Operational Logistics of Ikea Essay Example for Free

Operational Logistics of Ikea Essay1. IntroductionIKEA is a Swedish bon ton which was founded in 1943 with its headquarter in Denmark. IKEA succeeded on its low cost dodge which is able to offer a wide disgorge of stylish home furniture with good design and functional at competitive pricing. It carries a range of nearly 10,000 harvest-feasts and is well known across the world. IKEA is also recognized as a socially responsible and environmental friendly follow. Currently, there atomic number 18 287 IKEA gunstocks in 26 countries. In year 2011, IKEA has gained the total sales of 25. 2 billion (in EUR). IKEA was also the first company in the world to realize the do goods of flat annulus furniture in 1956. With this flat pack method its does not only help to save material, but is also saves the transportation costs with efficient dissemination and w atomic number 18house storage space.Franchises are part of IKEA expansion plan. All the franchised are granted by Inter IKEA S ystem B.V.The IKEA Group which has over 267 stores in 25 countries and franchisees outside IKEA Group in 16 other countries/territories. The Swedwood Group is part of IKEA Industry Group to manufacture and distributes wood and controls the entire value chain. Consisting of approximately 50 production units and offices in 10 countries across the continent. They are driven by their vision of achieving excellence in transforming wood into quality furniture and focused on continuous improvements in order to maintain competitiveness in the market.2. IKEA Global Supply ChainIKEA is also recognized as a global strategic firm as most of the IKEAs stores operations are under Ingka Holding BV which is located in the Netherlands. IKEA has an excellent supply chain management with the in vogue(p) nurture technology system which is able to gather all the information across their worldwide retail stores, manufacturers, suppliers as well as the distribution centres. IKEA has adoptive the integr ated JDA software which has increased their overall supply chain visibility and efficiency. In this way, IKEA is able to cast off more forecasts planning for supplier, warehouse and transportation capacities.IKEA has a large number of suppliers of both furniture and furnishings across the world. IKEA plays an important part to build up good relationships with its suppliers as its helps to create a huge electrical condenser for producing the product through theworldwide suppliers. Today, IKEA operated more than 28 distribution centres and 11 customer distribution centres in 16 countries across the world. Its main function is to keep back stock replenishments program. As the location of production facilities focuses heavily on transportation costs, IKEA is able to efficiently distribute mass products with short lead clippings by concentrating manufacturing in large factories and in specific countries.3. IKEA FranchisingFranchises are part of the IKEA expansion plan. All the franc hised are granted by Inter Ikea System B.V. The IKEA Group is the biggest base of franchisees which has over 267 stores in 25 countries. They also grow some franchisees outside the IKEA Group in 16 countries. 3.1. IKEA joined StatesIKEA store has one of its franchises in the United States. They own a total of 38 stores which are served by 10 distribution centres in North America.3.2 E-Commerce on IKEA AtlantaIKEA is also adopting the Business-to-consumer (B2C) e course model. It is an online retail store where customers can do the shopping at anywhere anytime. IKEA USA on-line shopping is also able to provide well-selected items which are similar to the promotional beginning of from living room to bedroom and etc. Customers are able to find suitably priced and stylish home furnishing solutions that suit their needs. This sales method mainly targets end-users.4. meshwork DESIGNIKEA has opened biggest logistics Distribution Centre (DC) in Shanghai for Asia-Pacific region, taking a dvantage on its geographical, governments escort and management. China is the biggest center of finance, economy, and trading and shipping, therefore it is recognized as the most important hinge of logistics. In addition, the centre in Shanghai adopts Radio frequency identification (RFID) System that lead greatly improve the responsive and quality helping to the customer, providing logistics service platform that helps the expansion of the IKEA in Asia. As for Europe IKEA choose Dortmund in southern Germany to be a European distribution centre. Itis because it has geographical advantage at centre of the Europe where IKEA can use rail and road transport for transporting its goods.4.1 IKEA Atlanta and the DC SavannahFor the Distribution Centre in Port Wentworth, Georgia, located near the port Savannah, the products were processed where they should be stored based on the product specifications and demand. It is the primary instrument to IKEA stores in Alberta British Columbia, Uta h, Oregon and Washington State. The facility can also supply to other stores across the country when needed. Location was chosen based on the fastest movers closest to the stores for replenishment. That not only improves service times, it also reduces transportation costs. The facilitys location allows it to quickly deliver fast-moving products to IKEA stores in local markets in the south-eastern