Ikea Business Operations

Bachelor of Arts (Honours) in Business and Human Resource Management Program

PT BCU BABHRM 4 BOL

Business Operations and Logistics (BOL)

Name: Julian Suresh S/O Albert Ratnaraj

Student Number: 17105876

Company: IKEA

Assignment name: A case study on IKEA (https://www.slideshare.net/roymanish91/ikea-supply-chain-mangament)

Introduction and IKEA’s Background

The founder of IKEA, Mr Ingvar Feodor Kamprad was born on 30 March 1926, on a small farm called Elmtaryd near the village of Agunnaryd, in the Swedish province of Småland. Mr. Kamprad began his career at the age of six, selling matches.

At 17, in 1943, Kamprad’s father rewarded him with a small sum of money for doing well in school, despite being dyslexic. With it, Ingvar founded a business named IKEA, an abbreviation for Ingvar Kamprad from Elmtaryd, Agunnaryd, his boyhood home.

Two years after starting IKEA, Kamprad began using milk trucks to deliver his goods. In 1947, he started selling furniture made by local manufacturers. By 1955, manufacturers began boycotting IKEA, protesting Kamprad’s low prices. This forced him to design items in-house.

Kamprad is also behind the simple, yet revolutionary innovation that is the flat pack. He began selling IKEA products in flat-pack form, from his own warehouses. Thus, the basic IKEA concept – simple, affordable flat-pack furniture, designed, distributed and sold in-house – was complete. The driving idea behind IKEA was, and is, that anyone should be able to afford stylish, modernist furniture. Kamprad felt he was not just cutting costs and making money, but serving the people as well.

Today, operating in 41 countries, IKEA is a global destination store for home furnishing, appliances, ready-to-assemble furniture, home accessories and kitchen products.  It is the world’s largest furniture retailer with more than 301 stores and 30 franchised units.

Over the previous 60 years, IKEA has grown from a simple entrepreneur into a cluster of companies with 76,000 associates. At the same time, an exceptional corporate culture with its own set of principles has been developed. The achievements of IKEA have been built upon zeal and eagerness, upon a steady aspiration to renew and progress, upon cost-consciousness and readiness to provide a hand and take accountability (IKEA, 2003).

The key goal of IKEA is to assist customers in implementing their own ideas and be creative in planning their homes and offices.

2. Literature Review on Operations Management Logistics

IKEA is a private global corporation that specializes in retailing home products including flat pack furniture, kitchen and bathroom items, and accessories using their own retail stores that have been established globally (Chopra, 2009).

IKEA is the largest furniture retailer globally and is considered the pioneer of affordable flat pack design furniture. With this global scale of operations and a large product portfolio, there is no doubt that operations management is vital in ensuring the success of the company (Gibson, 2012). The company also relies significantly on a complex suppliers’ network comprising of 1300 direct suppliers, 26 centers for distribution, and 10,000 sub suppliers. Besides, the firm relies significantly on its supply chain, which entails a range of processes from raw materials acquisition to the delivery of their products to their customers.