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:

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 IKEAs supply chain strategy. Poland takes 2nd place among IKEAs 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, IKEAs 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 IKEAs 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!