Topic: BusinessLogistics

Last updated: May 10, 2019

Summary of the article: The article titled “Logistics by IKEA” consists of IKEA’s Operation Strategies in regards to Supply Chain Management through Logistics. IKEA has pioneered many innovative approaches, such as flat-packaging, in Logistics, which allow the company to minimise costs and smoothly manage its flow of supplies to best meet the needs of its customer base.How is your article linked to your syllabus point? My syllabus point encompasses two overall headings, Supply Chain Management (SCM), which is the management of supplies from inputs to outputs, and Logistics, which is the distribution and transportation of these outputs.

My article displays that IKEA handles its sourced supplies, i.e products, with logistical inventory management techniques i.e flat-packaging, to create and manage a supply chain that operates at the fastest possible route from its manufacturing base to retail outlets. As highlighted in the article, IKEA does this in order to reduce overall expenses while maintaining a positive relationship with its suppliers.Describe the action(s) taken by the managers? Through its initially unorthodox innovation of flat-packaging, IKEA is able to package it’s products from suppliers as disassembled parts in flat-packs. As a result, IKEA’s packages take up a significantly reduced amount of space compared to fully assembled goods, and this consequently curtails space being occupied in warehouse bins and transportation trucks.

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This minimises overall transport cost, as a maximum amount of items are being transported in one truck and thus reduces costs such as fuel, stocking costs, paying the driver, security, etc. for extra trucks. IKEA’s unique packaging strategy has allowed for faster transportation of goods from the manufacturing plants to distribution centres and then to warehouses and customers, effectively facilitating the speed of the supply chain to rapid levels, as more outputs are being delivered to customers in a shorter amount of time, while consecutively meeting other performance objectives such as speed and profit maximisation.

Did the strategies work? Why or why not? Yes, the strategies have been successful as IKEA has been able to manage it’s inventory in a logistically strategic manner through flat-packaging, which enables it to reduce wastage of time (maximum products in one delivery) and resources (less transportation vehicles required), hastening the supply chain to allow its final outputs to reach its customer base efficiently and effectively.Demonstrate statistics, which support your point/idea? One of Forbes’ World’s Most Valuable Brands³, IKEA has consistently demonstrated increasingly positive statistics in all areas of its business. IKEA’s brand value as of May 2016 is 18 Billion Euros, and its annual revenue increased from 10.9 Billion Euros in 2001 to 29.3 Billion Euros in 2014?.

This demonstrates that IKEA’s strategies are effective and adequate in the business’s purpose, as it has achieved high levels of sustained profit over an extensive period of time while implementing these strategies. By enforcing flat-packaging, IKEA managed to reduce its overall expenses by 14% to 35 million Euros in 2013?.


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