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IKEA, the world’s largest furniture manufacturer and retailer, is a fine example of how effective inventory management can help a huge business with over 9,500 products in stock in every store run smoothly and live up to customer expectations. Drawing on this comprehensive IKEA case study, here are some inspiring inventory management strategies from IKEA that can help you grow and develop your business.

Long-term, Sustainable Relationships with Suppliers

IKEA has 1,800 suppliers in 50 countries. While the company does encourage competition between suppliers, it signs long-term agreements with them. This allows for a steady stream of supplies to come in and steady prices, which in the long run helps save inventory management costs.

Do-it-Yourself Assembly and Flat Packaging

IKEA uses a DIY approach to product assembly to lower packaging and inventory order and management costs. Most IKEA products are sold in pieces bundled in flat packaging, which the customers themselves can easily assemble at home. Flat packages take up less space both in the trucks with which they are transported to stores as well as in the store warehouse. They are also easier to handle. Consider how your products are sold and shipped. Can you improve the packaging in any way to lower your inventory costs?

Cost-per-Touch Inventory Strategy

IKEA uses a cost-per-touch inventory strategy that encourages customers to select the products in the store and take them to checkout themselves, instead of having staff retrieve it for them. In the world of inventory management, it is a well-known rule that the more hands touch the product, the higher the inventory management costs. Could your business adopt a similar approach, involving customers more in the actual, physical product retrieval from your store to lower inventory management costs?

Optimal Material Use in Product Manufacture

IKEA uses as few materials as possible to manufacture products, which results in lower transportation costs, as well as in lower product handling and shipment costs. More than half of the company’s products are actually made from recycled or sustainable products. If your business manufactures the products it sells, using a similar approach can lower your inventory management costs.

Min/Max Inventory Replenishment Settings

IKEA relies on a minimum/maximum settings inventory replenishment process. This 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.

An online inventory management system such as DataQlick comes with powerful business intelligence tools that enable you to understand your inventory performance even if you’re not an expert, as well as to set minimum and maximum order values for individual items in stock.