Ikea supply chain introduction

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IKEA’sSUPPLY CHAIN

NOV – 2015

Ali ArjmandUniversity of Tabriz

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Table Of Contents

- About IKEA

- IKEA’s Supply Chain Framework

- Global Supply Chain Planning

- Concluding

4About IKEA

- Founded in 1943 in Sweden by Ingvar Kamprad

- Vision : Create a better everyday life for the many people

- Business idea : To offer a wide range of well designed, functional home furnishing products at price so low that as many people as possible will be able to afford them

5About IKEA

IKEA Group at a glance 2014

Total sales EUR 28.7 billionStores 315 in 27 countriesProducts About 9,500 in the rangeCo-workers 147,000Suppliers 1,002 home furnishing suppliers in 51 countriesStore visits 716 millionWeb visits more than 1.5 billionCatalogues 217 million printed in 30 languagesProduction 59% of our production is in Europe

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Shorten the distance between need of customers and suppliers

Low costLow pricesHigh volumes

About IKEA

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Supply chain framework

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147000 co-workers

1350 suppliers

31 trading service officesin 26 countries

315 stores

31 distribution centerin 16 countries

Framework

9Framework

- Products are manufactured all over the world

- Local officers near to the suppliers

- Long-term agreements give low prices

Top purchase countries

China 18 %

Poland 12 %

Sweden 9 %

Italy 7 %

10Framework

Distribution

11Framework

- Large volumes + flat packs = low costs

- The hallmarks of IKEA distribution

From supplier to store :

- More deliveries by rail in future

- Global network

- Flat packs

- Large volumes

- Low costs

12Framework

Producing for IKEA includes following requirements

- Legal requirements - Social & working conditions - Environment and Forestry

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Supply Chain Planning Process

14Planning Process

FRAME OF REFERENCES

- Supply Chain Planning Process

- Centralizing planning functions

- Software support (ASP)

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Overview of the planning concept

Planning Process

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- Overall sales forecast made by corporate management

- Aggregate level in terms of total sales volumes in monetary units

Sales planning

- Forecast include remaining fiscal year plus 5 years into the future

- Updated 3 times per year

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Demand planning

- Adapting information and forecasting a certain part of assortment

18Planning Process

- Operational forecast is a manual forecast registered by respective units for the 3 weeks ( replenishment needs in the store)

- Tactical forecast is done on a rolling 84 weeks horizon on store level

Retail forecast group ?

Region ?

- DP should check the plan every week

19Planning Process

Need Planning

- The forecasts are netted against current stock level, ss and also against goods in transient.- Need planner is the person that is responsible for need calculation

- So, volumes are divided between suppliers

20Planning Process

Supplier Capacity Planning

21Planning Process

IKEA’s Planning Process Enablers

- Planning Organization

- Data Quality

- Software Support

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One integrated planning process

working-together environment

detect anddeal with problems

Balanced SC

Sustainable Organization

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