Ikea Supply Chain Management
Content
IKEA SUPPLY CHAIN
APEKSHA GUPTA | RIA GANDHI MFM 2012-14
ABOUT IKEA
IKEA is a privately-held, international home products retailer . It sells low-price products, including furniture, bathrooms and kitchen accessories.
The customer has to assemble many of the products.
265 stores in 36 countries (mostly Europe) only 30 stores are run by franchisees outside of the Ingka Holding. Ikea website contains about 12000 products.
IKEA
Largest furniture retailer in the world 42 distribution centers located worldwide Global supply chain with worldwide sales Controls every aspect of the supply chain
PRODUCT OFFERING
• Storage furniture • Floors
• TV solutions
• Small storage & Clothes storage • Sofas & armchairs • Tables & desks • Chairs • Lighting Decoration & mirrors
• Textiles & rugs & Beds & mattresses
• Furniture care & hardware • Kitchen cabinets & appliances
• Bathroom furniture • Children's IKEA
IKEA DISTRIBUTION
Hallmarks of Ikea Distribution
A global distribution network
Large volumes
Flat packages
Low costs
STORES
IKEA STORES 265 IKEA stores in 36 countries/territories: 30 stores in 15 countries/territories run by franchisees outside the IKEA Group
IKEA SUPPLY CHAINSWEDEN
SUPPLY CHAIN-SWEDEN
RAW MATERIAL PROCUREMENT
Raw materials are secured considering the following things:
1
• Plantation are identified which are more then 4000 hec.
2
3 4
• FSC is a certification which is must in consumer markets. • give active support to farmers.
• They still support supplying from small scale plantations and farmers.
SOURCING
• Efficient sourcing is an important part of the IKEA’s supply chain strategy. • Poland takes 2nd place among IKEA’s sourcing markets (according to volume). • IKEA cooperates with many Polish producers
THE SUPPLIER
IKEA tries to keep product life cycles as long as possible.
IKEA assists its manufacturers by providing credit if there is an opportunity for producing greater capacity.
The supplier is linked to ECIS, IKEA’s own system. This allows total transparency of the supply chain so that he can see IKEA sales forecasts and view inventory levels in distribution centres and stores.
IKEA staff gives technical assistance to the suppliers
IKEA buys production capacity rather than product quantities. In other words, they order 10,000 hours of production from their suppliers rather than 10,000 bookcases.
PURCHASING
The operative purchasing work is divided up among four trading agents, supported by 31 trading service offices in 26 countries. Allows for close proximity to suppliers - about 1,220 in 55 countries.
Top five purchasing countries
1. 2. 3. 4. 5.
• China 20%, • Poland 18% • Italy 8% • Germany 6% • Sweden 5%.
CO-WORKERS
The IKEA Group has 123,000 co-workers spread across functions such as purchasing, distribution, whole-sale, range, retail, support functions and the Swedwood Group.
DISTRIBUTION
• 28 distribution centers and 11 customer distribution centers in 16 countries. • Using flat packs, transporting goods where possible by rail and sea, and utilizing fuel-saving techniques allows IKEA to be cost-effective and environmentally friendly.
LOGISTICS AT IKEA
PRODUCT:
WOOD BASED FURNITURE
WOOD BASED FURNITURE
• IKEA uses furniture grade MDF (Medium Density Fiber board) for its furniture for 80% of its furniture. The manufacturing for tis furniture is done in countries such a s Poland, Germany, China etc. • However, for wood based furniture, the furniture is manufactured by Swedwood which is a subsidiary of IKEA. The wood is obtained from IKEA 4WOOD Forest Standard forests. 80 suppliers obtain wood from the forests of Sweden. Suppliers are also based in Russia, Romania, Bulgaria and China.
IKEA SUPPLY CHAIN MODEL
31 TSOs in 26 countries
1220 suppliers in 55 countries
IKEA of Sweden Head Office
Trading Service Office
Supplier
Component Material
Store Store Store Distribution Centers
28 DCs in 16 countries
FROM THE TREE TO THE LIVING ROOM
MDF Furniture IKEA Design SWEDWOOD (IKEA subsidiary) TSO-Poland (Profim)
Supplier-Poland (Priorzerk)
Wood Furniture
MANUFACTURING 2/3rd in Europe 1/3rd in Asia
Self assembled by customer
TIMELINE If customer places an online order in Sweden
17 stores in Sweden Torsvik
Customer orders in Sweden
Nearest Store
1 DAY
Distribution Centre
4
DAYS
TSOPoland (Conshocken)
Supplier (Swedwood)
TIMELINE FOR WOOD BASED FURNITURE
• IKEA allows customers to order from a large variety of products. However, every season it produces a catalogue of products that takes 10 months from conception to execution. • Products are delivered in flat packs and furniture is assembled by customers themselves
Parcel Delivery Truck Delivery
If package <100 lbs, 4 hours – 5 days
If package >100 lbs, 7 days
THE STAIRCASE MODEL FOR WOODEN MERCHANDISE
Supplier entry level and action plan to achieve level 2 requirements Compliance with the IKEA Way of Purchasing home furnishing Products and quality assurance IKEA standard Official standard
Level 4
Well-managed forests
Level 3
4Wood
Forest management in
Verified by compliance with official standard recognised by IKEA
Level 2
Acceptable wood sources
Transition towards level 4 Approved according to IKEA’s Forest Standard “4Wood”
Level 1
- Known origin – region within country - No wood from intact natural forests or high conservation value forests unless certified according to a “level 4 standard” recognised by IKEA
- Compliance with forest legislation - Not from protected areas unless certified according to “level 4 standard” or felled in accordance with management prescriptions - Not from plantations established after Nov. 1994 by replacing intact natural forests
Thank You!
