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Supply Chain Management

The world's largest furniture retailer is a privately held, international home products company that
designs & sells ready to assemble furniture & home accessories

CASO DE
EJEMPLO

Summary
Culturethe IKEA Way
Mission & Vision
History
Sustainability & Responsible care
The Group organization
Market analysis
IKEA at a Glance

Corporate objectives
Marketing strategy
Order Qualifiers & Winners
Competitive capabilities
Processes & Infrastructures
Terry Hill
Conclusions

Culture The IKEA

Way
IKEA offers 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.
This is the idea at the heart of everything IKEA does.

Anybody can make a good-quality product for a high price, or a poor-quality product for a low price.
But . to make good products at low prices, you need to develop methods that are both costeffective and innovative.
The IKEA way of doing things is to pass these cost savings on to their customers.

Vision & Mission

To create a better everyday life for many people.
It means, thinking about home furnishing in a way that really does
solve some of lifes daily challenges.
It means reaching out to as many people as possible and helping
them achieve their dream home at the lowest possible cost.
As many people as possible will be able to afford a wide range of well

El objetivo de IKEA es crear

un mejor da a da para la
mayora de las personas.
Nuestra idea de negocio
apoya esta visin ofreciendo
una amplia gama de
productos para la decoracin
del hogar bien diseados,
funcionales y a precios tan
bajos, que la mayora de la
gente pueda comprarlos.

designed, functional home furnishing products at prices so low.

Design + functionality + Low prices

History

1920s

1940s

1950s

1960s

1970s

1920s - IKEA founder Ingvar Kamprad was born in Sweden.

1940s - IKEA is founded.
1950s - Showroom in lmhult. 1st catalogue is published.
1960s 1st store outside Sweden, in Norway.
1970s Rapid expansion - opens in Switzerland, Germany
Inter IKEA Finance SA, is founded in Luxembourg.
The Testament of a Furniture Dealer by Ingvar Kamprad is published.

1980s

History

1980s

1990s

2000s

2010s

1980s IKEA Group is formed. Opens stores in Paris, Philadelphia, Manchester, Milan.
Ingvar Kamprad retires from his executive roles.
1990s - IKEA establishes its own industrial group, Swedwood.
A Little IKEA Dictionary by Ingvar Kamprad is published.
2000s - MAR Shopping in Portugal. Opens in Japan, Russia.
Several environmental & social projects.
The code of conduct called The IKEA Way on Purchasing Home Furnishing Products.
IKEA launches its own food label. E-shopping was launched.
2010s - Inter IKEA Centre Groups starts 1st shopping in China. Scheduled to open in 2013/2014.

Sustainability
We've come a long way, but we're still just warming up.
Steve Howard Chief Sustainability Officer, IKEA Group
Sustainability is about - taking care of people & the planet from tackling the problem of children
living in poverty to creating renewable energy.
Our co-workers, suppliers & partners have been working on these issues & more for a while.

Responsible Care
IKEA Foundation was formed in 2005.
This was the starting point for IKEAs fight
against child labour in the supply chain.
Mission improve rights & life opportunities
of the children.
IKEA invests in simple, cost effective &
meaningful approaches.

Group Organisation
Inter IKEA Holding SA is the parent company in Inter IKEA Group. The overall purpose of Inter IKEA Group is to secure
independence and longevity, and through the Franchise Division control, safeguard and develop the IKEA Concept.
Organized into 4 divisions;
Franchise Division with Inter IKEA Systems B.V., the owner of the IKEA Concept, franchises the systems, methods
and solutions to franchisees worldwide for marketing and sale of IKEA products under the IKEA trademarks.
Retail Centre Division Inter IKEA Centre Group develops, owns & manages shopping centres anchored by an IKEA
store. Create unique retail & entertainment place in which both the store & the shopping centre benefit from the synergy.
Property Division strives to create long term value through property investments. The operation includes new property
development, active management of portfolio properties and land-banking.
Finance Division includes investments & trading activities as well as treasury management.

Market Analysis
Traditional furniture represents ~ 70% of the global market.
Biggest producers in Europe: Germany (27%), Italy (22%), France (14%) & UK (10%).

Rest of the world:

Canada is the 5th largest exporter of furniture in the world.
Major furniture producing countries in South East Asia are:
Philippines, Indonesia, Malaysia, Singapore, Thailand, Korea ,Taiwan and India.
Asia shows healthy signs of growth.
China has today emerged as a furniture production center.

IKEA at a glance

IKEA at a glance

Corporate Objectives
Sustainable growth target 35 Billion for 2015(*)
Positive impact on people & environment
(Sustainability report)
Focus on customer
Strong Corporate Culture

* Educated guess

Marketing Strategy
IKEA design means products that are atractive,
practical & easy to use

Product
Pricing
Strong relationship with
suppliers.
Flat furniture packages

Strong Communication
Catalogues & ecatalogue

Promotion

IKEA

Prices

IKEA Family card

Cost savings passed to

their customers
Good value for money!

