Question

Strategically, having more than 1,000 suppliers results in a complex task of managing those suppliers, 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?

Answer 1

Answer:

There are pros and cons of having 1,000 different suppliers for IKEA. In one way you can are not limited to choice, price or quality and have enough suppliers to shift production requirements to meet demand surges.

However, manage 1,000 different suppliers can also lead to quality issues that are difficult to sustain. IKEA can do a number of things including:

Explanation:

• With so many products, IKEA can categorize each supplier e.g. fabric suppliers, wood suppliers, kitchen etc. In this way, it will be easier for different departments to be set up that actively manage these category of suppliers.

• Since IKEA is a global brand, they can further categorise each supplier based on location. For example, they can have suppliers for the Asia-Pacific Market, other suppliers for the Middle East and another group for Europe and North America.

• IKEA can also outsource is supply. Going by an 80:20 strategy where 80% of them are direct suppliers while 20% of them are outsourced, third part suppliers who only step in when required.