APEKSHA GUPTA | RIA GANDHI MFM 2012-14
ABOUT IKEA
IKEA is a privately-held, international home products retailer . It sells low-price products, including furniture, bathrooms and kitchen accessories.
The customer has to assemble many of the products.
265 stores in 36 countries (mostly Europe) only 30 stores are run by franchisees outside of the Ingka Holding. Ikea website contains about 12000 products.
IKEA
Largest furniture retailer in the world 42 distribution centers located worldwide Global supply chain with worldwide sales Controls every aspect of the supply chain
PRODUCT OFFERING
• Storage furniture • Floors
• TV solutions
• Small storage & Clothes storage • Sofas & armchairs • Tables & desks • Chairs • Lighting Decoration & mirrors
• Textiles & rugs & Beds & mattresses
• Furniture care & hardware • Kitchen cabinets & appliances
• Bathroom furniture • Children's IKEA
IKEA DISTRIBUTION
Hallmarks of Ikea Distribution
A global distribution network
Large volumes
Flat packages
Low costs
STORES
IKEA STORES 265 IKEA stores in 36 countries/territories: 30 stores in 15 countries/territories run by franchisees outside the IKEA Group
IKEA SUPPLY CHAINSWEDEN
SUPPLY CHAIN-SWEDEN
RAW MATERIAL PROCUREMENT
Raw materials are secured considering the following things:
1
• Plantation are identified which are more then 4000 hec.
2
3 4
• FSC is a certification which is must in consumer markets. • give active support to farmers.
• They still support supplying from small scale plantations and farmers.
SOURCING
• Efficient sourcing is an important part of the IKEA’s supply chain strategy. • Poland takes 2nd place among IKEA’s sourcing markets (according to volume). • IKEA cooperates with many Polish producers
THE SUPPLIER
IKEA tries to keep product life cycles as long as possible.
IKEA assists its manufacturers by providing credit if there is an opportunity for producing greater capacity.
The supplier is linked to ECIS, IKEA’s own system. This allows total transparency of the supply chain so that he can see IKEA sales forecasts and view inventory levels in distribution centres and stores.
IKEA staff gives technical assistance to the suppliers
IKEA buys production capacity rather than product quantities. In other words, they order 10,000 hours of production from their suppliers rather than 10,000 bookcases.
PURCHASING
The operative purchasing work is divided up among four trading agents, supported by 31 trading service offices in 26 countries. Allows for close proximity to suppliers - about 1,220 in 55 countries.
Top five purchasing countries
1. 2. 3. 4. 5.
• China 20%, • Poland 18% • Italy 8% • Germany 6% • Sweden 5%.
CO-WORKERS
The IKEA Group has 123,000 co-workers spread across functions such as purchasing, distribution, whole-sale, range, retail, support functions and the Swedwood Group.
DISTRIBUTION
• 28 distribution centers and 11 customer distribution centers in 16 countries. • Using flat packs, transporting goods where possible by rail and sea, and utilizing fuel-saving techniques allows IKEA to be cost-effective and environmentally friendly.
LOGISTICS AT IKEA
PRODUCT:
WOOD BASED FURNITURE
WOOD BASED FURNITURE
• IKEA uses furniture grade MDF (Medium Density Fiber board) for its furniture for 80% of its furniture. The manufacturing for tis furniture is done in countries such a s Poland, Germany, China etc. • However, for wood based furniture, the furniture is manufactured by Swedwood which is a subsidiary of IKEA. The wood is obtained from IKEA 4WOOD Forest Standard forests. 80 suppliers obtain wood from the forests of Sweden. Suppliers are also based in Russia, Romania, Bulgaria and China.
IKEA SUPPLY CHAIN MODEL
31 TSOs in 26 countries
1220 suppliers in 55 countries
IKEA of Sweden Head Office
Trading Service Office
Supplier
Component Material
Store Store Store Distribution Centers
28 DCs in 16 countries
FROM THE TREE TO THE LIVING ROOM
MDF Furniture IKEA Design SWEDWOOD (IKEA subsidiary) TSO-Poland (Profim)
Supplier-Poland (Priorzerk)
Wood Furniture
MANUFACTURING 2/3rd in Europe 1/3rd in Asia
Self assembled by customer
TIMELINE If customer places an online order in Sweden
17 stores in Sweden Torsvik
Customer orders in Sweden
Nearest Store
1 DAY
Distribution Centre
4
DAYS
TSOPoland (Conshocken)
Supplier (Swedwood)
TIMELINE FOR WOOD BASED FURNITURE
• IKEA allows customers to order from a large variety of products. However, every season it produces a catalogue of products that takes 10 months from conception to execution. • Products are delivered in flat packs and furniture is assembled by customers themselves
Parcel Delivery Truck Delivery
If package <100 lbs, 4 hours – 5 days
If package >100 lbs, 7 days
THE STAIRCASE MODEL FOR WOODEN MERCHANDISE
Supplier entry level and action plan to achieve level 2 requirements Compliance with the IKEA Way of Purchasing home furnishing Products and quality assurance IKEA standard Official standard
Level 4
Well-managed forests
Level 3
4Wood
Forest management in
Verified by compliance with official standard recognised by IKEA
Level 2
Acceptable wood sources
Transition towards level 4 Approved according to IKEA’s Forest Standard “4Wood”
Level 1
- Known origin – region within country - No wood from intact natural forests or high conservation value forests unless certified according to a “level 4 standard” recognised by IKEA
- Compliance with forest legislation - Not from protected areas unless certified according to “level 4 standard” or felled in accordance with management prescriptions - Not from plantations established after Nov. 1994 by replacing intact natural forests
Thank You!
