How Does the World Largest Home Furnishing Retailer Manage its Inventory?

IKEA is the worlds largest home furnishing retailer with 375 stores world-wide and 31.9 billion EUR in sales in 2015. The average store is 27,871 square meters and holds over 9,500 products in each of them.

How can IKEA maintain so many products at such a low price and always being able to keep items in stock?

The company secrets to such a mature success is to have good relationships with their suppliers and finding smarter way to save on logistics.

IKEA seeks to use as few materials as possible in the making of their furniture, by using fewer materials the company can cut down on transportation costs.

The company has over 1,800 suppliers in 50 countries, they make only long-term business relationships to lower the price of products.

Most of IKEA furniture is designed for the customer to assemble. They design the to fit into a flat package so they take up less space in the transportation, maximizing the number of products that can be shipped. Also taking up less space in the warehouse, the savings on the transportation are passed on to the customer.

IKEA believes in a tactic called “cost-per-touch” meaning that the more hands that touches the product, the more costs are associated with it. IKEA saves costs by making the customer get the product he wants, because they do not have to pay the customer to get the product.

In each and every store there is logistics personnel that handles inventory management, they ensure the flow of products to the store to maintain high sales and customer loyalty.

For more in-depth information about IKEA way of doing Logistic better see https://www.tradegecko.com/blog/ikeas-inventory-management-strategy-ikea


Written by: Sara Dröfn Gunnarsdóttir

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