Logistics: an essential link for Ikea
The success of Ikea, the Swedish furniture giant, needs no introduction. Yet one of the ingredients behind it is far less well known: the management of its logistics. It is, in fact, through the management of its supply chain that Ikea is able to remain affordable.
Until recently, anyone wishing to buy that beautiful Ikea wardrobe spotted at a friend’s home had to visit one of the Swedish group’s 36 stores in France. Once there, the challenge was to find the desired piece among the group’s thousands of product references. While this option remains available, it is now much easier to order the desired furniture online and then collect it from a dedicated site. Or, better still, have it delivered directly to one’s home.
The Swedish group embraced omnichannel sales in 2012 and now generates 20% of its revenue from online sales in France. That figure rose to 35% in 2020, amid travel restrictions related to the health crisis. “We are constantly developing our logistics activities and network to meet our customers’ needs. We are investing in logistics so that we can carry out operations more efficiently and ergonomically,” says Magnus Westerberg, Service Operations and Fulfillment Manager at the Swedish group. E-commerce flows and flows destined for stores are handled in separate fulfillment units. When an order is placed online, products may come either from the nearest store or from a central warehouse, depending on inventory levels. Algorithms based on orders already placed are supplemented by predictive calculations over different time horizons, ranging from three months to 10 years.
Automation and the creation of new distribution centers
To remain competitive and affordable to as many people as possible, Ikea has had to optimize its supply chain to meet growing demand without increasing prices. “Logistics is key to remaining competitive. It requires us to build an extremely efficient supply chain, with as little downtime and storage as possible,” Magnus Westerberg continues. The majority of volume no longer even passes through Ikea warehouses. Items are delivered directly from suppliers to stores.
“For items that need to be modified, four distribution points serve France: Dortmund, Metz, Fos-sur-Mer and Piacenza. To these distribution points, three hubs specifically dedicated to online sales must be added: in Lyon, Chartres and Gennevilliers,” adds Magnus Westerberg. In Gennevilliers, moreover, the group leases a multi-story building. To shorten its supply chain and delivery times, Ikea also plans to open two further hubs dedicated to online sales: one in Limay, in the Yvelines department, covering more than 70,000 m², and another in Toulouse, covering 10,000 m², to serve southwestern France. “In addition, two units are currently being automated to reduce storage and distribution costs: Lyon’s parcel distribution center and Metz’s central distribution unit,” adds Ikea’s operations manager.
Paris by barge
The group also wants to reduce the carbon intensity of its deliveries. To achieve this, Ikea already delivers to its customers in Paris by barge from Gennevilliers, then by electric truck via the Port of Bercy. “Our new customer distribution center in Limay, on the Seine, should enable us to develop this river-delivery model in the Île-de-France and Normandy regions,” Magnus Westerberg explains. Today, 30% of truck deliveries are zero-emission, and the Swedish group is targeting 100% from 2025 onward. “This system has enabled us to make 40,000 low-emission deliveries, via the Seine and electric trucks for the last mile,” Magnus Westerberg concludes.
