Purchasing Strategy: The Goal Of The IKEA Supply Management

800 Words2 Pages

Theoretical framework:
Operations

5.1 IKEA Supply
The goal of the purchasing & logistics organization is to take the lead for optimizing the total IKEA value chain, contributing to the goal of providing better products at lower prices. IKEA Purchasing Development is divided in seven category areas: 1)Flat line, 2) Wood & Fibres, 3) Comfort, 4) Textiles, 5) Electronics, 6) Metal, Plastic and Float Glass, and 7) Specific. Their large-volume approach enables us to invest in efficient industrial production set-ups and focus on affordability, accessibility, sustainability and quality. IKEA designs the total supply chain network for maximised overall efficiently. This helps in reducing the transportation costs and CO2 impact in the value chain. …show more content…

By reducing the amount of ‘wasted space’ the can improve their ‘filling rate’ to transport and store more products at the same time. By fitting more products in the same places and reducing the amount of wasted space they also reduce the amount of packaging used. This also reduces the prices and ecological footprint. Today 60 percent of all IKEA freight is transported by road, 20 percent by rail and 20 percent by sea. Less than one percent is air freighted. The aim is to constantly increase the proportion of goods transported by rail. Within the next three years 40 percent of all IKEA freight within Europe will be moved by rail. This is to reduce the costs of fuel and minimize …show more content…

IKEA designs unique products that incur low manufacturing costs while meeting strict requirements for function, efficient distribution, quality, and impact on the environment. More than 50% of their products are made from sustainable or recycled products. By using less materials IKEA also cuts down on transportation costs because it uses less fuel and manpower to receive materials and ship products. Due to their do-it-self packaging their packages are more efficiently packed to reduce the transportation costs. The packaging also takes less space in the warehouse bins allowing them to stock more additional items. This helps saving the company money and also reduces their prices. IKEA works with a strategy called ‘cost-per-touch’. This means that they want to let as little people touch the product in the buying process of a product. An example of this is that the product goes from the manufacturer to a distribution center, to a warehouse/shop and then directly to the customers house. IKEA saves money on this by letting their customers retrieve their package themselves. IKEA also relies on something rare and unique concerning its logistical management of reordering products, they employ in-store logistics personnel to handle inventory management at its stores. they ensure an efficient flow of goods within IKEA stores, which is essential to maintaining high sales and

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