Table and services to best assist the last customer

Table of contents

Table of contents. 1
Abstract. 2
Introduction. 2
Supply chain management concept definition. 3
Literature review.. 3
Best value supply chain comparing to traditional value. 3
Supply chain cycle. 4
Supplier management. 4
Logistics. 4
Inventory. 5
Purchasing. 5
Cost. 5
Accuracy. 5
Importance of supply
chain management. 5
Principles of supply chain management. 6
Evaluation and optimization method of SCM.. 6
Supply chain and value chain. 6
Abstract: 8
Introduction. 8
Supply Chain Management and Competitive Strategy?1.1 The Environment, Resources, Objectives, and Feedback Decisions Used
in. 9
Strategic View.. 9
1.2. Supply Chain of IKEA. 9
2. Customer Fulfillment and Environment Scanning. 10
2.1. Creating Value for Customers through the Supply
Chain. 10
.2. How IKEA Monitors Customer. 10
2.3. Environmental Scanning for the Company. 11
2.4. Important Forces of Change Influencing the Supply
Chain Strategies. 11
3. Supply Chain Processes Thinking and Order Fulfillment. 12
3.1. Strategies Used by the Firm as Part of Its SCM.. 12
3.2 The order fulfillment processes according to the
SCOR model 12
Conclusion. 13
References. 13

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Supply chains encompass the companies and the
business activities needed to design, make, deliver, and use a product or
service. Businesses depend on their supply chains to provide them with what
they need to survive and thrive. Every business fits into one or more supply
chains and has a role to play in each of them. The pace of change and the
uncertainty about how markets will evolve has made it increasingly important
for companies to be aware of the supply chains they participate in and to
understand the roles that they play. Those companies that learn how to build
and participate in strong supply chains will have a substantial competitive
advantage in their markets, in the wider view of supply chain thinking, are now
seen as part of the work wanted to achieve client needs, Supply chain
management views the supply chain and the organizations in it as a single unit.
It carries a systems approach to understanding and handling the different
activities needed to organize the movement of goods and services to best assist
the last customer



In the current focused situation inventory network administration
expect a noteworthy significance and calls for genuine research consideration,
as organizations are challenged with discovering approaches to meet
consistently rising client desires at a sensible cost. To do as such,
organizations must pursuit out which parts of their supply chain  process are not competitive, comprehend which
client needs are not being met, build up change objectives,  what’s more, quickly actualize important
enhancements,  In training, supply chain
based companies have used different performance management tools to maintenance
their supply chain policies. Checking and development of performance of a
supply chain has become an increasingly difficult task a complex performance
organization system contains many management processes, such as identifying
measures, defining targets, design, communication, checking, reporting and
response, Companies that learn how to recover management of their supply chain
will become the new achievement stories in the world-wide market place. “Study
on Benchmarking shows significant cost differences between organizations that
exhibit best-in-class performance and traditionally, Supply Chain Management
(SCM) has been a melting pot of various aspects”, with influences from
logistics and transportation, processes management and resources and scattering
management, marketing, as well as buying and information technology . Ideally,
the all-inclusive attitude of SCM holds each of these functions to produce an
overall supply chain strategy that eventually improves steady routine

Supply chain
management concept definition


Many researchers defined SCM
by different definitions but they all agreed to that SCM is “consists of the
integration activities taking place among a network of facilities that procure
raw material, transform them into intermediate goods and then final products,
& deliver products to customers through a distribution system”. While the
separation of supply chain activities among different companies allows
speciality and economies of scale, there are many important subjects and
problems that want to be fixed for effective supply chain process – this is the
main determination of SCM


Best value
supply chain comparing to traditional value

Researches proved that in order to compare
between best value and traditional supply chains you have to
depend on 9 theories which are transaction cost economics, agency theory,
resource dependence theory, institutional theory, game theory, network theory,
social capital theory, strategic choice, and the resource-based view/knowledge
based view

