Documente Academic
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Documente Cultură
On IKEA Inventory
Management
Practices
By Group 10
Tuhin Banerjee
Pratyush Samantaray
Inventory Management decisions have a direct
bearing on company's balance sheet.
Company’s
reformulate their
inventory strategies
to stay ahead in the
competition in
challenging times
Inventory
Inventory Levels are always on radar of financial controller as well as Top Management
Costs Relevant to Inventory Management
• Procurement costs
– Price of the goods
– Cost of preparing the order
– Cost of order transmission
– Cost of production setup if appropriate
– Cost of materials handling or processing
at the receiving dock
• Carrying costs
– The primary cost is the cost of money
tied up in inventory, but also includes
obsolescence, insurance, personal
property taxes, and storage costs
• Out-of-stock costs
– Lost sales cost
– Backorder cost
Inventory Management Objectives
• Takes into account the distribution and handling patterns of items from stores.
• Important when obsolescence is to be controlled.
F – Fast moving
1. Average Stay of the item in inventory
S – Slow moving 2. Consumption Rate Of the item
N – Non moving
• High Flow and Low Flow DC - IKEA’s store operations are supported by high-flow
facilities (focused on the 20% of SKUs that account for80% of the volume)
Pull vs. Push Inventory Philosophies
PUSH - Allocate supply to each PULL - Replenish inventory with
warehouse based on the forecast order sizes based on specific needs
for each warehouse of each warehouse
Demand
forecast
Warehouse #1
Q1
A1
A2 Q2 Demand
Plant forecast
Warehouse #2
A3
Q3
10000