MSc Operations Management-IKEA’s Supply Chain Management Report

MSc Operations Management

IKEA’s Supply Chain Management Report

1.0 Executive Summary

The objective of this report is to analyse the operations management of supply chain management of IKEA, a global furniture manufacturer and seller. It is figured out that IKEA’s supply chain management include mainly three processes of raw material development and extraction, product manufacturing, and product distribution and sales from the supplier end to the customer end. The three processes help effectively reduce costs and ensure the high quality of products and customer satisfaction. However, there are also issues, including consistent quality control among all suppliers, cost reduction in supply chain and ensuring effective communication and trust-based relationships with suppliers and manufacturers.


2.0 Introduction

Operations management is of great significance for organizations to gain and maintain competitiveness in the market because it enhances organizations’ key abilities to maximize its efficiency and effectiveness and provide products or services that can meet and even exceed customers’ demands (Hill, Jone and Schilling, 2014). It is composed of efficient and effective process management and maintenance, such as supply chain management, quality management, inventory management, service operations, etc.

This report conducts the case study of the company of IKEA. Founded in 1948 in Sweden and headquartered in the Netherlands, IKEA designs and sells ready-to-assemble furniture, home accessories, and kitchen appliances, and has business presence in 49 countries with 145 stores in the whole world (Jae-Woong, 2011). IKEA has great reputation in offering creatively-designed, affordable and quality products and services to customers (Yoo-Nah Hahn, 2015). It has been globally agreed that it is effective operations management that ensures IKEA to fulfil its customers’ requirements at the same time of minimizing costs. Effective and efficient supply chain management, quality management, and cost are three areas that IKEA has been focusing on to ensure business success (Arrigo, 2005). As to the supply chain management, it includes designing, product manufacturing and warehousing to achieve effectiveness and efficiency in purchasing, distribution, and sales in the whole globe.

3.0 Supply Chain Management of IKEA

In the following part, the supply chain management of IKEA will be briefly explained along with the associated processes and strategic implications of the operation. The supply chain management adopted by IKEA is a global system, which is composed of the handling and controlling of the three processes of designing, production and warehousing of products (Larsen, 2007). According to Arlbjorn (2008), supply chain management covers all facilities, activities , and functions that are involved to achieve the purpose of manufacturing and delivering products and services to customers, and it begins from the end of suppliers to manufacturers and then the other end of customers. In the case of IKEA, the boundary of   IKEA’s supply chain management is within the scope of purchasing, production of products, distribution, and retail sales to the end customers (TradeGecko, 2018). Any steps related to   raw material purchasing, design and production, product warehousing and distribution, and sales all over the world are included in the company’s supply chain management.

4.0 Input and Output Analysis of IKEA’s Supply Chain Management

5.0 Process Map of IKEA’s Supply Chain Management

6.0 Operational Issues of IKEA’s Supply Chain Management and Their Implications

7.0 Challenges that Rapid Technological Development Places on IKEA’s Supply Chain Management