6%

Poland12%

China18%

DistributionCentre

StoresFinal

Customer

DistributionDepartment

RetailDepartment

MarketingDepartment

Vendor managedinventory system

DistributionDepartment

RetailDepartment

MarketingDepartment

Distribution centreswork as wholesaler

IKEA´s store workas a warehouse -

Flat packaging isused to minimizedistribution cost

7 x units pershipping than theproduct alreadyassembled

Forecasting systembased on historicaldata provide eachstore with the idealquantity

Clear message: costadvantage of brand

70% of budget -printing catalogues

212 million of copiesof IKEA cataloguesprinted in 29languages, onlinecataloguesdownloaded 9.7million times.

IKEA & it's Customers

IKEA design's focus on people with limited income and limited livingspace

IKEA Consumers : half producers-half consumers, the products are selftransported, self assembled

To achieve a low cost, no frill services are offered to the consumers

IKEA strives to offer its consumers - Quality, Speed, Dependability,Flexibility and Cost.IKEA offers it's consumers 120 days to return or exchange the product ifunsatisfied.

IKEA & it's other Customer Services

IKEA offers for the furniture to be delivered to the consumer's home fora premium price

IKEA also sends a technician to the consumer's home for assembling theproduct if needed.

IKEA sends over "Dr. Furniture" to the consumer's home if the consumeris dissatisfied or has incurred any injury from IKEA's products- incase the product caused an injury to the consumer or harmed theconsumer, the product will be pulled out of production and the retailstores immediately.

81%16%NORTHAMERICA

EUROPE

3%

3%

ASIA &AUSTRALIA

ASIA &AUSTRALIA

SALES AROUNDTHE WORLD

Improve conditions for their direct and indirectemployees

Expand into new countries

Entering the second hand furniture market

Improve the relationship between suppliers andshops, for the suppliers to understand thecustomers and the reasons behind every purchaseor product return better.

IKEA's FUTURE GROWTH

Our visit to IKEA, Madrid

Thank you