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Case study on factors affecting inventory management
Questions on supply chain management
Theories of inventory management & control
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2. Introduction Companies are finding ways to improve its flexibility and competitiveness by changing its operation strategy, technologies that have implementation of Supply Chain Management (SCM) paradigm. For example, IKEA. It is the world’s largest home furnishing retailer having 298 stores in 37 countries with huge competitors around the world. However, it has a unique supply chain and inventory management techniques that makes it different and unique from others. 3. Section 1: Open ended discussion on IKEA 3.1 Suppliers IKEA’s success is mainly to its communication and relationship with its suppliers. IKEA has more than 1800 suppliers in 50 countries and uses 42 trading service office to manage the supplier relationship. IKEA believe in having high quality product with minimum wastage and negative environmental impact. IKEA makes long term business relationship with its suppliers by …show more content…
For example, if someone select to buy a furniture. The furniture is ordered, shipped from the manufacturer then moved from the delivery truck to the warehouse. From the warehouse it is moved to the customer’s vehicle or delivered by the furniture retailer to the customer’s home. It costs money every time the product is moved, shipped and loaded. IKEA inventory is stocked at night after the opening hours. IKEA consider minimum setting that is minimum number of products available before reordering and maximum setting that is maximum number of products to order at one time. This process meets customer demand while minimising ordering too few or too many products and lowering cost of lost sales. Logistics managers know what is sold through point-of-sale (POS) data and how much inventory comes into the store through direct shipping and from distribution centres through warehouse management system data. IKEA believes its process and system allows for the right goods to be in the
Various competitors have adapted or created a similar approach to marketing furniture and fittings and therefore Ikea’s market share is being threatened. Most of Ikea 's rivals are located in Europe where Ikea makes most of its revenues, but the competition is very limited everywhere else due to Ikea’s excellence in cost leadership and differentiation in their products.
The purpose of this essay is analyze the case of IKEA, which has involved in the HR management. Meanwhile, choose two topics to identify the IKEA current situation, including training and development and cross-cultural management. From those two points, give some forward suggestions on the IKEA HR management practice.
The self-service in IKEA is reflected in several ways. When the customer first enters the market, he can take a brochure; a ruler made of paper and a pencil for free so that he can get knowledge of the products and record the length of the furniture. The shopping area is decorated as numbers of model houses; it has children’s rooms, living rooms, bedrooms, washrooms and kitchens. All the products IKEA sales are displayed in the show area. As it shown in the picture 1, the consumer can follow the trace that IKEA provide and he can visit all of the rooms.
IKEA is a company which takes pride in being a “high quality, low cost” provider. For a company which has this image, needs to understand that there are problems associated with the title. Not all individuals will perceive their products as being high quality, if they are also DIY products. In order for IKEA to combat this, the company needs to restructure its products to fit the consumer’s wants and needs. IKEA also needs to have an understanding that when expanding in the U.S. market they need to have a different approach than in European countries. If IKEA can improve their internet presence, open more brick and mortar stores, and differ its product offerings, then the company will have the chance to be one of the most successful furniture retail outlets in the U.S.
In the competitive environment, it is necessary for moving products involves reception of products at an intermediate location, store, repackage, clear customs and transport to final destination. The other factor in the supply chain logistics is speed given information flows fast in the internet era. The customer expects everything quick accustomed to the instant status access to the information. With the real time inventory, customer expects the location of the product, it is next scheduled movement and the final delivery schedule.
Another example of IKEA’s international strategy in building good relationships with suppliers is in Asia, especially in Vietnam, where IKEA expanded its own supply base. Vietnam manufacturers offers low cost labor force and not expensive raw materials, while IKEA provides the view of creating a long-term, high-volume business relationship, and advice on finding the best according to the price raw materials, setting up and bulding factories, choosing what machines, equipments
Supply chain management has been defined as that process that involves the management of information, materials, and all the finances that are handled within and across the entire supply chain process (Christopher, 2016). The management is usually done through out the entire supply chain management from that moment when the suppliers are involved through all the manufacturing activities, different distribution activities, and the way that the products are served to the final product consumer (Turban, et al., 2002). The process also includes all the activities that different organizations offers to their customers as after sale services for purposes perfecting their services and products towards their highly valued customers (Christopher,
IKEA is a Swedish furniture retailer that sells good-quality and affordable furniture to the consumers of the mass-market. Its procurement policy is to establish long-term relationship with suppliers. IKEA expands globally. Marrianne Barner is the new business area manager for carpets at IKEA. IKEA just signed a contract with the Rangan Exports which is an Indian carpet supplier forbidding the use of child labor. The vision of IKEA is “To create a beter life for the majority of people which is the basis of its strategic orientation.” The mission statement of IKEA is “To offer a wider range of home furnishing items of good design and function at prices so low that the majority of
IKEA know as a unique furniture business that involved the customer’s needs with the potential on the factory floor. IKEA have owns abilities to develops its products directly based on the understanding and knowledge about the life and home challenges among the customer’s needs with low cost and high quality product. The skilled suppliers create the furniture that can adapt with the product size and constructions that enable them to produce, package and provided delivered stock in proficient way to all customers. It also put effort in developing, improvement and save resources. Apart f...
