What factors are responsible for influencing Ikea Supply Chain Management success?
Ikea is a wood furniture manufacturing company which was established in 1943 in Sweden and has gradually expanded globally due to an effective Ikea supply chain management strategy. The company is today amount the largest wooden furniture manufacturers and specializes in the design, manufacture, and supply of household fixed as well as portable furniture. With the company has expanded its operations globally, it has become important for the business to also ensure its addressing important supply chain management issues. This is especially concerning due to the company specializing in the production of wood furniture. Wood continues to be a scarce resource globally due to environmental policies and concerns making it important for Ikea to develop effective supply chain management policies which address the different aspects linked to wood supply and use by the company. In addition to government regulations, Ikea also needs to keep public interest and social concerns in mind to ensure the brand retains its public reputation and brand value.
Analysis and Evaluation
Ikea is today the largest international wood furniture manufacturer and supplier which have been achieved due to Ikea supply chain management strategy. But wood harvesting remains as being among the most highlighted environmental degradation issues to date. Deforestation is a major concern in most countries and many have blocked and ban the cutting of trees altogether. This has resulted in an acute shortage of raw timber and wood supplies globally resulting in increased wood prices as well as close vigilance linked to timber harvesting as well as wood processing. In order for IKEA to retain its customer confidence, IKEA supply chain management required to be carefully streamlined and important points addressed with relation to sensitive aspects linked to raw materials and supply channels to ensure consumer confidence is always retained.
Communicate Guidelines with supplier
Wood processing involves the harvesting of wood from the plantation and indigenous forests but this still involves the cutting down of trees which has been highlighted as a major reason for increased levels of CO2 globally due to trees naturally absorbing Carbon dioxide and releasing Oxygen. This has made it very important for IKEA to communicate clearly the importance of sourcing its timber products from approved sources. Illegal timber harvesting is resulting in major controversy being raised against certain wood processing companies making it imperative for the wood being used by the company to be sourced using ethical approaches. To achieve this IKEA requires educating the company’s suppliers regarding international environmental and policy guidelines associated with wood harvesting as well as public views towards the practice. While wood has been identified to be a basic requirement for most construction projects, it’s important for the wood to have been sourced ethically. This means the suppliers will have to perform background checks related to the source of the wood to determine if it has been ethically sourced before supply to the companies warehouses. Failing to monitor this will result in the business losing public and consumer confidence towards addressing environmental issues and concerns. Global warming, pollution and the increasing levels of carbon in the atmosphere are major concerns amount most global communities today. This makes it imperative for the IKEA to ensure the supplier's review and ensure materials are being ethically sourced before being used.
Choose the right material suppliers
With the guidelines linked to assignment having been outlined and clearly explained to the suppliers, its IKEAs responsibility to review the supplier’s reputation and adherence to following the set guidelines. The IKEA supply chain management requires sending the field agent to review the material sources and extraction areas to affirm the suppliers are actually extracting the materials from referable and suitable sources as opposed to damaging the environment. Suppliers who do not adhere to the set guidelines are automatically dismissed and contracts canceled as these places the overall organization's reputation in danger of losing consumer interest and confidence. This is due to it being capable of classifying IKEA as being a company which does not support environmental concerns which is a major concern linked to product preference. Failing to address environmental confirms will only result in the business losing its customer due to the company being classified as not being adherent to corporate social responsibility guidelines and regulations.
Have multiple suppliers for each product
Furniture is created using different types of wood which means IKEA needs to source its wood supplies from different regions in order to meet consumer requirements. Ikea supply chain management strategy requires for the raw material supply needs to be regulated. It is therefore important for IKEA to have multiple suppliers for its products located in different parts of the world. Most timber species are limited to a certain region of the world thus its mandatory to get suppliers from those regions to meet the companies supply needs. Cedar, Pine, and Cypress wood is produced mainly in countries above the tropics. Major producers and exports are the USA and Canada but smaller quantities are also produced in equatorial and tropical regions. Hard Woods species such as Teak (Tectona grandis), African redwood (Hagenia abyssinica) and Acacia(Mimosoideae Fabaceae) are commonly found in Tropical and equatorial regions of the globe. this means IKEA needs to identify ns enter into raw material agreements with companies in those regions of the globe in order to secure the required Raw timber stocks which can be used to manufacture furniture as per the customer’s needs. While IKEA does manufacture furniture from hardwoods, they are less common and IKEA ensures the hardwoods are being harvested using ethical techniques. This is due to hardwoods being a slow-growing tree which means regeneration of the wood can take several decades as opposed to softwood specifies which are ready to harvest in a few years.
Ensure materials are legally sourced
IKEA’s operations are heavily dependent on wood making it imperative for the company to ensure the materials are being produced following ethical approaches. This is a growing concern globally since the demand for timber being harvested surplus the number of trees being planted. This makes it important for companies like IKEA to develop sustainability plans based on which timber production can be planned allowing for the business to have access to a sustainable source of material which is legally sourced. This means IKEA quality control and public relations officers need to physically visit the suppliers to and survey their sources of timber to ascertain the timber is being produced using ethic approaches. It is IKEA responsibility to ensure the timber being supplied to them is produced following globally accepted techniques and more importantly, the supply systems and sources of timber are being regularly to ensure the materials are coming from ethically accepted sources and right correctly techniques being used to produce the timber. Ikea supply chain management strategy ensures the materials are sourced from legal locations and sources are this is an important factor linked to retaining a company’s reputation amount its customers. Failing to abide by regional and international laws as well as by consumer expectation will automatically result in the company losing its public reputation and consumer confidence as the products would be linked to illegal activities and activities which are harmful to the planet, environment and public health.
Promote environment sustainability
Environmental concerns are growing day by day making it important for every company to abide by environmental policies that convey the businesses intentions towards addressing environmental needs. It’s important for the business to ensure sustainable timber harvesting is being done which is an important factor contributing towards addressing environmental concerns based on which the company can ensure the materials used to manufacture its products are coming from legal sources and being harvested using suitable techniques which will help manage the environment positively which is a major concern towards the business operations as well as the environmental concerns.
Recommendation and Conclusion
Rapidly expanding populations has resulted in the increased demand for building materials such as wood which has resulted in placing considerable pressure on the environmental. Wood production and processing business have been the amount the most affected and highlighted within the business categories since they are responsible for consuming and processing wood and timber products directly. This is a major concern among environmentalist as well as the public due to the increasing environmental issues such as global warming, increase carbon emissions and pollution across the globe. this has placed more pressure on wood processing and production companies like IKEA which must ensure they abide by environmental norms based on which consumer evaluate companies to determine their performance and reputation as a good supplier. To retain a positive reputation among consumers, it is essential for the IKEA supply chain management strategy to identify suitable material sourcing strategies; to help retains its public reputation and interest. IKEA supply chain management assignments are being prepared by our SCM assignment help experts from top universities which let us to provide you a reliable assignment help online service.