Theoretical perspective

Best value supply chains

supply chains

Transaction cost economics

Focus on total costs, not just transaction costs, as the basis
of make or buy decisions.
Short term costs play a secondary role if the potential for long
term, trusting relationships exists

Focus on transaction costs as the basis of make or buy
Opportunism undermines trust; short term costs are a primary

Agency theory

Use payment constructions and cultural effectiveness to align
members goods Possible for opportunism minimized

Interests of supply chain members only partially aligned Strong
potential for opportunism

Resource dependence theory

Supply chain members recognize that dependence can create self-control
and trust

Each member tries to avoid becoming dependent on others and
tries to make others dependent on it

Institutional theory

Use industry formulae and best practices to notify, but not command,
supply chain management activities

Rely deeply on manufacturing recipes and best performs to lead
supply chain management activities

Game theory

Mutual dependence and trust overcome members? temptation to
pursue self-serving behaviour

Some members use free riding, hold up, and leakage to benefit
themselves and to the detriment of the chain

Network theory

A blend of strong and weak ties that matches supply chain needs
is created in order to maximize supply chain performance

Strong and weak ties formed on a case-by-case basis rather than

Social capital theory

Shared goals, standards, and experiences create shared sense
making and better performance

Mix of shared and firm-level goals, values, and experiences
circumscribe shared sense creation

Strategic choice

Planned choices made with fear for the chain as the primary
driver. This strategic supply chain management opens the door to single
blended plans that exceed the stable

Strategic decisions made with concern for the firm as the principal
driver. This approach makes firms to using a generic strategy such as
prospector or low cost leader

Resource-based view/knowledge based view

Assume that unique resources exist at the supply chain level,
and that supply chains can be unique cheap weapons

Assume that unique resources reside within firms. Supply chain
management is thus a tool to
 accompaniment these

Supply chain

 Supplier management

Supplier management is what
most people observe supply chain management to mean. And, truly this is where a
lot of supply chain leaders occupy their time the ground of supplier management
contains the cost of goods negotiations, on-time transfer management,
quality audits and management, new product progress — to name a few areas of
emphasis. Your supply chain team will work with your dealers’ customer service
groups, engineering teams, quality teams and even supply chain


Logistics and supply chain aren’t
the same things. Logistics is the management of the
movement of goods whereas supply chain management covers the many other areas
we’re discussing here however logistics is a portion of supply chain and that
means whoever achieves your supply chain will be in charge for managing load
forwarders, shipping companies, parcel delivery companies (like Fedex and UPS),
Logistics workers should be succeeded in the same way that you manage your
suppliers Prices and agreements can be
negotiated You can source freight forwarders the same way you would basis suppliers of the goods you want.


The difference between paying
for logistics and paying for inventory is that when you incur the payment for
logistics you’ve received that profit. A logistics provider ships something to
you and you pay them. You’ve invited the outflow for a service reduced but
inventory is a two-edged sword Often, you’ll pay your suppliers for your
inventory and you’ll have the product you just paid for but you haven’t
received the profit of that product That profit comes when you sell it.



managers can develop into supply chain specialists, but it takes an
understanding that the transactional activity of obtaining is only a minor
slice of what supply chain management is.





Managing the
cost of your company’s products, the value of your overall inventory and
logistics expenses that’s all your CFO is going to need to identify your supply
chain leadership is handling. Supply chain management is individually located
to be the cost display at your business.



Supply chain management
needs to make sure the original data that drive on-time transfer reports and
other provider performance facts is exact therefore requires reviews of your
interior procedures and checks at your dealers.

