As per the case study of IKEA provided, approximately 50 per cent of the total products are made out of recycled or sustainable products. IKEA considers the utilization of minimum number of material in making furniture, while ensuring there is no compromise of durability and quality. By the use of less number of materials, the company ends up cutting down on costs of transportation as there is use of less manpower and fuel for receiving the materials and shipping the products.
Major credit for the success of IKEA can be given to its relationship management and communications with the manufacturers and suppliers of materials for getting good prices for the overall procurement. IKEA is a retailer of high volume; purchasing products from almost 1,800 suppliers spread across 50 nations and further has been using 42 offices of trading service from all across the globe for the management of supplier relationship. There is negotiation of prices, while the quality of materials is checked on regular basis, and there is key focus on the working and social conditions. Even though IKEA has been fostering competition across the key suppliers for ensuring there is attainability of best materials and prices, the key belief is to make long term relationships of businesses with IKEA by coming in contract with the company. Thus, this increases the need to lower the prices of each and every product. As a significant example, IKEA is known for having a code of conduct also referred to as the “IKEA Way to Purchase Home Furnishing Products (IWAY), consisting of minimum guidelines and rules for assistance of manufacturers in reducing the effect of the key activities on the overall business environment (Rangan et al., 2014).
It had been identified that the plans of growth had key focus on the platforms of emerging market. In this scenario, there is an issue related to the lack of suppliers of wood and they failed in meeting the stringent standards of sustainability across the organization. On the contrary, the company has spent significant time and effort has been put in to transform the base of material while trying to become an independent producer of power, lifting condition of work by the chain of supply, and accelerating trend in the sectors of production as it becomes the biggest retailers of energy efficient light of LED across the globe. Also, there is no denial in the fact that sustainability is a key factor driving such massive growth and has ended up becoming a fundamental element in the process of decision making. There is surety that the growth strategy of the company will not, in any way, be conflicting the sustainability targets of IKEA (So et al., 2012).
Based on the above mentioned facts and experiences, it can be stated that the strategic dichotomies are treated as trade-offs by the managers when considering the management of supply chain and logistics. Also, in the achievement of sustainability when supplying wood, the managers of IKEA faced a significant issue as they put in efforts for deciding how they should be meeting the overall goals in the ambitious plan of sustainability for the company.
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