IKEA’S INVENTORY MANAGEMENT

Since inthe last class we were taught about what is really important regarding inventory management is to manage it I was looking for a management way that I may like, so I found IKEA’s way:

Ikea has 298 stores in 37 countries and each one of these stores has a 9.500 products holding capacity. So how does Ikea manage its inventory? These are the main strategies that IKEA follows:

COST-PER-TOUCH INVENTORY TACTIC

This strategy consists in having customers select the furniture and retrieve the packages themselves. This tactic is used since some companies found out that the more hands touch the product, the more cost are associated with it. The higher is the capacity of a company to shorten the process a product gets into a customer’s hands the less pays for inventory. Every time the product is shipped, moved, and loaded, it costs money. IKEA saves costs with this guiding principle to minimise touches because it doesn’t have to pay the customer to retrieve the furniture and take it home.

MIN/MAX INVENTORY REPLENISHMENT SYSTEM

As an in-store logistics, IKEA uses this inventory management process to respond to store-level inventory reorder points and reorder products. The rules of this system are:

Minimum settings: The minimum amount of products available before reordering.
Maximum settings: The maximum amount of a particular product to order at one time.

The system responds to reorder points within the inventory, setting accurate reordering triggers for the minimum products available before reordering, as well as the maximum amount of a particular product to be ordered. These are based on business intelligence for inventory and the ongoing analysis of stock performance.

Sources:

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