Importance of supply chain management


inventory cost

customer satisfaction as well as service

better trust between partners

efficient manufacturing strategy 

cash flow

quality and gives higher profit

process integration

better trust between partners

of supply chain management


1st principle indicates that if organization has “quick
response” simpler supply chains in terms of topology or the sort of nature to
the item being traded preferred to be more complex

2nd principle shows that associations need to deal with
their supply chains on the premise of their action, dedicating greater
administration assets to exceedingly active ones when contrasted with less
active ones

3rd principle allows organizations to better understand their
supply chains by decomposing 12levels on the sorts of changes required, and the asset suggestions that
these progressions will have on the operation of the supply chain

and optimization method of SCM


There are a lot of techniques has been
suggested for SCM evaluation, however most of them are for simple SCM
applications and cannot evaluate the newer generation of applications

In order to evaluate the more complex supply
chain it has to be a cause and effect relationship. If the cause and effect
are not satisfactorily reflected in the BSC, it won’t interpret and convey
firm’s vision and methodology

For Example: Adaptability of administration frameworks to
meet specific client needs will probably meet client desires higher level of
client expectations this will lead organizations to supply more imaginative
items and administrations this thusly will expand the piece of the overall
industry and gainfulness

The most critical measures of SCM
achievement can be the last level of administration, consumer loyalty and
production network aggressiveness and productivity in general However as these
are hard to quantify or use as a rule to screen change, more operational
estimation techniques and records were produced

Overview of execution measures demonstrated
that the total cost and client responsiveness rule as the regularly
specified measures

Supply chain
and value chain






The integration of all the
activities involved in the procurement, conversion and logistics of the
product is known as Supply Chain.

Value Chain is defined as
the series of activities that adds value to the product.

Originated from

Operation Management

Business Management


Product Request – Supply
Chain – Customer

Customer Request – Value
Chain – Product


Customer Satisfaction

Gaining competitive

Value Chain refers to the range of activities that adds value at
every single step in designing, producing, and delivering a quality product to
the customer

























Case study



The case study research is mainly
concerned with application of supply chain strategy through discussion of
IKEA’s strategic business purpose. the case study aims to study the supply
chain organization and good strategy applicable to IKEA. It has been test how
the overall innovator in furniture exchange gapped through necessities and
advancements and as still extending by molding best routine with regards to
business forms



As characterized by Cox (1999), and Harland (1996),
Supply Chain Management (SCM) suggests to a procedure of dealing with an
interconnected business arrange which gives goods and services to the end
clients. In this case study, the contextual analysis focuses on the way in
which the SCM procedure of IKEA happens. The company mainly involves in the
distribution of furniture goods and it also proposals other household things.  As examined, the idea of vibrant inventory
network administration and its purpose is under discussion. Stephen (1997) argues
that the store network recognition and the majority of its capacities exhibit a
noteworthy susceptibility to the idea’s definition and degree. It connects with
Tan (2001) who considers that still there is deficiency of generally accepted and
large acknowledged term of strategic supply chain management.

From this point of view, the case study would at first
talk about the IKEA’s store network (SIM) by focusing on its business reason.
This would involve its SCM and competitive system, client satisfaction, environmental
examining and supply chain forms thinking and arrange satisfaction.




1. Supply Chain Management and Competitive Strategy?1.1 The Environment, Resources, Objectives, and Feedback Decisions Used

the Strategic View

Resources The company’s outlets around the globe have highlights that empower
both the company and the clients to profit through the shopping exercises. The
employees of the organization are given exceptional training keeping in mind in
order to guarantee that the quality is kept up in the general SCM process (procuring,
storing, manufacturing, and delivery processes).

Objectives It is noteworthy that a majority of the organization’s stores are situated
in the economically developed countries in Europe, America, Asia, and the
Middle East, and emphases on operating in highly lucrative markets.

Feedback decisions IKEA’s client centric strategy entails obtaining feedback from customers


1.2. Supply
Chain of IKEA

It portrays that the operations
are performed through different stages.




