The performance of every business company that deals with the production of goods from raw materials is greatly dependant upon the supply chain, i. e. the cycle of getting the raw materials, their processing, and production of goods, storage, and distribution of the latter. IKEA, as one of the world’s leading firms in home design furniture production, is also developing its supply chain to be able to compete in the modern market.
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The current state of the supply chain of IKEA is rather good. The supply chain cannot be called a superior one as with the course of time innovations demand companies to always modernize their supply chain. However, it is also impossible to consider the supply chain of one of the world leaders in furniture production to be poorly designed. For instance, IKEA has over 1, 600 suppliers in more than 50 countries of the world. Shaw Wood, Menderes Tekstil, etc. are the suppliers that cooperate with IKEA and provide raw material for IKEA to supply it over 165 stores all over the globe with the high-quality goods. IKEA’s manufacturing capacities are also considerable and subsidiaries dealing with production processes are equipped according to the latest technical innovations. Finally, scholars stress the loyalty that customers show to IKEA in exchange for the quality of goods it produces. Therefore, IKEA’s supply chain is a rather developed one.
Definitely, in the light of the fact that the modern market demands fast reaction to the innovations, IKEA tried to maximize the efficiency of its supply chain. One of the latest attempts to maximize the supply chain efficiency and to simultaneously minimize the costs connected with the supply of the goods was the idea of IKEA to focus on the suppliers located in underdeveloped countries with low prices and favorable tax climates. To achieve this IKEA needs to put the innovation in accordance with the demands of its retailers and customers. Therefore, IKEA relies much upon Supply & Demand Optimization solutions program devised by JDA Software, which includes JDA® Demand and JDA® Fulfillment programs. These software programs are designed specifically for supply chain optimization activities and are intended to help IKEA in its further development.
The specific area in IKEA’s supply chain that demands improvement nowadays is connected with the aforesaid maximization attempt. As far as the reorganization of the company’s supply chain to be focused on local and low-cost suppliers only demands additional time, funding, and effort, IKEA needs to find a way to optimize these additional expenses and preserve its ties with retailers, suppliers, distributors, etc. The exact ways of this optimization will become evident after detailed research but the approximate ones can include the reduction of retailer prices for the period of reorganizing sponsorship activities and promotional programs that might help preserve IKEA’s positive image and allow it to save its customers base.
To conclude, the performance of every business company that deals with the production of goods from raw materials is greatly dependant upon the supply chain, i. e. the cycle of getting the raw materials, their processing, and production of goods, storage, and distribution of the latter. The supply chain of IKEA, one of the world’s largest furniture manufacturers, is currently rather developed but the company always looks for the ways to maximize its efficiency. There are currently the areas in IKEA’s supply chain that demand improvement, but the committed work of the company’s staff is sure to make these improvements.