Ikea Business Idea

I attended the Star's Business Networking Series 2007 on 'Accessing A Global Supply Chain' yesterday. The talk was organised by The Star and the Global Malaysians Network, a project initiated by Asian Center for Media Studies.

It is not often that one gets a chance to listen to the home lifestyle retail giant giving a peek into its business model. According to its Southeast Asia trading manager, Mikael Demitx-Helin, Ikea’s success in the furniture retail business stems from its close cooperation with suppliers globally.

He said Ikea took part in every level of the supply chain, right from the sourcing of raw materials, to the transportation and distribution to customers through its stores. It is interesting to note that Ikea has 26 distribution centres around the world and it is an increasing challenge for the company to transport finished products direct to all its stores worldwide.

Ikea's competitive advantage is definitely its business model which strives on continuous improvement, best prices, quality products, self-service, production centric design, proactive partnership with suppliers (1500 suppliers in 46 countries) and an integrated global supply chain.

Malaysian companies who are interested to supply to Ikea can contact their material managers based in Ho Chi Minh, Vietnam. Ikea sets a high standards on its working relationship with suppliers. It has a strict policy against environmental degradation, child labour and shoddy working environment at the suppliers' place.

Inter Ikea Systems business support manager Andreas Otto said this close interaction among the suppliers, Ikea and customers were the main reasons behind the group’s success. The group recorded sales worth 17.3 bil euros last year, up from 14.8 bil euros in the previous year. Ikea's revenue growth in the last 10 years has been phenomenal.

This is obviously one of my more memorable projects.