EIB20603 Supply Chain Management (IKEA)

EIB20603
SUPPLY CHAIN
MANAGEMENT
(IKEA)
Ariff Luqman Bin Peter Lisut (62212220297)

Adilah Hawa Binti Zailan (62215220187)
Puteri Annisa Fatima Binti Azmi (62212219093)
Noormasitah Binti Mohd Nasir (62212119508)
Nur Ilyda Azalia Binti Mohamad Zaini (62212119503)
Supplier and Raw Materials
INDUSTRY SECTORS AND A LONG-TERM
SUPPLY CHAIN
Different ranges Quality customer Supply chain

of product service process
IKEA’S SUPPLY CHAIN
THE PRIMARY SECTOR
Raw Materials Own Design to Go Though Strict

The Products Requirements
Many Suppliers Negotiating

Process
"The Ikea business shall have an overall positive
impact on people and the environment."
IKEA uses the

‘e-Wheel’ tool
It helps analyze the
four stages within
the life of a product
Enviromental impact
to the products
IKEA’S CODE OF CONDUCT
International
IKEA Way (IWAY) Legislation
Rules and
Guidelines
IKEA’S SUPPLY CHAIN
NETWORK
METAL PARTS
Headquartered in China. Considered as the most

advanced and competitive companies.
Baosteel entered an agreement with Rio Tinto. A

british-Australian multinational metals and
mining corporation.
Established in 1999, in Taiwan and primarily deal

with the production of nuts, bolts and screws.
TIMBER PRODUCTS
• Founded in 1991 and headquartered in Ängelholm,

Sweden.
• A subsidiary company that manufactured all wood-
based furniture made with board- on-frame technology.
• Has 16,000 employees in 50 offices and factories.
• Largest factory located in Southern Poland.
• Production units in Sweden, Hungary, Russia, Poland,
Portugal, Slovakia, Latvia, Lithuania, France, and USA.
TEXTILES &
LEATHER
First company that developed the first
commercially available waterless dyeing
technology.
Established in 1986, Royal Leather

Industries Limited is a vertical unit
producing finished leather for shoes,
garments, handbags and furniture.
CHEMICAL
INDUSTRY
Located in Central Northern Bulgaria.
PARALLEL Ltd. Sevlivo is specialized
production of foam polyurethane.
A major international coating company

founded in 1942, an active market in
France, Portugal and Romania before
entered Asia.
The Secondary Sector
INPUT + MANUFACTURING PROCESS = OUTPUT WITH ADDED VALUE
Manufactures within the secondary sector create IKEA

products from raw materials. As products move through
the supply chain, the process of value-added takes place.
MANUFACTURING : Manufacturers within the
secondary sector create IKEA products from raw
materials. As products move through the supply chain,
the process of value-added takes place. 15 Input
Manufacturing Process Added value+ = • IKEA designs
many of its products so that the smallest number of
resources can make the best products. For example,
IKEA saves on resources by using hollow legs in
furniture (e.g., the OGLA dining chair).
Sustainable Partnership
• In 2000 IKEA formed a partnership with UNICEF
• IKEA has also formed a partnership with the World
Wildlife Fund (WWF)
• To support sustainable partnerships with suppliers, IKEA

works with other organisations.
IKEA and WWF actions have led to :

 a series of training courses for people in Russia, Bulgaria, Romania and
China on responsible forest management
 the development of forestry plans in China
 demonstrations to managers in Latvia on the benefits of responsible
forestry
IKEA’s Customer Relationship Management
Reverse Logistic
• Following the selling of a product, a

series of activities is carried out to
recapture value and bring the product's
lifecycle to an end. It mainly involves
returning a product to the manufacturer
or dealer or sending it to be serviced,
refurbished, or recycled.
• Dissatisfied customer can return
problematic and defective products at
any nearby Ikea store. The product will
be sent to a focal firm and the product
will be recycled and redistributed
through the supply chain.
Operational
Excellence
• Most of IKEA’s customer are loyal and repeat

customer such as advocates who promote
through “Word of Mouth”
• IKEA’s product is affordable, save space and
easy to assemble (provide guide and
instruction)
Management in
customer life
cycle
Development
Cross selling through other
categories
• Buy bed with bed sheets
• Buy bowl with plates
Upselling through
customization
• Warranty
Management in
customer life cycle
Acquisition
• IKEA Website
• Advertising
• Sales Promotion
• Word of mouth
• Publicity Media coverage
• Direct Marketing Campaign (IKEA Catalogues & Direct
Mails)
Management in customer life cycle
Retention
Value added service
 Delivery
 Assembly
 Installation
Loyalty Program
 Permanent membership
 Member price
Improvement in IKEA
CRM
• Staff be more approachable

