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20150313 OM Presentation IKEA Inventory management

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Sashrika Cooray

on 12 March 2015

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Transcript of 20150313 OM Presentation IKEA Inventory management

IKEA
Introduction
HOW BIG COMPANY?
REVENUE
Annual revenue of the Ikea Group worldwide
from 2001 to 2014 (in billion euros)*
This timeline depicts the annual revenue of
the IKEA Group worldwide from 2001 to 2014.
In 2013, the global revenue generated by the
IKEA Group amounted to 28.5 billion euros.
INVENTORY MANAGEMENT
IKEA is a multinational group of companies
that designs & sells ready-to-assemble furniture
appliances, small motor vehicles and
home accessories.

Founded in
SWEDEN IN 1943

One of the the world's
LARGEST
furniture retailer.

As of December 2014, IKEA owns and operates
351
stores in
46
countries.

Approx
12,000 PRODUCTS
- entire IKEA range.



‘A community of professionals, constantly developing the skills
necessary to create a better everyday life at home for the many
people.’





‘To develop the skills of every IKEA employee, so that they
may become professionals in providing a complete range
of home decorating products of good form and function at a
low price.’
GROUP 2
VISION
MISSION
Ikea uses approximately
1%
of the world’s entire commercial supply of wood.
In the U.K.,
1 in 5
people sleep on an Ikea mattress.
Ikea employs more than
131,000
people worldwide.
In 2012, there were an estimated
655 MILLION VISITOR
to Ikea stores.
There are more copies of the Ikea
CATALOG
printed each year than the Bible.
Ikea has lowered its prices by an average of
2% EACH YEAR
since 2000.
The largest IKEA store in the world is located in Stockholm, Sweden. It covers
55,000 SQUARE METER
, which is bigger than 10 American football fields.

INVENTORY

Combining Retail and warehouse
- Shop located in warehouse.

- Customers can pick up products from lower racks

- Additional products are stored in reserve racks above these locations.

- Inventory is let down to the lower slots at night (forklifts and pallet jacks are not used during store hours for safety reasons).

Flat packing
light
easy to assemble
easy to move
Adventages
for Inventory
- Save space
- Decrease SKU cost
(inventory cost)
For customers
Lower price
Save time
Other adventage
- Decrease renting cost

automation. While IKEA operates highly-automated facilities in other countries, this is the first automated DC in North America. In this case, the DC was designed around a 13-crane automated storage and retrieval (AS/RS) system(viastore) featuring a 100 foot-tall high-bay inhouse rack system. At full operation, the system can process 600 pallets an hour, or nearly one pallet per minute from each crane.

The Top 10 Automated Warehouse
Warehouse automatic system
COST - PER - TOUCH

More hands touch the product
=> The more costs are associated

IKEA warehouses act as retail stores
=> Customers choose, bring and assemble by themselves
IN-STORE LOGISTICS
In-store logistics manager
Set and respond to store-level inventory reorder points
Forecast independent demand
Store goods manager
Material handling logistics at all IKEA stores
MAXIMUM / MINIMUM SETTINGS
- Is inventory replenishment management process
- Does not replenish during the day
- Very little cycle counting
- Logistics manager forecast sales and order

-Huge Inventory => Effective Stock Management?

(Source: IKEA GROUP FY2014 YEARLY SUMMARY)
Warehouse: High-Flow & Low-Flow

IKEA has its unique inventory system as we mentioned. If we were to adopt that system in to some other companies or to industries such as manufacturing, it will be very efficient and effective. Main issue to consider in this system will be, making customer aware of having customer themselves to collect their ordered products since its a unique system which everyone can't do.
IKEA inventory system to other companies
cated worldwide to cater to demands of its retail stores. (42 distribution centers)

How does IKEA track and manage its inventory ?

Use of barcodes
Use of automated Roberts and machineries
Eliminate the need for manpower
Cost effective management of distribution centers is their competitive advantage.
Distribution centers
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