2. Customer
Fulfillment and Environment Scanning

Creating Value for Customers through the Supply Chain

The company focuses on
assuring consumer loyalty through the arrangement of tremendous persuade and
value among the shopping experience. Accordingly, products that meet the
requirements of the clients are furnished along with services that support the
clients to effectively distinguish, buy, transport, and use the product. In
this unique context, an extensive variety of items are accessible at the stores
for the clients to look over and the stores are planned to empower clients to
effortlessly check the items. The employees are placed in various sections
inside the outlets to help the clients. Additionally, suitable packaging is
encouraged through self-get together level packs which contain the important
guidelines and instruments. Additionally, IKEA has set up facilities, for
example, parking, a food court, supervised children’s play area, the mini
cinema, etc., to provide the customers high convenience in their shopping
activities and add value to the brand 


.2. How IKEA
Monitors Customer

Satisfaction and Deals With its Partners Customer satisfaction is
constantly checked by IKEA through the feedback gotten directly by interacting
with clients. Importantly, the company monitors the request for the products at different price levels, in
order to confirm that prices are set in a way which would attract higher numbers of clients.

Environmental Scanning for the Company          



Large and diverse product portfolio.?International operations.?Globally recognized brand image.?Ability to generate high levels of
customer satisfaction.
Continuous emphasis on innovation (Inter IKEA Systems) Strategies of
low wastage, low cost, minimal environment pollution, and attractive pricing.
Highly integrated supply chain.
Long term relationships with suppliers and partners.

Annual price reducing strategy impacting profitability.?Differences in quality standards in
different markets.
Customization of products is low – due to standardization of products.?The low cost strategy could affect
product quality in the long term.




Expand operations in the existing markets. Emerging markets in Asia
and South America could be tapped into.?Expand the
use of online markets.?Enhance the
presence in the food industry.?Focus on
entering new industries which competent the current product portfolio.

High level of competition in the global markets. Growth in competitive
economic downturns.?Increased
regulatory barriers in different markets.



Important Forces of Change Influencing the Supply Chain Strategies

IKEA’s SCM strategies are influenced by its ability to maintain the
appropriate quality standards, efficiently satisfy customer requirements,
minimize environmental impact, and generate higher returns in long run.
Emphasis is laid on adapting to the changing requirements of the customers by
updating the product portfolio annually. Also, the company focuses ensuring
that the customers are able to obtain and use the products with utmost

3. Supply
Chain Processes Thinking and Order Fulfillment

Strategies Used by the Firm as Part of Its SCM

The main strategies used by the company are cost leadership and product

•Lowering costs borne on procuring raw

•Minimizing wastage.

•Decreasing operational errors by
increasing employee efficiency.

•Stakeholder integration and commitment
towards quality

•Way of Purchasing Home Furnishing

•range of new products


3.2 The
order fulfillment processes according to the SCOR model


• Plan – Classifying the manufacture
requirements according to the request and determining the applicable costs and
the logistics required

• Source – Ordering the needed raw
material from the applicable suppliers.

• Make – This entails efficiently dealing
the resources for the production activities and subsequently manufacturing the goods
in line with the quantity and quality requirements.

• Deliver – Distribution processes are
used to deliver the products to the storage units, sales outlets,

• Return – Clients are provided with a
guarantee for the products they purchase.

• Enable – Integrating all members in the
SCM process by making them conform to the WAY code, conducting constant
research identify and remedy any shortcomings, and involving employees in the
innovation process

1.4. Conclusion


IKEA’s supply chain case study that it offers an extensive variety of products
to the end customers. Additionally, the great demand for the products that the
company offers, requires it to keep high quality standards in its goods and
operational exercises. IKEA’s market position in the global markets is due to
its solid brand image, international nearness, effective money related
administration, customer centric policies, and innovation, and strong relations
with its suppliers and partners. Importantly, the efficiency and judicious
policies associated with the SCM process has enabled IKEA to originate
financial benefits and enhance its competitive experiences. This thusly has
guaranteed that the companies satisfy its hierarchical destinations while
proceeding to expand its position in the market.



















Aziz Muysinaliyev, Sherzod Aktamov School
of Management, Shanghai University, China

Difference Between Supply Chain and Value Chain