International Logistics at IKEA IKEA is a Swedish multinational group founded in 1943 that designs and sells ready-to-assemble furniture and home accessories. It has 31 distribution centers in 16 countries and sources from over 1350 suppliers in 50 countries. IKEA uses efficient production and transportation methods like flat packing and container vessels to distribute goods from suppliers around the world to its 423 stores located within 600km of distribution centers, using various modes of transportation. Its logistics strategy focuses on getting the right products to the right customers at the right time, place, condition, quantity and cost.

1. International Logistics at
IKEA
Presented by: Snehal Deo
6 Oct 2018
1

2. Introduction
• Swedish Multinational group founded in 1943
• Founder Ingvar Kamprad
• Designs and sells ready to assemble furniture and home
accessories
• 31 distribution centres in 16 countries
• 1350 suppliers in 50 countries
2

3. 423 IKEA
stores
3

4. Production
Price
ProductPromotion
Place
-Efficient use of raw materials
-Apply technical innovation
-Best design of products
-Self assembly products
-Invest time in designing of
products
-Flat Pack
-Use Push strategy
-Promotes annual catalogue
for new line of products
-Word of Mouth
-Distribution centre’s-gathers
goods from all over the world
-Dispatch products to
different areas
-Within 600km
5 P’s of
Logistics
-Cheap labour and resources
available: India, China, Poland
-Abundance of woods: North
America
4

5. 7R’s of Logistics Management
• Right Product
• Customers choose products from store and write down the choice
• Pick things checking the label on box
• Right Customer
• Customers take home the products with them
• Logistics partner: Gati-KWE (India)
• Right Time
• Strict logistics operations procedure
• Process must be completed within 5 working days
• Right Place
• Distribution centres/warehouses near retail stores
• Customer order home delivery at low price
5

6. 7R’s of Logistics Management
• Right Condition
• Flat packs loaded in trucks
• Reduces the probability of damage
• Container vessel
• Right Quantity
• Actual forecast done
• Right Cost
• High filling rate reduces the cost
• Results in reduction of overall cost of product
6

7. Export Market Entry Strategy
Franchising
• In exchange of fees IKEA grants rights to other companies to:
• Use IKEA trademark
• Sell IKEA products
• Work with IKEA business method within defined territory
• Methods and Solutions to market and sell IKEA Range
7

8. Export Market Entry Strategy
Wholly Owned Subsidiary
• Majority of IKEA stores are wholly owned and Managed by
INGKA Holding
• Stores operations, management, furniture design and
manufacturing is overseen by INGKA Holding
• Example: IKEA store in India
8

9. Road
60%
Train
19%
Sea
20%
Air
1%
Modes of Transportation
Road Train Sea Air
9

10. Packaging Strategies
• Low value product consume lot of space
• Results in poor efficiency in transportation and warehouse
operations
• “Air out, product in” – principle for design and packaging
• Packaging is designed to squeeze as many units as possible
• Products broken down into elements that pack best
10

11. 11

12. 30% increase in number of
candles packed
100 candles randomly filled Neatly stacked
12

13. Overview of Supply Chain
Raw
materials
Manufacturing
Distribution
Retailer
Consumer
13

14. Thank you
14
4