Company’s procurement and supply chain analysis
Discuss about the Collaboration in Supply Chain Resilience.
The study aims to produce an analytical mapping for the procurement and SC activities in IKEA. The results of the report have been presented with the inclusion of the various types of the reporting aspects which are seen to be considered as per the supply chain and procurement process in IKEA. The main discourse of the reporting aspects has focused on the findings about the improvement program and preparation of a google site presentation for completing the analysis. The important aspect of the discussions is considered with the various types of the procurement and SC initiatives in terms of the “supply, operations, information, integration and sustainability issues”. Some of the main considerations of the model will be discussed with the inclusion of the dynamic alignment model which will be conducive in terms of the stating the present SC issues faced by the company. The discussion of the improvement program has been included with the supply, operations, integration of information and sustainability (Gattorna, 2015).
IKEA is identified as the Swedish founder for the multinational group associated to designing and selling of the ready to assemble furniture products, kitchen appliance and accessories for home. The company is further acknowledged for being the world’s largest retailer in the furniture retail since 2008. The company was depicted to be established in 1943 by a 17-year-old “Ingvar Kamprad”, listed by Forbes in 2015 (Stadtler, 2015).
The company is further seen to be considered for the various types of the activates which are based on the different types of the aspects of the building modern designs furniture for interior designs and eco-friendly simplicity. Moreover, the firm has considered giving the attention pertaining to the cost control and including the operational details with regards to continuous development of eh product and including the corporate attributes. The main form of the corporate attribute of the company has allowed it to reach to the lowest of the prices with an average percent of 3% more in the decade of 2010 during the phase of global expansion (Chae, 2015).
The group has been depicted to be formed with a complex corporate structure with the inclusion of the members from the European Parliament who have been alleged to design for more than “€1 billion in tax payments from 2009-2014”. The IKEA is further depicted to be operational in 415 stores across 49 countries. In 2016, goods worth more than €36.4 billion was seen to be sold to represent a total increase of 7.6% increase in 2015. The IKEA website has further contained more than 12000 range of products. There have been several instances of including 2.1 billion visitors in the IKEA website from “September 2015 to August 2016”. In several aspects the company is seen to be responsible for the 1% consumption of the commercial product thereby making it the largest user for wood in the retail sector (Holmberg, 2015).
Inventory planning and comparison to competitor’s product and services
IKEA calls on designing a long natural way for designing a retail store which allows a customer to directly go to a section of the desired goods and services. There are several instances of shortcuts for the other parts of the company. It has been further seen that the sequence is firstly seen to involve furniture showrooms taking note of the selected items. The customers are depicted to collect the shopping cart and proceed to “Market Hall”. This is then depicted to be addressed with the self-service furniture warehouse for the collection of the showroom products of the company. Despite of the main manufacturing activities being designed in Sweden; a major portion of the assembly is performed by the end user. IKEA is for the thing to handle the subsidiary is asserted to the production of all the company’s wooden base products. The largest Swedwood factory of the company is situated in southern Poland. As per the latest reports, it has been seen that there are subsidiaries over 16,000 employees across 50 sites in 10 countries who are responsible for manufacturing the hundred million furniture which is sold by IKEA on an annual basis. The alternative hardwood furniture is situated in southern Sweden which is the sole supplier of the company. In addition to this, IKEA was named as top hundred companies for working mothers in 2004 and 2005. The ranking of the company was seen to be among top 200 companies in the world and named one of the top hundred companies in (Canada Scholten & Schilder, 2015).
The procurement process of IKEA has been explained with the use of dynamic alignment model. The use of this model has focused on two important things it is related to ever changing business environment and effectively aligning and leading the managers for achieving a compelling strategy. In addition to this, some of the main components of this model has been included with the inclusion of the consideration for strategy, performance, employees, managers and leadership. These factors at further connected with clear purpose, flexible systems, continuous improvement, enthusiastic workforce and shared values. The different characteristic of the dynamic alignment model is also seen with encompassing all the elements and aim for adapting ever-changing business environment and effectively align the managers, leaders and employees with a compelling and clear strategy (Fawcett et al., 2015).
The main design of the process for the product is seen to be based on the strategy of lowest price. In order to make the products saleable the company identifies the right for IKEA identity and the co-workers for focusing on design, price, quality and function. The competitor companies such as Walmart, Amazon, WayFair and Sears have been also adopting a similar set strategy of maintaining minimum price for procurement activities (Yu et al., 2016).
Discussion on the improvement programs
IKEA’s performance in terms of maintaining an impressive inventory is not only recognized among the consumers in terms of high quality furniture at affordable price but also among the competitor companies with its unique inventory management methods. Each store of IKEA is seen to hold more than 9500 products and offer many products that a very low price while keeping availability in the stock. The in-store Logistics management of the company is developed as per “minimum/maximum settings” for responding to the store level inventory and reordering of products. Additionally, the minimum number of products available before reordering are set with minimum settings. The maximum settings are applicable for an particular item to order one product at a time. Due to the fact that the IKEA inventory is stocked only after opening hours, the main logic behind minimum and maximum settings is considered with the total number of products which are to be sold from the reserve stock of bin in a particular day or within two days. The process in general meets the customer demand thereby minimizing the ordering level to few products from many products (Lu, 2018). This aspect directly points to the integration and sustainability aspect as per dynamic alignment model (Quarshie, Salmi & Leuschner, 2016).
IKEA appointed several professional consultants for managing its supply chain operations. IKEA maintains an internal logistics manager for the ordering process and material handling at IKEA stores. The strategies adopted by IKEA have been proven and tested to be successful in the furniture retailer industry with a very low operating cost and high demand of product. This has allowed the company to stay competitive by streamlining the SCM.
