Product development and innovation
The county of Småland in Sweden is the heart of all IKEA product development. The IKEA product range is the core of the IKEA business. It is developed to inspire people and provide solutions to everyday home furnishing needs. Each year, we introduce approximately 2,000 new products to the IKEA stores. The complete IKEA range consists of approximately 9,500 products.
The IKEA business idea is “to offer a wide range of well-designed, functional home furnishing products at prices so low that as many people as possible will be able to afford them”. The key to the success of IKEA products starts with an understanding the different needs of people all over the world.
Democratic Design is our backbone
Democratic Design enables us to develop better products at lower costs. When our designers develop a new product, they consider the five dimensions of Democratic Design: form, functionality, quality, sustainability, and low price.
Products to enjoy for years
IKEA products must not only be functional but also well-made and durable. That’s why our designers are involved throughout the whole development process. From construction design and choosing the right material, to testing the prototypes. We want people to enjoy our products for a long time.
At the IKEA Test Lab, we thoroughly test all our materials and products during the product development phase. All IKEA products have to be safe to use and comply with the strictest applicable laws and regulations on all IKEA markets. Third-party laboratories and institutes complement our tests and verify the work done in the IKEA Test Lab.
We use innovations in material and production technique to become less dependent on raw materials. And we want sustainability to be affordable to the many people; not a luxury for the few. People want to make a positive change for the world and themselves. To support them, we develop solutions and products for a more healthy and sustainable life at home. We don’t just want to create new products. We want to support people and help them create a better everyday life.
Communicating the IKEA home furnishing offer
People can’t buy IKEA products if they don’t know about them. We create and produce IKEA communication. Not just the well-known IKEA catalogue, but also product communictation like price tags, brochures, buying guides and other communication.
We use our knowledge of consumers and market conditions to create inspiring and effective communication. We work closely together with all retail markets worldwide to give customers a seamless multichannel experience: in the store, on the web or in the catalogue.
Purchasing & Logistics
The way we work with supplying has always been an important contributor to realising the IKEA vision and business idea. By taking an interest in efficient production and constantly working to lower logistics costs and find ways to handle goods efficiently, we strive to be the good link between suppliers and customers.
The goal of the Purchasing & Logistics organisation is to take the lead for optimising the total IKEA value chain, contributing to the goal of providing better products at lower prices. We want to be economical with resources, finding more efficient ways to manufacture products and striving to make more from less.
We are proud of the results we achieve, but also how we achieve them, demanding that production and other supplier activities are done under working good conditions by suppliers who take responsibility for sustainability. We are constantly developing our partnership that is based on trust, respect and transparency to improve the way we work and grow together with our business partners.
How we organise in Purchasing & Logistics
IKEA Purchasing & Logistics is divided in eight business units: IKEA Components, Regional Supply Teams, Purchasing Development, Logistics Development, Sales & Supply Planning, Transport & Logistics Services, Purchasing & Logistics Areas, and Quality Support Centres.
Purchasing Development is divided in eight category areas: 1) Flatline, 2) Wood & Fibres, 3) Comfort, 4) Textiles, 5) Electronics, 6) Metal, Plastic & Float Glass, 7) Specific Home Furnishing Business (stearin, tableware, green plants, etc.) and 8) Food.
We have nine Purchasing & Logistics Areas that are named after the region they operate in: 1) South Europe, 2) South East Europe & Pakistan, 3) North Europe, 4) North East Europe, 5) Central Europe, 6) Americas, 7) South Asia, 8) South East Asia and 9) East Asia. Each Purchasing & Logistics Area is responsible to develop, lead and secure an optimal support structure for all business units in the region.
Logistics in Inter IKEA Group includes handling, planning and execution of the global goods flows with involved organisations and functions such as Transport & Logistics Services, Customs Service Centres, Regional Supply Teams, Quality Support Centres, Logistics Development with Distribution Network Design, Capacity Planning, Warehousing Logistics and process development of the process ‘Providing Products to our Customers’.
At IKEA Purchasing & Logistics, we want to make the most of our competitive advantage of economies of scale. Our large-volume approach enables us to invest in efficient industrial production set-ups and focus on affordability, accessibility, sustainability and quality.
A lean and efficient value chain
We design the total supply chain network for maximized overall efficiency. We do this for example by locating the material supply close to the production, or by locating production closer to sales markets, and by strategically planning the locations of our distribution units. This helps to reduce transportation cost and CO2 impact in the value chain.
Logistics is an integrated part of the business
We want highly efficient distribution all the way from suppliers to customers, and logistics is considered at all stages. From product development, raw materials, and suppliers all the way up to the customer’s home. Future development will also increasingly include reverse flow and recycling.
Our suppliers play an important role in this success. Long-term relationships allow us to optimise logistics throughout the value chain. We always try to reduce transport; about 20% of products are shipped directly from suppliers to the IKEA stores.
Purchasing and logistics are also integrated within our Business Areas at IKEA of Sweden, striving to develop accurate sales plans and balanced supply plans for maximized product availability at lowest total cost.
Close, long-term relations with suppliers
Our supplier relations are based on a strategic fit -shared business model and values with a long-term view. All supplier partnerships are characterised by mutual respect, trust and transparency. This close relationship between IKEA and its suppliers leads to better products and services at a lower cost and a shorter time to market.
That’s the average number of years a supplier has been a partner to IKEA. Right now we have partnered up with 946 home furnishing suppliers in 51 countries.
Partner with us: become an IKEA supplier
We are constantly looking for partners who have the right strategic fit for long term growth with IKEA. Read more about partnership with IKEA.
Sustainability benefits everyone
Sustainable business practices increases resource efficiency in everything we do. Using fewer resources and raw materials means a lower environmental impact but also lower costs. For example, we have officially said goodbye to wooden pallets in our goods flow. Instead, we use paper pallets and loading ledges. This solution is not only more sustainable, it improves filling rate and significantly reduces handling material costs.