Research Paper on IKEA Performance

Economic growth and globalization have changed the way we view international trade as well as their associated business processes. One example is that supply chain processes operate much quicker compared with even just a decade ago. Easier trade and transportation access to companies in emerging and developing countries, higher commodity demands, and lower profit margins have contributed to today’s supply chain, which operates substantially faster than in the past. “Real-time” supply chain information is critical to the main stakeholders involved in the trading of goods to ensure effective decision-making and contingency planning. One of the primary reasons is that supply chain visibility is a viable solution that has a direct impact on reducing supply chain operational costs because visibility allows improved control over inventory levels as well as reducing management costs related to supply chain management.

Application of RFID tags assists retailers in exercising more control over their suppliers and increasing efficiency in category management. In the retail industry, it takes 104 days for products to reach consumers. In order to cope with the scenario, Automatic Replenishment Programs are in use by retailers such as IKEA. IKEA employs Just-in-Time strategy of tracking of cargo more efficiently, as one of their primary goals. Obviously retailers like IKEA are to strengthen their state of the art supply chain systems with substantial information such as pallet level international shipping, however not much information is available at this stage. IKEA, for example, applied technology-driven security systems with cargo that originated from Guatemala inbound to Australia and became part of CTPAT program partner as well.

Application increased security and visibility and reduced the inventory in conjunction with on-time deliveries. Compared with other industry segments, retailer industry appears to have increased levels of awareness of supply chain tools, which affects the supply chain performance; in addition, this awareness is also seen in large organizations as well. IKEA import raw materials all around the world and bring them to their manufacturing facilities in developing countries. They have to deal with constant supply chain delays. In order to improve supply chain processes, IKEA’ use advance tag- 95 reader technologies on pallet level; however, this is not frequently applied for international container shipping at neither container nor the pallet level. IKEA constantly focus on improvements on new technology, the main reasons are not having a visible connection between promotions, buying patterns, warehouse stocks, amounts in order, and amounts shipped, and this causes either increased inventory levels or empty shelves.