Question 3 Strategically, having more than 1,000 suppliers result in a complex task of managing those supliers, ensuring the quality of the products, and maintaining the IKEA brand While we will, addr[.]
Question 3: Strategically, having more than 1,000 suppliers result in a complex task of managing those supliers, ensuring the quality of the products, and maintaining the IKEA brand While we will, address global supply chains later on, from a global strategy standpoint how would you manage IKEA's global suppliers? IKEA's strategy for expansion Wholly-Owned Subsidiaries IKEA holds 100% of the market share for these subsidiaries, which consist of 367+ stores administered by INGKA Holding B.V (located in the Netherlands) International Franchising: The Inter IKEA Group, which links all of the franchises, operates 38+ stores Benefits include: - Aids in operational control, standardization, and easy entry into new markets; - Compel IKEA to realize location and curve economies; - Easily achieve economies of scale; - produce more products at the same or lower cost; - lower average production costs; - achieve cost leadership (IKEA Strategy) IKEA’s suppliers • Many suppliers due to wide range of products they sell • IKEA manufactures certain standard models of products; but o They also manufacture certain modified versions of products o E.g., products sold in Europe are smaller than USA, but larger than China and Japan IKEA manufactures some standard models of products, but they also manufacture some modified versions of products For instance, products sold in Europe are smaller than those sold in the United States, but larger than those sold in China and Japan IKEA has a large number of suppliers because of the variety of products they sell Production at IKEA • 90% of goods are created externally by 1,000+ suppliers in 50+ countries, with the remaining 10% produced internally by IKEA • IKEA works closely with its suppliers to: Assure good quality & affordability Acquires expertise by manufacturing goods internally Shares that information with its suppliers to boost productivity Productivity equals costs along the supply chain Produces economies of scale IKEA’s suppliers o Many suppliers due to wide range of products they sell o IKEA manufactures certain standard models of products; but They also manufacture certain modified versions of products E.g., products sold in Europe are smaller than USA, but larger than China and Japan How to handle IKEA's international suppliers in terms of global strategy: Consult with them frequently Establish risk management and vendor assessment Establish quality guidelines or standards (such as IWAY) Check their certifications before doing business with them Create open lines of communication ... certain modified versions of products E.g., products sold in Europe are smaller than USA, but larger than China and Japan How to handle IKEA'' s international suppliers in terms of global strategy:... chain Produces economies of scale IKEA? ??s suppliers o Many suppliers due to wide range of products they sell o IKEA manufactures certain standard models of products; but They also manufacture...Production at IKEA • 90% of goods are created externally by 1,000+ suppliers in 50+ countries, with the remaining 10% produced internally by IKEA • IKEA works closely with its suppliers to: Assure