Ikea Supply Chain Management

In: Business and Management

Submitted By EmmaI
Words 392
Pages 2
An important aspect to IKEA’s supply chain is the approach used when pricing their products. In normal practice, a company designs their product and then prices it according to the cost of production and their competitor’s markup. IKEA have a different approach, they first ascertain a target price and then design the product. Designers at IKEA must accommodate all costs such as raw materials, manufacturing and transportation until the product reaches the stores within its target price. IKEA have developed this approach in order to support ‘a vision by offering a wide range of well-designed, functional home furnishing products at prices so low that as many people as possible will be able to afford them.’ (Our Business Idea-IKEA)
IKEA adopted the idea of designing practical furniture that could be disassembled for flat packaging and transported to their stores worldwide. This idea was implemented in order to reduce the amount of free space in its transportation and storage. Transporting their goods in flat packs allowed IKEA use their space more efficiently and therefore cut down on their costs in contrast to their competitors who transport assembled furniture. Although the company focuses on producing affordable furniture they do not compromise the quality of the goods when designing them.
In order to manage their supply chain, IKEA divided their corporate structure into different division with three major components-Retail, Distribution and Trading Areas.

IKEA of Sweden: Develops and supplies IKEA’s product range for IKEA stores worldwide. A dedicated team work towards meeting the customer’s needs by providing a wide range of products with the right combination of design, quality and function which are tested at IKEA’s accredited test lab in Älmhult. (IKEA in Älmhult)
Retail Division: This division was established in 2001 and develops and manages the…...

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