Principals of Logistics - Ikea

IKEA is a global home furnishings retailer with a presence in over 40 countries. Its recognizable blue and yellow logo can be found in urban areas as this is where their target audience is located. The location of its stores plays a part in the way their marketing strategies are planned. Logistics plays a role in how their products are transported directly from its suppliers to the market for sale. It is a given to say that how well its logistics channel performs, directly interfaces as well as contributes to the marketing side in making decisions with regards to product, price, place and promotion.

As is stated on their website, IKEA does not manufacture its own products. Rather, it works with over 1350 suppliers across the globe to create and produce the IKEA concept and IKEA product offerings. Therefore, a well-run logistics system is crucial in maintaining and servicing all of its stores worldwide, so as to meet and maintain customer satisfaction. The fact that they also market themselves as being environmentally and socially responsible, also plays a part in the way they run their business (Inter-IKEA Systems B.V, 05 January 2011).

PRODUCT

When it comes to making product decisions, marketing is responsible for deciding the range of products to be sold according to region and country. IKEA has a main product line which is available in all of its stores regardless of location. To further establish its brand, they have also additional product lines which are tailor made to match the local tastes of each area. This means that logistics has a huge responsibility when it comes to keeping track of the full product offerings and to ensure that the correct product range is identified and storage properly arranged so as to support the firm’s marketing efforts in making available the full range of products for the benefit of its customers

An example of this would be the different demand levels of different product lines in different countries. By working together with the marketing side, logistics would be better informed regarding the popularity and therefore demand levels of different products which would greatly contribute to decision making when it comes to moving and maintaining inventory/stock levels. Maintaining a certain stock level of an unpopular product in one location would result in high cost in terms of storage due to its slow-moving nature. That storage space could also be better utilized for storing other fast-moving product lines.

In addition to managing stock levels of its product offerings, logistics is also responsible for the way the items are packaged. A majority of its product categories, such as Beds, Cabinets, Tables etc., do not come ready assembled. As previously mentioned, IKEA does not manufacture their own products but depend on its suppliers to provide the components and materials needed so that when assembled by the customer, it forms the finished product.