1. Challenges for the Future
Over the next five years IKEA’s strategy has been to keep expanding in the international markets which makes them to face new challenges, particularly with the distribution system. Such enormous growth urges the company constantly review its distribution structure and adapt it to the required needs. One of the primary moves the company should do is to reallocate its distribution structure in a way that the low-flow range will be stocked centrally for big regions and high-flows near to the appropriate market. Meantime, the company should work on increasing direct deliveries.
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The other upcoming challenge that the company is coping with is about organizing remote shopping over phone and Internet. Even though IKEA customers still prefer to visit the stores as it is a whole experience for them, however internet shopping and phone orders is on demand and in order to meet this expectations the company should find new and flexible distribution solutions.
2. IT’s impact on IKEA’s success
As the globalization is increasing in the retail industry in terms of sales and supplies the significance of IT is rising substantially and is playing a vital role in managing the complexity of retail operations. Major retail industry players are willing to allocate larger amounts for IT costs as they realize the importance of its application in the business as it generates numerous advantages over the competitors and delivers value.
IT has played a great role in IKEA’s success and this is because the company was not merely integrating these systems into its operations but also coinciding them with its strategic goals. At the same time, IKEA was able to maintain successful in the market as it was evolving the IT systems in the company as the business was growing starting from simple and base systems to finding complex solutions to complex problems.
2.1 Competitive advantages from IT’s implementation
In this dynamically moving business environment it is a challenge for companies and organizations to sustain their competitiveness. Today by integrating IT systems in its everyday operations, IKEA has empowered its grounds in the market as these systems provide best information that the company needs to do its task more effectively. It has quick access to information and it minimizes the errors in business transactions. At the same time it serves as a powerful competitive tool for IKEA to interact with its customers, supplier and employees in an effective manner that contributes to a mutual benefit by making its stakeholders loyal to the company.
Today, due to its successful Supply Chain Management system IKEA is able to achieve cost benefits and offer reduced prices to its customers. At the same time the implementation of Supply Chain Management system in its global planning has given IKEA the opportunity to reduce its stock level and increase the service level. This in its turn contributes to the overall satisfaction of the company clients and supplier. Contrary to its competitors, IKEA is able to detect and cope with problems related to the supply chain at an early stage which helps the company to have a balanced chain. It also has an accuracy in its forecasts and better visibility and efficiency in its overall supply chain.
In summary, the IT implementation in various business operations gave number of competitive advantages and benefits to IKEA. Today the company has improved its overall operations in the market and runs the company with a better and global view. These IT initiatives gave the company long-run significant competitive advantages in the market that will contribute to improved profits.
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2.2 Lessons learned from IKEA’s IT applications
IT systems became the heart of IKEA operations and it plays an important role in alleviating pressure points in its business transactions. On the other hand, those companies who do not manage their IT systems effectively it becomes a problem rather than solution, especially when a retail industry player has to deal with advanced planning and scheduling systems, merchandizing and inventory management systems. However, these systems play crucial role in retail operations and when the company uses it effectively, it can improve efficiency and increase revenues.
In IKEA’s example we learn that the company matched its IT systems to its existing culture and found success in its initiatives. Their objective was not to create a sophisticated systems but systems that could promptly respond to the employees’, suppliers’ and customers’ specific needs.
One of the success factors that have to be taken into consideration was that IKEA did not compromise its corporate culture by using information technologies. The company was aware that these systems exist to support people and not the technologies. They understood that those tools should not have negative impacts on healthy and powerful organizational culture as these tools are not capable to replace the nuances of the human experience.
Another important aspect that has to be taken into consideration is the change management in IKEA, when implementing new IT projects. Most of the IT systems integrated by IKEA have been implemented successfully as the company spent money and efforts to support workers to adapt to methods and tools by creating awareness and interest among the employees, trying out the solutions and adapting to the change.
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