The production process of IKEA is involved with several suppliers for creating atmospheric unique designs which has featured environmental responsibility, efficiency in users and material users of resources. Additionally, the expansion presents enormous challenge for adaptation to the future necessities and overall distribution process. The important challenges in the supplies and process for the company has been discussed with finding internal suppliers and sustainable issues associated with the suppliers. The future challenges among the people are often seen with higher education required for using the computer technology which is mostly implemented in the operational process of IKEA. In addition to this, most of the customers prefers ordering the customized design furniture online (Cao, Huo, Li & Zhao, 2015).
Some of the important nature of the issues related to supplier selection is due to the lack of collaboration and coordination among the existing suppliers. In case there is a good collaboration and coordination among the partners then the company could have attained better productivity. The improvement measures further include coordination with traditional businesses within the company and making a design of the product from before and to meet the necessities of the customer. In addition to this, the company should follow up the supply chain strategy to build up the stock in which customer segment is particularly based on online platform thereby designing the market with large production size (Boström et al., 2015).
The alignment of the supply chain with the company structure will be able to attain a better sustainable competitive advantage and link to the structure of the company. Additionally, the strategies of the companies are based on managing and producing maximum output which is in many terms not, and all organizations. Due to the fact IKEA has a flat structure, it gives preference to its employees. This should be utilized by the company in order to attain a smooth inflow and outflow of material and improve the overall supply chain process. Based on the significant sources of secondary material it has been discerned that IKEA has not given adequate technological support to its suppliers on an ad hoc fashion. Additionally, it is a part of the vision of the company to secure the base of manufacturing as per the production volumes and technological capabilities. Therefore, the company needs to support the supply chain operations on a regular and ongoing fashion thereby taking into consideration the various factors for technological aspects and ensuring the quality assurance (IWAY or ISQS).
A significant problem is seen with monitoring of the suppliers as IKEA needs to maintain an extensive body of requirements for complying with the “ISQS, IWAY, and product specifications”. In addition to this, IKEA has considered auditing extracts taken from the third-party organization because of the self-made auditing process and having a close relationship with the suppliers and developing a competence in the way IWAY walks. There are several scopes for the company in improving the long-term relationship by focusing on fewer suppliers and reduce the monitoring costs. In order to support the cost associated to monitoring a separate team need to be maintained for regular on-site visits in the warehouse and distribution hub of the company (Laurin & Fantazy, 2017).
Conclusion
IKEA is associated to designing and selling of the ready to assemble furniture products, kitchen appliance and accessories for home. Management of supply chain compared to competing products and services is depicted with maintaining an internal logistics manager for the ordering process and material handling at IKEA stores. The main design of the process for the product is seen to be based on the strategy of lowest price. In order to make the products saleable the company identifies the right for IKEA identity and the co-workers for focusing on design, price, quality and function. Each store of IKEA is seen to hold more than 9500 products and offer many products that a very low price while keeping availability in the stock. The in-store Logistics management of the company is developed as per “minimum/maximum settings” for responding to the store level inventory and reordering of products. Management of supply chain compared to competing products and services is considered with appointing several professional consultants for managing its supply chain operations. IKEA maintains an internal logistics manager for the ordering process and material handling at IKEA stores. Some of the important improvement measures has been suggested with keeping a track of the monitoring activities and maintaining a bit of a sustainable competitive advantage linked with the structure and board objectives.
References
Boström, M., Jönsson, A. M., Lockie, S., Mol, A. P., & Oosterveer, P. (2015). Sustainable and responsible supply chain governance: challenges and opportunities. Journal of Cleaner Production, 107, 1-7.
Cao, Z., Huo, B., Li, Y., & Zhao, X. (2015). The impact of organizational culture on supply chain integration: a contingency and configuration approach. Supply Chain Management: An International Journal, 20(1), 24-41.
Chae, B. K. (2015). Insights from hashtag# supplychain and Twitter Analytics: Considering Twitter and Twitter data for supply chain practice and research. International Journal of Production Economics, 165, 247-259.
Fawcett, S. E., McCarter, M. W., Fawcett, A. M., Webb, G. S., & Magnan, G. M. (2015). Why supply chain collaboration fails: the socio-structural view of resistance to relational strategies. Supply Chain Management: An International Journal, 20(6), 648-663.
Gattorna, J. (2015). Dynamic supply chains. London: Pearson Education Limited.
Holmberg, S. (2015). Supply Chain Planning at IKEA. Guest lecture-IKEA of Sweden. Held September, 19, 2.
Laurin, F., & Fantazy, K. (2017). Sustainable supply chain management: a case study at IKEA. Transnational Corporations Review, 9(4), 309-318.
Lu, C. (2018). IKEA supply chain- how does IKEA manage its inventory. Tradegecko.com. Retrieved 31 May 2018, from https://www.tradegecko.com/blog/ikeas-inventory-management-strategy-ikea
Quarshie, A. M., Salmi, A., & Leuschner, R. (2016). Sustainability and corporate social responsibility in supply chains: The state of research in supply chain management and business ethics journals. Journal of Purchasing and Supply Management, 22(2), 82-97.
Scholten, K., & Schilder, S. (2015). The role of collaboration in supply chain resilience. Supply Chain Management: An International Journal, 20(4), 471-484.
Stadtler, H. (2015). Supply chain management: An overview. In Supply chain management and advanced planning (pp. 3-28). Springer, Berlin, Heidelberg.
Yu, Y., Wang, X., Zhong, R. Y., & Huang, G. Q. (2016). E-commerce logistics in supply chain management: Practice perspective. Procedia CIRP, 52, 179-185.
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