• Upgrade directories
• Accepted more payment method (Razor
Payment)
• Provide free delivery for bulky items
• Appreciation gift for customer
Technology in IKEA Store
• E-catalogue
• IKEA mobile apps
• Self checkout price
• Mobile gift cards
• Online planning tools
Customer Experiences Touchpoints Engagement Evaluation
•Showroom •Social-Media platform •Quality of products
•Cognitive: Cheap, easy to •Staff service
•Poster assemble •Prices
•IKEA’s Website •Emotional: Happy & satisfied •Facilities
•IKEA’s magazine •Behavioral: Repat buying •Design and colors
•Kiosk from IKEA Store
•Stability
IKEA’s Distribution
DISTRIBUTION AND WAREHOUSING
 In the process of distribution, suppliers of IKEA use third party logistics companies to
transport their products to various IKEA locations.
 In its high-flow warehouses, IKEA employs automatic storage and retrieval systems to drive
down its costs-per-touch.
 The hallmarks of ikea distribution are :

- Low cots
- Large volumes
- Flat packages (self assembly by customers themselves)
- A global distribution network
LARGE VOLUMES + FLAT PACKS = LOW COSTS
 IKEA stock incurs low manufacturing costs while meeting strict

requirements for function, efficient distribution, quality, and impact on the
environment.
IKEA seeks to use as few materials as possible to make the furniture, without
compromising on quality or durability.
DISTRIBUTION CENTERS
 A distribution center for a set of products is a warehouse or other specialized building, often
with refrigeration or air conditioning.
 In 1956, IKEA founder Ingvar Kamprad introduced "flat packing," the method now synonymous
with IKEA that cuts costs by letting consumers purchase their furniture in pieces and assemble it
themselves.
 Design and manufacture of furniture is run by a trust, INGKA Holding, headquartered in Delft,
Holland. While most of the designs of IKEA products are made in Sweden.
THE TERTIARY SECTOR
In the tertiary sector, IKEA’s retail stores add value to manufactured goods by
providing a form of shopping different to the usual high-street experience.
 These meet the needs of consumers in a number of different ways.

Conclusion
Conclusion
• The IKEA Company is widely regarded as one of the world's leading retailers. It has
established modern furnishings that are both high quality and reasonably priced. These
products are designed to suit the needs of various customers. It has a wide range of
products, nearly all required at home.
• IKEA is an example of global retailer since it sets strategic goals. It also recognizes the
essence of the local market since it sells its goods through a variety of outlets. The
business has a massive global branch network. It has many clients and vendors, which
aids the company's internationalization.
• IKEA demonstrates how a strategic relationship with producers and suppliers is critical to
success. The business sells products that are relatively simple to assemble. Side tables
and coffee tables in various styles are common all over the world. To complement the
furniture, textiles, rugs, bedding, and accessories are available.
Thank You

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EIB20603

Ariff Luqman Bin Peter Lisut (62212220297)

Different ranges Quality customer Supply chain

Raw Materials Own Design to Go Though Strict

Many Suppliers Negotiating

IKEA uses the

Headquartered in China. Considered as the most

Baosteel entered an agreement with Rio Tinto. A

Established in 1999, in Taiwan and primarily deal

• Founded in 1991 and headquartered in Ängelholm,

Established in 1986, Royal Leather

A major international coating company

Manufactures within the secondary sector create IKEA

• To support sustainable partnerships with suppliers, IKEA

IKEA and WWF actions have led to :

• Following the selling of a product, a

• Most of IKEA’s customer are loyal and repeat

• Staff be more approachable

 The hallmarks of ikea distribution are :

 IKEA stock incurs low manufacturing costs while meeting strict

 These meet the needs of consumers in a number of different ways.

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