Challenges Faced By IKEA:-
Here are some of the challenges I found from the case study- * I kea’s low valued products used excessive space on load units due to packaging design which resulted in poor efficiency in both transportation and warehouse operations that created unnecessary costs.

* Involvement of suppliers was a challenge as solving the problem affects the packaging design as it affects the product design too as it got to adapt to the new packaging design where manufacturing processes are affected too.

* To discover new ways to reduce unnecessary space in packaging without altering the product design.

* Eliminate the problems related to filled air that takes a lot of unnecessary space during transportation and storage by finding out new methods for packaging.

* Another challenge would be Increase in density of the packaging would create overload and to balance the load on the trucks is to use lightweight products to fill up the left over space. That is in short to Load balance the products of different volumes to fill transportation units in regard to both weight and volume.

* For the above balancing scenario it is important to convince suppliers for a cluster supplier concept by storing one company’s product by another supplier in order to reduce space related problems.

Strategic Implementation:- * Implementation of cluster supplier concept for Glimma tea candles where a major supplier of IKEA takes responsibility for storing goods from the other suppliers for later consolidation with its own goods when orders are dispatched to CDC and warehouses in different countries. By working together with suppliers it’s possible to consolidate goods which results in load balancing of high utilization in respect to both weight and volume.

* Since many of the IKEA products where of low value it was certain that they needed to keep a constant price and sort out the problems related to maximum utilization of transportation as they formed a large part of the total costs. * IKEA had to work with suppliers when it comes to the packaging designs since in some cases the product design has to be adapted to the new packaging design as the manufacturing processes are often affected.

Lessons learnt & Success factors for Ikea * As many of the Ikea’s products are low value but high volume products, transportation costs form a large part of the total costs, for many products that is by increasing efficiency when concerned about transportation, handling and warehouse costs will be proved as an effective solution for the problems faced by companies of IKEA’ s size.

* The cluster supplier concept can lower the costs and increase the efficiency with high utilization in respect to both weight and volume.

* Involving suppliers in beginning itself can reduce the hassle as changing in packaging design can affect the product design thereby manufacturing processes getting affected in order to avoid that involvement of suppliers in beginning stage can contribute great idea involvement thereby increasing efficiency and lowering costs with good supplier relationship.

* The solution for Glimma tea candles packaging was to increase the density of the product package by removing excess air and better utilization which then decreased transportation work and costs.

* They were able to eliminate the unnecessary space occupied by large products such as pillows, mattresses and sofas which resulted in maximum utilization of transport load units and vehicles even in warehouse too. Their successful effort in making a change in package design has led to 30% increase of products per load unit. The total number of pallets shipped reduced from 60000 to 42000 pallets thereby increasing the efficient utilization of weight and volume.

Sustainability economic, environmental, social and transferability benefits
Economic Benefits: * More effective space in warehouses that could be used for storage of other products as in effective utilization of space.

* The Glimma tea candle solution accounted up to increase in 30% of load capacity which resulted in significant decrease in transportation work and costs. * New packaging made it easier for handling customer wise as well as easier for storage while warding off problems related to excessive air.

* As weight gets reduced due to effective packaging it’s easier to handle the product i.e easier to replenish the stocks.
Environmental Benefits: * Efficient packaging uses only less material required for packaging. * Less pollution due to fewer 40ft containers on road due to effective utilization in respect to both weight and volume.

Social benefits: * Reduction in noise pollution and emission benefits the society with usage of lesser vehicles. * Fewer accidents benefit the society.

Transferability Benefits * Bringing together and involvement of suppliers can be done where there are companies of Ikea’s size (Low value high volume products) by keeping in a constant price and working on the factors that lead to problems will help company to achieve goals.

* Efficient utilization in packaging by eliminating the excessive air is possible in other industries also which would resulting in better handling, reduction of weight, better storage practices and reduction in costs.