United States, including North Carolina, Florida and Texas. In North America, DC was equipped with a 13-crane Automated storage and Retrieval (AS/RS) system (via store), featuring a 100 foot-tall high-bay in-house rack system.At full operation, the system can process 600 pallets an hour, or nearly one pallet per minute from each crane. IKEA Atlanta is one of the IKEA stores that are supported by IKEAs Savannah Distribution Centre. Geographic area is the main reason that IKEA has the DC in Savannah. In terms of transportation, it only needs less than a 4 hours drive if goods are delivered by truck and it only takes about 1.3 days to reach Atlanta if delivered by rail. With this speedy transportation, IKEA Atlanta can fulfill responsiveness in goods supply to customer for both in-store and online purchase. Unfortunately, there is limitation product from buying on line. Consumer may not able to get some of the needs product on line.4.2 Savannah Transit time by rail truck4.3 The Highway and Rail NetworkThe Company is always unendingly looked for ways to maximize in each transport. To achieve this goal, packaging was designed in much(prenominal) a manner as to fit the maximum come-at-able products into containers. Plus all DC share similar objectives which is to have lower total cost and improve customerservice at the same time, apply of advance technology to emphasis sorting and sequencing material processes, enhancing responsiveness to the customer.5. OPERATIONS ANALYSISIKEAs company main concept is based on a three points cheap, innovative and stylish. These three points are affecting the IKEAs product design and development concept. Nowadays, IKEAs in USA have launched with online retail or E-commerce. E-commerce has been become part of the IKEAs digital strategy and should be the next big offering from IKEA. Every customer may easy online shopping without conk out out, queue, purchases and collects their purchases from the stores. E-commerce or shopping online at IKEA is now become very convenient, enjoy and fun for every customer. Process or step to e-shop at IKEA as per succeeding(a) 5.1 Operation logistics for E-commerceThe whole process cycle take about 2 to 3 days depending on the customer order time. 1.The successful online order go away transfer to IKEA Delivery Planning System. 2.Planning System go out send the data to Savannah Distribution Center. 3.Savannah DC will do the order picking and packing.4.Goods will be sending out to customer by Savannah DC team.6. CUSTOMER RELATIONSHIP MANAGEMENTIKEAs in USA has run the business wi th Customer Relationship Management (CRM) and provide the E-commerce applications. Customer Relationship Management (CRM) with E-commerce applications that enable IKEAs easily to view the both interaction channel and economic sales channel for consumers and business customers via internet. With CRM, IKEAs can allow their customers with convenient self-services and a personalized Web experience. The E-commerce applications also helping IKEAs in service operations and strengthens sales to reducing the customer service calls and transaction costs.Features and Functions of CRM of E-commerce processesIKEAs have use the latest technology to ensure all the personal information which customer submitted through the internet website such as credit card numbers, address and other information are under secure, stable andreliable. IKEAs have using the SSL technology which allows it to be transmitted securely over the internet without accessing to it by anyone else. Successful to secure the cust omer loyalty will achieve the company goal and target in the followingIncreasing the customer online spending on IKEA product feces reducing marketing, advertising and communication costCan reduces data and information maintenance cost by giving customers authorities to update personal details such as address details, contact number, telecommunicate address and requirement on the IKEA website. To achieve the customer service and satisfaction, IKEA have set up the strategy in the followingHire the right pileBring in the employees who have more experience on the customers skill and knowledge in order to develop the customer service focus such as to have better communication with customers, pleasant, motivated and cooperative. Also, can retain those customers that are desirable to keep.Provide orientation and provisionIKEA have provided the necessary training for each employee to maintain the customer services standards and also can improve on communication skills with the loyalty c ustomers.Set the standard for customer serviceIKEA have set the clear standard for performance such as Enable Company to establish, monitor, and control quality.7. RiskDuring development stage, thousands of tests were carried out on IKEA products each year. And more tests are conducted during production. Once a product is approved for production, IKEA will reviewed and decide whether additional risk assessment testing is required for any proposed changes to the product or to the production method. IKEA ensure that banned chemicals such as formaldehyde and phthalates dont exceed their requirements. IKEA requires suppliers to order certified products testing by third companionship auditors. Likewise, IKEA has a third-party accredited test laboratory thatis certified each year by external auditors.Accused for Logging Ancient