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Write a short description (services, customers, location and business model) about the business that you have identified. (10%) Services – what are the products and/or services the company sells or offer' Products that IKEA sells are furniture and materials that allows customer to assemble the furniture themselves. Material such as: wood, metal, stainless steel and many more. IKEA store provides services such as Measuring services, Delivery services, Installation service and Assembly service. Measuring service is a crucial part of the kitchen buying process, measuring not only allows customer to check their chosen kitchen will fit and see what changes need to be made, it ensures the success of customers’ installation. While many of our IKEA products are easily self-transportable, IKEA has arranged for an appointed delivery service provider to provide customer with reliable delivery services should they require them. One delivery trip to anywhere in mainland Singapore costs $50 and onwards. All IKEA products are designed to be easy to assemble and install, but if customer prefer not to do it themselves, IKEA recommend services at reasonable prices for kitchen/bathroom cabinet and electrical installation. Depending on how much help customer wants, they can choose from IKEA’s installer’s menu of services: from part installation to a fully comprehensive, customized service. Assembly and installation are done by an independent company. Most IKEA products are flat-packed with instructions so that customer can assemble them at home. However, IKEA also provides affordable in-home assembly service. Apart from the loaning of tools for dismantling of purchased AS-IS products, IKEA also offer complimentary short-term loans of power drills for wall drillings. The IKEA store provides everything that is needed for convenient shopping: pencils, notepads, tape measures, store guides, IKEA catalogues, shopping bags, strollers and trolleys. IKEA open a café name IKEA Restaurant to allow customers to relax and enjoy the delicious food after the long hours of shopping. Free shuttle bus is available for customer to hop on for a free ride to and from IKEA store. IKEA are confident of their quality that is why they offer excellent Everyday Quality guarantees on selected products; Frame, Base linen/supporting fabrics, Legs, Fittings, Armrests, Filling and Mechanisms. IKEA will examine the product and decide if it’s covered under this guarantee. IKEA will then, at its choice, either repair the defective product or replace it with the same or a comparable product. In these cases, IKEA will be responsible for the costs of repairs, spare parts, labour and travel for repair staff that IKEA incurs, provided that the product is accessible for repair without IKEA incurring additional expenditure to gain access. Customers – who are the customers' Does the company segment their customers and how are these customers targeted and handled' The targeted customers of IKEA are young family, college students or single people. IKEA target on “Do-It-Yourselfers”, by doing it yourself, the price of furniture will be relatively cheap. Therefore, the key target market comprises those just starting out who are in need of relatively cheap, sturdy furniture. By providing the Assembly-Yourself service, customer can purchase the product that are not being assembled. It can reduce their cost in buying the “ready to be used” furniture. Location – where are the locations of the head office, regional offices, branches, plants and retail outlets' (Location of these offices may affect the co-ordination of purchasing, manufacturing, distribution and sales) IKEA has only 2 branches in Singapore; IKEA Alexandra and IKEA Tampines. IKEA Alexandra is at the West side of Singapore, while IKEA Tampines is at the East side of Singapore. Where are IKEA products manufactured' Sweden. Business Model – how does the company generate revenue or “make money”' Business-to-Business (B2B) Business-to-Consumer (B2C) Section 2 Describe the materials used in your business; BOM. Describe where to purchase the material and how much and how to make the product. Do BOM (bill of materials). Section 3 (i) Purchasing What is the purchasing process adopted' IKEA uses the B2B system in order to integrate with their suppliers for transparency, visibility and to exchange real time information. From the suppliers side, internet access and a computer is required. Because all the information is provided online, it reduced the workload of the internal administrative for IKEA and for its suppliers. Because of the IKEA suppliers system (ECIS) the Company is able to trade information with their suppliers such as order information, transport booking, sending order confirmation (the supplier), and invoices. Usually this is referred as Electronic Data Interchange (EDI), since both the organization and their suppliers can exchange business information in a standardized electronic form; a database is used within IKEA’s Enterprise Resource Planning (ERP) information system in order to store all this kind of information. The connection between the organization and their suppliers is achieved by the use of extranets, where the supplier with an internet connection, connects to the intranet of IKEA. In the IKEA’s intranet several types of information can be found, such as specifications, transport information, forecasts, and customs information. In order for the company to integrate their suppliers into their systems other technologies are used as well, such as purchase management system, and the carrier integration project. IKEA merges all its total needs and then the orders are sent to their suppliers though one system, which it is the purchase management system. A quotation management system is used in order to assist their suppliers; all the submitted quotations are in a standardised format. At the carrier integration system, IKEA traces online with an EDI system all their products, in order to view the status of their products and have a global communication platform. What does your company have to buy' How much does your company need to buy' Since IKEA does not produce raw materials on their own, they require from their suppliers and manufacturers.   