IKEA's supply chain introduction (Market, development, future challenges ahead) with a particular focus on China.

1. 工作报告 POWERPOINT
ANNUAL REPORT POWERPOINT
汇报人：优品PPT Report Person: 1ppt.com
201X
Group 4:
Arthur MEUNIER – 1701213825
Abdalla YASIN – 1802202010
Kevin PIECHATZECK -1802010221
Ekaterina PETER - 1701213795

2. History
01
02
03
04
Created in 1943 by Ingvar Kampar (at the
age of 17) in Sweden
Ingvar
Kamprad
Elmtaryd (farm where he grew up)
Agunnayard (His hometown).
Was initially selling small items like
pens, belts, accessories… Started
to sell furnitures and home
appliances in the 50s
In the 60s: First stores outside
Sweden

3. History
05
06
07
08
Famous for its furniture designed to be
assembled by the customers themselves,
allowing drastics price cuts (Labor and
transportation)
Modern designs associated with eco-
friendly concepts
In 2017: IKEA operates 415 stores
in 49 countries
Fully owned by INGKA HOLDING
(Netherland) since 1982

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Stores locations in the world (2018):

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Business strategy and competitive advantage
Strategy/Vision:
Design and develop
products which can
satisfy consumers
everyday’s needs
and keeping
attractive prices.
Competitive
Advantage
Cost
savings in
furniture
design
Sustainable
relationship
s with
suppliers
Do-It-
Yourself
assembly
lowers
packaging
costs
Streamlinin
g the IKEA
supply
chain
Usage of
high-flow &
low-flow
warehouse
facilities
The IKEA
Code of
Conduct –
IWAY
Customers
and
Suppliers in
Focus

6. Simplified SC Organization
IKEA HQ
Design
ManufacturingSourcing & QC
Logistic &
Distribution
Sales
Manufacturing facilities
in 10 coutries:
- China,
- France,
- Hungary,
- Lithuania,
- Poland,
- Portugal,
- Russia,
- Slovakia,
- Sweden,
- USA.
19,000 co-workers.
Sourcing:
- Wood
- Steel
- Textile
- Electronic
- Steel parts
Mostly in Asia and East
Europe.
 1,350 suppliers in 52
Countries (= local buyers
network).
 Economies of scale
Logistic:
- Optimize the value
chain.
- Reduce transportation
costs.
- Control lead times.
- Manage inventory.
 Economies of scope
Sales:
- Marketing/Ads
- Analyze customer’ tastes
- Forecast demand
- Strategic planning
 Assist design

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Design
Modern designs using as few materials as possible without
compromising on quality or durability

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Sourcing & QC
• Cost control due to volumes (Bargaining power)
• Suppliers need to comply with IKEA ethic and
environemental guidelines.
• >50% of the products are made from sustainable
or recycled products.
• Rely on a strong network of buyers and partners
worldwide to ensure quality standards are met
(QC).

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Manufacturing / Production
• Production in Series (Forecasts from HQ)
• Lean Manufacturing (5s / 6 Sigma)
• DIY: reduced packaging & storage space
• Recycling chain to maximize materials’
value

10. Good’s lifecycle
Design new products
Manage catalogs
Select suppliers
Forecast demand
Follow production
Set sales objectives
Define strategy
Materials’ selection
and availability
Supply production
Cost control
Sourcing
Headquarters
Manufacturing
Distribution centers
Retail (offline)
Retail (online)Mass production
Ergonomy
Lean manufacturing
(5S – 6 Sigma)
Packaging
Inventory follow-up
Back-up local stores
or deliver customers
Directly (2007).
Secure lead times and
Replenishement
Manage expeditions
and delivery.
Exclusive shops
Display catalogs
Gather data about sales
Inventory control
Large cities location
New (2015)
No Inv (demo only)
Take order on catalog
Pick-up points for
online sales
Smaller cities location
External
Stackeholders

11. Managing Logistic: IKEA’s IT system and big data
Suppliers
Headquarters
Manufacturing
Distribution
Retail (offline)
Retail (online)
Integrated IT softwares:
- Inventory management
- Logistical support
- Enhanced communication
- Facilitate flows of products
- Reduce leadtime
- Decrease bullwip effect
- Analyze sales and
customers preferences.

13. Implantations (2017)
NORTH AMERICA
56 stores
8 Stores + 5 customers
distribution centers
7 pick-up points
EUROPE
HQ
242 stores
16 Stores + 18 customers
distribution centers
15 pick-up points
RUSSIA
14 stores
1 Store distribution
center
ASIA
33 stores
5 Stores distribution
centers
3 pick-up points
AUSTRALIA
10 stores
1 Store distribution
center

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Sales: Megastores
• Build typical blue buildings with huge IKEA Logo;
• Exclusive shops with typical layout and a « clockwise path » to enforce the
visit of the entire shop – even sell food to customers after the « tour »;
• In store inventory: Shops are also wearhouses where sales, pick-up and
deliveries are made from.

15. Sales: Results
5 Main IKEA markets (2017):
- Germany (15%)
- USA (14%)
- France (8%)
- China (6%)  60% of sales in Asia (+16% y-o-y)
- UK (6%)

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IKEA in numbers (2017)
820
Millions
store visits
in 2017
2,1 Billion
visits to
IKEA.com
123
Millions
visits to the
store’s app

17. Closer look to the SC competitors in China
Supplier
•Economies of
scale
•Advantage:
bargaining
power for
cheaper and
better quality
materials
Design
•An increasing
competition
from
companies that
imitate the
design
Manufacturer
•Jiayimei – a
former OEM
manufacturer
of IKEA
produces
almost exact
copies
Distributor
•Alibaba Group
plays either
distributors or
retailers role
for ikea-like
manufacturers.
Retailer
•Online
shopping
platforms with
the highest
growth rate in
furniture sector
– Taobao,
JD.com, Tmall

18. China: threat for the design part
Online selling platforms’
market review show that
some companies are
copying IKEA’s designs
(or have similar ones).
It might be challenging
especially regarding the
consumption patterns in
China

19. China: threat for the retailer side
In China nowadays:
- Sales mostly made online;
- Cashless society;
Consequently, market
penetration, distribution &
supply chain are evolving in a
different direction
 Less needs for physical shops
as promoted by IKEA’s
SUPERSTORES business model.

20. Conclusion
Challenges ahead especially regarding Emerging markets:
1- Competition’s management;
2- Market penetration & positionement;
3- Sales and distribution models;
 As for International brands which succeeded global expansion, IKEA
will most likely have to adapt its business model to its different markets
(especially Asian markets) in order to reach and maintain leadership
positions.

21. 年度工作概
THANK YOU