Trees in RussiaSwedwood, whom IKEAs amply owned production subsidiary which was founded in 1991, was found irresponsibly logging Russias ancient trees of over 30 0 years old. And as a whole, IKEA are under the heat internationally especially in the timbrery industries. This has been a huge issue because natural grown trees take centuries to grow. And its these trees that has greater biodiversity and could stabilize the climate by locking carbon in the soil to reduce global warming. In their defence, IKEA forest manager, Anders Hildeman mentioned they have been working with the NGOs, and they have been working with the scientists to develop these schedule methods.Though there are old trees present, that do not mean that its high conservation value. Species, size of the area, exposition, position has to take into considerations to define them as High Conservation Value Forests (HCVF). Hildeman welcomes WWFs (World broad(a) Fund of Nature) recommendations for a full certification control audit. And had invited FSCs (Forest Stewardship Council) for a control audit from their accreditation dead body to avoid any doubts and that we are followi ng the Russian FSC.7.1 SustainabilityTaking a leading role towards a low carbon societyIn support to reduce carbon dioxide emission, IKEA are working together with WWF to investigate on how to calculate climate-positive aspects from what they do together with their customers. Majority of carbon dioxide emissions related to IKEA come from material extraction, suppliers, customer transportation, and the use and disposal of products. And all these are areas that IKEA can only indirectly influence. In order to influence the society, IKEA has to put these into practice first.They are manner of walking towards to installing photovoltaic (solar) panels to turn sunshine into electri city in around 150 stores and distribution centres over the next few years. The panels will provide these buildings with 10-25 percent of their electricity need.When they plan a new IKEA store, good public transport is an important consideration, and in many cities they offer free shuttle buses between the cit y centre and the store.IKEA Foundation contribution to UNICEFSince 2001, IKEA has taken part in basic social services to help children in underdeveloped and developing countries like India and Haiti. impart to UNICEFs work through philanthropic donations, sales of UNICEF Greeting Cards and many more has been IKEAs key of support for over 10 years. In addition to that, IKEA has committed more that $200 million both in cash and in-kind donations to UNICEFs programs making them the largest corporate cash donor.What makes IKEA a true partner, is the companys deep commitment to social responsibility and their direct engagement with issues affecting children. In addition to providing financial support for child protection, education and health programs, they work together to provide expertise and knowledge gained over the years on addressing labor issues in the supply chain.Forest Project with WWF for NatureWWF (World Wide Fund for Nature) collaborate with external organizations in a nu mber of forestry projects in order to contribute to the development of responsible forestry practices and policies. To date, there are 13 forest projects by IKEA and WWF. These projects aim to increase forest areas with responsible management practices, combat illegal logging, support forest certification and promote responsible timber trade.8. closing curtainFrom the research we found, we notice that IKEA has a good strategy in sourcing from the raw material from suppliers to the location of distribution centre and store. Their strategy is also to keep their product in low pricing. Overall IKEA is still very success in the business with theconcept of keeping low price policy. From customer point of view, they are able to enjoy the stylish furniture and functional with low and suitably price. IKEA also success in managing the product quality, prices with supplier by maintaining the good relationship with their worldwide suppliers. We also notice that IKEA vision is to create a bett er everyday life for the many people which is hang on every store. till today, IKEA is still continuing finding the effective way to further reducing the cost.9. ImplementationIKEA Singapore should consider implementing E-commerce instead of focusing on their in-store shopping business. on that point are 2 stores here in Singapore, in Alexandra Road (West) and Tampines (East). Poh Tiong Choon Logistics (PTC) was hired as their 3rd Party Logistics (3PL) they are located within IKEA at Alexandra. opposite than transportation, PTC also provides installation services on behalf of IKEA. All necessary information from product measurements, product descriptions, product amount and product comparisons has already made open in their website. In term of online payment Singapore is considered as the most secure country as IDA (Infocomm Development Authority of Singapore) which helps businesses to leverage ecommerces benefit where both businesses and consumers confident with the mark of Tru stSg.Why customers should purchase onlineMost of the IKEAs products are consider bulkySave traveling timeSave time from long queues for paymentSave time from long queues for taxiProduct measurements information made available onlineCheck for stock availability online