Main raw materials used in IKEA products are wood, cotton, metal, plastic, glass and rattan. For IKEA retail, Shopping Carts is needed. Expected Order Quantity (pcs): 30,000 pcs. http://www.alibaba.com/activities/features/ikea.html The primary division of IKEA is their suppliers, since the company does not produce the raw materials on their own. They require from their suppliers and manufacturers to follow some specific standards and methods in order to co-operate with them, IKEA refers to this standards as IKEA Way (IWAY) (IKEA 2008b). In order to assess the environmental impact of its products, the company created the e-Wheel (IKEA 2008c), which can also help the suppliers, by understanding the environmental impact of the products they supply. In order to avoid the waste that usually is created during the manufacturing, IKEA suggested to their suppliers to reuse the wasted material in order to manufacture other products. The organization uses recycling and reusable resources in order to produce more products when older products reach the end of the e-Wheel lifecycle. The agents of the Company are responsible to negotiate the prices with their supplier, placing orders, purchase the materials, check the quality of the products they supply, and investigate if the standards that the Company has provided are followed.  For each item your company buys, who does it buy from' Give suitable examples to illustrate single or multiple suppliers. Give reasons why. Multiple suppliers. IKEA has multiple suppliers for its material. IKEA needs to order raw materials and also furniture from suppliers. Therefore, IKEA has multiple supplies. IKEA classified their suppliers into two groups. One is raw material another one is outsourcing furniture. (Reasons favouring multiple suppliers: IKEA choose to have multiple suppliers as it can spread the risk of supply interruption. Multiple sources allow IKEA to spread the risk of supply interruptions due to a strike, quality problem, political instability, or other supplier problems. By having multiple suppliers, IKEA will have more information about market conditions, new product developments, and new process technologies. Make or Buy decision' Make and Buy. IKEA products can be made and buy. IKEA can buy furniture that is around designed and made from supplier. IKEA can purchase raw material from suppliers and make its own IKEA product is making in IKEA Sweden. But the raw material is bought from other suppliers. Does the company use outsourcing' Why' Outsourcing for raw material. Does your company Make-To-Stock, Make-To-Order or Configure-To-Stock' Explain the decision to use one or more approaches. IKEA choose the decision for Make to Stock. IKEA make the products to stock as its product are standardised products that sell in high volume. By producing large batches, it can keep manufacturing costs down and having these products in inventory means customer demands can be met quickly. Purchase Orders: normal PO or blanket/open-ended POs. Does it use blanket POs and why' IKEA uses blanket PO. Reason for choosing blanket PO is because it can covers a variety of items and is negotiated for repeated supply over a fixed time period. IKEA will have the supply delivered quarterly. The additional items and expiration dates can be re-negotiated. The price and estimated quantity for each item, as well as delivery terms and conditions are usually negotiated and incorporate in the order. Blanket purchase order is suitable for IKEA as IKEA needs the supplies to be delivered are required every month. Does it adopt the centralized or decentralized purchasing' Or does it use a mixture of both' Why' Illustrate with appropriate examples. i) Order Mgt What is the ordering process' Does it have online, phone or walk-in customer orders' In Singapore, IKEA allows customer to order the product only at the retail outlet. There’s no online ordering for IKEA in Singapore. However, there are other countries that provide online ordering for customer. E.g. in United Kingdom, IKEA allows customer to shop online. How are customers’ orders fulfilled' Store front outlet customers want the goods to be delivered to their homes. Customer visited the store front outlet and told the salesperson what he/she wants to order in the sales order. The Sales Order is then entered into the Enterprise Resource Planning (ERP) information system by the sales person in order to store all kind of information. Information of customer’s order such as order number, order quantity, order product, delivery mode and etc will be entered in to the ERP System. The Customer Credit Limit is checked to see if it is acceptable to continue processing the order. It is important to check whether customer has exceeds the credit limit. If the credit limit has exceeds, customer will not be able to purchase the products and the order will not be processed. The requested product or service is checked to see if IKEA inventory has available in the necessary quantity. If there is not enough quantity, IKEA will have to check whether production has been scheduled to replenish the stock of that item. By checking stock status can prevent out-of-stock situation. Prepare Delivery Order, Sales Invoice and shipping documents (e.g. Bill of Lading).IKEA financial department will prepare the sales invoice. IKEA warehouse department will prepare the Delivery order and shipping documents. It is important for IKEA to process the invoice and shipping document as these are the important documents for the customer to check whether their orders are correct. IKEA Warehouse will perform the Pick & Pack process according to the Picking List or Delivery Order. Products are picked from shelves and packed into cartons and processed for delivery. Picking list contains the information of where the product is being stored in the warehouse. By using the picking list, warehouse staffs will be able to pick and pack easily. Customer chooses to use delivery their ordered goods. IKEA warehousing will schedule transportation. Goods normally will be delivery by truck. Customer checks receipt of goods according to order placed and when delivery is in order, customer will pay based on sales invoice. IKEA Accounts Department will process customer’s payment and update customer balance. 1. Customer visits the outlet. 