Successful Implementation of Supply Chain Management at IKEA Stores

Supply chain profitability is the difference between the revenue generated from the customer and the total cost incurred across all stages of the supply chain. Supply chain decisions have a large impact on the success or failure of each firm because they significantly influence both the revenue generated as well as the cost incurred. Successful supply chains manage flows of product, information, and funds to provide a high level of product availability to the customer while keeping costs low.” (Chopra &amp. Meindl, 2004. 44)
IKEA should undertake the approach of goods flow on the supply chain according to their shelf life and not just on the time they’ve been in the supply chain. “For instance, products with long lead-times that have been exposed to high temperatures during distribution would be sent to the retail shelves before those with short lead-times but distributed under more favorable conditions”. (Roberti, 2005)
The international sourcing policy effects corporate, marketing, purchasing, and other strategies. It is important for the Management of IKEA to connect the future objectives with corporate objectives and strategy.
IKEA is a worldwide name with some 175 stores worldwide in locations as far apart as Singapore and the Czech Republic. It works with approximately 1800 suppliers and 55 countries, and its range is made up of around 10,000 products.
Swedish furniture retailing giant IKEA’s massive newly opened Peterborough distribution center is fast becoming a familiar landmark on the city’s outskirts. With over 57,000 square meters of storage space, and boasting an underground geothermal heating system, the £21.3 million warehouses will employ some 250 people by the summer — all newly created jobs. It will help the company service its 11 existing British stores, which occupy over 26,000 square meters apiece. 20 more outlets should be opened by 2010, leading to a huge increase in current annual UK sales of almost £750m. “The term ‘Value Chain’ was used by Michael Porter in his book "Competitive Advantage: Creating and sustaining superior performance" (1985). The value chain analysis describes the activities the organization performs and links them to the organisations competitive position.
Value chain analysis describes the activities within and around an organization and relates them to an analysis of the competitive strength of the organization. Therefore, it evaluates which value each particular activity adds to the organization’s products or services.