Green marketing

Place
Segmentation
Coverage middle class consumer segments
(educated single/ young family) - Do it yourselfers

Qualifiers & Winners

Order Qualifiers

Order Winners

Price

Quality/Price - value for the money (50%)

Image - Design
Functional/Flexibility
(combine & mix components)

Product Range (30%)

Innovation

Image - Strong brand (20%)

Competitive
Capabilities

Price low price is not appealing unless it represents good value for money
Economies of scale standardization
Economic design
Economic Logistics
Economies of scope: Everything together food and wood!
Customers included in the value chain
Network of suppliers > 1200 in more than 53 countries
Functional/Flexibility client can combine & mix components
Product Range
Distinctiveness in design
Image - Strong brand

Processes and Infrastructure

Overview

Processes and Infrastructure

Predict the future in costumer needs
Forecasting

Product Design

Production

Distribution
Centres/Stores
Final
Costumers

Processes and Infrastructure

Research & Development
Forecasting

Technical Specifications
Suppliers and manufacturers Engagement

Product Design

Prototype

Production

Distribution
Centres/Stores
Final
Costumers

Requirements
Cheap and modular
Limited weight
Allow a flat packaging
Stackable pallets

Processes and Infrastructure

SWOP
Forecasting

Product Design

Production

Distribution
Centres/Stores
Final
Costumers

SWOP, Swedwood Way of Production, is "Lean" strategy and a

philosophy of continuous improvement that goes beyond productivity
improvements.
SWOP is the culture and it means that everything is continually evaluated
and improved in terms of time required, resources used, resultant quality
and other relevant aspects.
Every person in Swedwood is involved and can contribute and should be
involved in improving the company. Improvement is about everybody and
everything in the company, not only manufacturing.

Processes and Infrastructure

IKEA range consists of approximately 9.500 products
Forecasting

Raw Materials
IKEA buys from 1200 suppliers (high volumes) in 53 countries

Product Design
33 factories worldwide + other manufacturers
Production

Distribution
Centres/Stores
Final
Costumers

Mass Production process

Max.capacity utilization:
Focus on one production technique
Focus on one cluster of products or product ranges
Optimize efficiency, volumes, lead time & efficient distribution.
Manufacturing in continuos flow & assembly line

Processes and Infrastructure

Annual planning, depending on the estimated sales
Forecasting

Product Design

Production

Cheap and modular

Limited weight
Allow a flat packaging
Stackable pallets

Cost Saving

26 Distribution centres

Distribution
Centres/Stores
Final
Costumers

338 Group Stores

Make to Stock

Processes and Infrastructure

The IKEA Experience
Forecasting

Almost everything for home, under the same roof

Huge stores - around 30.000 m2

Product Design

Few workers
Catalogues

Production

Distribution
Centres/Stores
Final
Costumers

Self Service Furniture & transport

Assembling by the costumer
Location out of the cities centers
Ikea Family Card

Culture/Values:
Culture/Values:
The
values and culture of Ikea Group reflect the founders spirit - Responsability,
The values simplicity
and culture
of constant
Ikea Group
reflect the founders spirit - Responsability,
humbleness,
and
renewal.
humbleness, simplicity and constant renewal.
Corporative
Objectives

Marketing
Strategy

Sustainable
growth

Product Design
and Innovation

Positive impact on
people &
environment
(Sustainability
report)

Well defined
Pricing Strategy
(Low prices)

Focus on
customer

Strong Corporate
Culture

Order Winners & Order Qualifiers

OW

Competitive Capabilities

Price

Strong brand Image

Quality/Price -value for the money
Product Range

Segmentation
- Middle class
consumer
- Do it yourselfers
Strong
Communication
(Green marketing)

Functional/ Flexibility- client can

combine & mix components
Innovation
Image/Design

Forecasting
processes

Product Range
Product R&D
processes

Infrastructure

Advanced clerical
system
( suppliers quote
collectors,
reporting, etc)

Distinctiveness in design

OQ
Price

Processes

Functional/Flexibility
client can combine & mix
components
Image - Strong brand

Standard Mass
production
(several locations)

Prototype
Dep/ment
Testing Dep/ment

Own and
controlled
outsourced
production (make
and buy)
Advanced Supply
Chain processes
Single sales
channel retail
stores

Large scale
production units
Large scale
distribution
network
(Warehouse)
Large scale retail
stores
Quality control
systems

Conclusion
-

The success of the IKEA Group relies on:

- The IWAY Innovation - Design - Functionality
- Economies of scale - Mass Production
- Supply Chain Production Distribution Retail Stores
- Cost savings are passed on to their customers

Looking forward...
- We may question if these order winners will remain the source of success
- How will IKEA react to market changes & how fast will they adapt their order winners &
qualifiers

Thank you
see you, at one of our
stores