IKEA is a Swedish furniture retailer with large stores in more than 20 countries. IKEA has targeted customers who want stylish furniture at a reasonable cost. The company’s business model, based on huge production runs of identical stock, allowed it to export Scandinavian style at an affordable price to the rest of the world. The company limits the variety of styles that it sells through modular design. IKEA are widely considered as the “kings of flat pack furniture”, having cleverly exploited the potential of DIY assembly. Being able to visit a store, pick a wardrobe, chuck the cleverly packaged parts into the boot and drive home proved to a very popular approach, avoiding waiting weeks for delivery and simple installations; even if the accompanying instructions aren’t always as simple as they look. Social media is full of insights about IKEA-instigated arguments over how to construct furniture (or even just trying to navigate the stores’ pathways). But the company remains highly thought of. The large scale of each store and the limited variety of furniture decreased the implied uncertainty faced by the supply chain. IKEA stocks all styles in inventory and serve customers from stock. Every IKEA store has a warehouse on the premises. On the main showroom floor, customers can browse for items. They then obtain the products themselves from the floor pallet location with racking as high as the typical person could reach, where furniture can be purchased and taken home. The presence of inventory at large IKEA stores allows replenishment orders to its manufacturers to be more stable and predictable. It buys products from more than 1,800 suppliers in 50 countries, and uses 42 trading service offices around the world to manage supplier relationships. IKEA’s manufacturers, who also tend to located in low-cost countries and focus on efficiency. IKEA has a code of conduct for their called the IKEA Way of Purchasing Home Furnishing Products (IWAY), containing minimum rules and guidelines that help manufacturers reduce the impact of their activities on the environment. This also underlines IKEA's commitment to the 'low price but not at any price' vision. Comment on how IKEA managing different cost conflicts that are arising due to the interaction of different cross-functional logistics drivers and able to maintain a balanced trade-off between efficiency and responsiveness?
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IKEA is a Swedish furniture retailer with large stores in more than 20 countries. IKEA has targeted customers who want stylish furniture at a reasonable cost. The company’s business model, based on huge production runs of identical stock, allowed it to export Scandinavian style at an affordable price to the rest of the world. The company limits the variety of styles that it sells through modular design. IKEA are widely considered as the “kings of flat pack furniture”, having cleverly exploited the potential of DIY assembly. Being able to visit a store, pick a wardrobe, chuck the cleverly packaged parts into the boot and drive home proved to a very popular approach, avoiding waiting weeks for delivery and simple installations; even if the accompanying instructions aren’t always as simple as they look. Social media is full of insights about IKEA-instigated arguments over how to construct furniture (or even just trying to navigate the stores’ pathways). But the company remains highly thought of.
The large scale of each store and the limited variety of furniture decreased the implied uncertainty faced by the supply chain. IKEA stocks all styles in inventory and serve customers from stock. Every IKEA store has a warehouse on the premises. On the main showroom floor, customers can browse for items. They then obtain the products themselves from the floor pallet location with racking as high as the typical person could reach, where furniture can be purchased and taken home. The presence of inventory at large IKEA stores allows replenishment orders to its manufacturers to be more stable and predictable. It buys products from more than 1,800 suppliers in 50 countries, and uses 42 trading service offices around the world to manage supplier relationships. IKEA’s manufacturers, who also tend to located in low-cost countries and focus on efficiency. IKEA has a code of conduct for their called the IKEA Way of Purchasing Home Furnishing Products (IWAY), containing minimum rules and guidelines that help manufacturers reduce the impact of their activities on the environment. This also underlines IKEA's commitment to the 'low price but not at any price' vision.
Comment on how IKEA managing different cost conflicts that are arising due to the interaction of different cross-functional logistics drivers and able to maintain a
balanced trade -off between efficiency and responsiveness?
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