Firstly, the history of IKEA International A/S is needed to be described. The company is based in Denmark. It is one of the world’s top retailers of furniture, home furnishings and housewares. The company designs its own items and their items are sold in more than 140 IKEA stores. The store is spread throughout approximately 30 different countries worldwide. IKEA distributes its thick catalogs once a year in the areas surrounding its store locations. Also, it peddles its merchandise through mail order. Additionally, the company offers high-quality items at low prices as their character. Then, the company buys items in bulk, ships and store items to save money for itself and its customers.
Success of IKEA The secret of success of IKEA is the IKEA-feeling, the culture. The company has Swedish origins, and it's no accident that the IKEA logo is blue and yellow. The IKEA concept, like its founder, was born in Småland. The people are famous for working hard, living on slender means and using their heads to make the best possible use of the limited resources they have. Like the founder Ingvar Kamprad said „wasting resources is a mortal sin”. “This characterizes the whole company itself. This way of doing things is at the heart of the IKEA approach to keeping prices low. But quality is not compromised for the sake of cost. Swedenhas an international reputation for safety and quality you can rely on, and IKEA retailers take pride in offering the right quality in all situations”. The IKEA product range is wide in several ways; it comprises 9,500 products that are largely the same in all IKEA stores. First, it's wide in function: you'll find everything you need to furnish your home, from plants and living-room furnishings to toys and whole kitchens. Second it's wide in style. The romantic at heart will find just as much as the minimalist. And finally, by being coordinated, the range is wide in function and style at the same time, and at all times. IKEA offers not just furniture, but smaller fixtures for rooms as well, that can be bought at the same time as furniture. Customers can spend a lot of time in the stores, even if they don’t want to buy any furniture, they walk around the inside globally same formed IKEA, they get ideas how to furnish their house, and in the end they might have a plan to come back later or even buy something, probably just a candle or a vase. Many people associate Sweden with a fresh, healthy way of life. This Swedish lifestyle is reflected in the IKEA product range. IKEA works to ensure that products and materials are adapted to minimize any negative impact on the environment, and are safe for customers from a health perspective. They use renewable and recyclable materials. The flat-packs are also important because of the shipping cost. They don’t deliver air, this means lower costs, lower emission of CO2. For example, they “slimed” the KLIPPAN sofa with some centimeters so in one carriage they can put 4 more sofas.
It explains how retail businesses like Walmart source their products from different parts of the world and how these products flow through different channels of the supply chain before they reach the hands of the customers. A good supply chain management process is where all the companies that are involved play an active role in getting the products from the suppliers to its manufacturers to wholesalers to retailers and finally to the consumers. Supply chain management is an intense process in which products are sourced, made, and delivered by the firms involved so that we, as customers, can enjoy those products. Without a good supply chain management system, a company would not be able to manufacture its products efficiently or distribute the finished goods to its customers. Thus, the execution of an effective supply chain strategy helps a firm create value and gain a competitive edge in the
IKEA is more than a furniture store they are a company driven by values (IKEA, 2014). The company seeks to make their consumers lives easier by providing them with modern, innovative, inexpensive products which they use to tackle daily home activities. IKEA Group has 298 stores in 26 different countries (IKEA, 2014). The company’s vision is “to create a better everyday life for the many people” (IKEA, 2014, para 1). Using innovative techniques for creating, producing, and marketing their products IKEA can provide consumers with durable products for reason...
Inventory management involves planning, coordinating, and controlling the acquisition, storage, handling, movement, distribution, and possible sale of raw materials, component parts and subassemblies, supplies and tools, replacement parts, and other assets that are needed to meet customer wants and needs (Collier & Evans, 2009). In order for business and supply chains to run smoothly, they must meet all the listed requirements for effective inventory management. Thus, inventory management must be managed wisely in order to be a successful an...
The traditional outlook of supply chain management only focused on delivery f goods to the customer at the cheapest price possible but the definitions of supply chain has been altered over time.The new supp...