2. Ask sales assistant to take down the order. 3. Customer sales order entered into the system. 4. System checks the stock in the inventory. 5. System check customer credit limit 6. System prints out receipts (invoice) for customer to check their ordered items. 7. Customer makes payment using Cash, Nets or Credit cards. 8. System checks Credit Cards validation. 9. Customer goes to the pickup item corner to pick up their goods. What are the ordering channels used' Describe the channels, where appropriate. (eg online, phone, physical outlets/stores, partners, etc) Store front outlet: There are two IKEA outlets in Singapore. In IKEA store, before the customer start purchasing the product, there will be pencils and paper provided for customers to write down price tag details like where to pick up their item. Tap measures, latest Catalogue for customer to borrow, shopping carts and yellow shopping bags for those smaller items customer like. Every area in the showroom has a sales desk where a specialist can answer your questions or offer you home furnishing advice.  As you take a walk in the showroom, take a look at our price tags. Jot down the name, rack number, section number and article number of the Self-Serve red-tag items. You will need them to pick up the items at the Self-Serve Area. On the price tags, you will also find lots of other details – colours, sizes, materials, care instructions etc. On your way to the check-out, you'll pass through the Self-Serve Area. This is where you pick up the flat-packed furnishing items you saw earlier in the showroom. Picking up your purchases is an important part of the IKEA’s approach to customer involvement. Specifically, if you can do simple things like pick up your purchases and assemble them at home, we'll keep prices low. Do we have a deal' Of course, there is always someone available to give you a hand if you need it. Our cashiers accept cash, credit cards, debit cards, and IKEA gift vouchers. Most of our items are flat-packed for self-carry to help you save on your delivery costs. Should you require assistance getting your purchases home and assembled, you can proceed to delivery counter for home delivery and assembly services. Selected items need to be picked up in Merchandise Pick-Up Counter after you have paid for your purchases at the Check Out counter. Just hand the Sales Order to the counter staff. If you are not satisfied with your purchase, simply return it to us in its original packaging within 100 days, together with your receipt. We'll exchange it for another item or give you a refund. What is the percentage of orders from each of the channels used' 90% storefront 5% phone ordering. (ii) Warehousing Private/ Public warehouse' Public warehouse at Tampines and Alexandra. ▪ Services provided: ▪ Break-bulk: shipments are broken down & items are combined into specific customer orders. ▪ Repackaging: items are repackaged for specific customer orders. ▪ Price marking: print price tag ▪ Assembly: final assembly operations to satisfy customer requests. ▪ Quality inspections: perform incoming & outgoing quality inspections. ▪ Material handling, equipment maintenance, & documentation services. ▪ Storage (the space is charged per square foot or per cubic foot) ▪ Dispose returned material ▪ EDI or Internet transmissions Private warehouse in other countries. Why increase warehouse' Why not increase warehouse Centralize/Decentralize warehouse' Decentralize warehouse. 1. Does not require special warehouse. 2. Customer service high (public warehouse, customer can visit the warehouse to shop); High customer service achieved by being closer to customers. Reduces delivery times, improved responsiveness. 3. Product line is limited; Diverse products kept in multiple sites(thus, multiplying effect) means greater costs of inventory. 4. Product value is low; cheaper to hold fewer expensive items in one location than more of them over multiple locations. 5. Purchase size is small; large purchase size means more cost per purchase. Its expensive to decentralize Warehouse location' Market' Product position' Intermediately' ➢ Market-positioned strategy ▪ warehouses close to customers to maximize distribution service & improve transportation economies of scale IKEA has two public warehouses that are at the East and West of Singapore. (iii) Transportation Types of transportation services to customer Contract carriers, Exempt carriers, Common carriers Contract carriers serve specific customers under contractual agreements. Modes of Transportations Air, Rail & ship' IKEA Supplier is from Sweden. Therefore, for the supplies to transport the goods to Singapore warehouse, it transport by air, rail and ship. By using Air as it can transport goods that can be quick with long travel distances. By using Rail carrier it is most favourably when the distance is long and shipments are heavy or bulky. By using shipping, it can carry the heavy and bulky goods. Third Party Logistics Services' IKEA don’t use 3rd party logistics right' cos the supplier is from overseas. Sweden. Nope. International Transportation Issues' International Freight Forwarders Move goods from production to foreign destination w/ surface & air transportation. (iv)Customer Relationship Management Post-transaction elements Occur after the sale & include warranty repair capabilities, complaint resolution, product returns, and operating information. http://www.ikea.com.sg/en/service/store-services/return-policy.asp CRM component: - Call centre -Web Site Self-Service -Measuring Customer Satisfaction -Field Service Management- -Customer Privacy Capabilities- Problems Order management IKEA provide only store-front ordering for customer, customer has to wait for their turn for payment and collect their orders. The ordering process is slow and tedious. I suggest that IKEA should have online shopping in Singapore too. Customer can purchase their products online fast and easy. Warehouse IKEA warehouse in Singapore is public; the warehouse is available for public to purchase and shop in the warehouse. IKEA Singapore warehouse is messy and the warehouse staffs have to wait for customer to leave then they can clean and tidy the warehouse. ----------------------- Receipt from customer Ship order to customer Schedule Transportation Pick and Pack Process Process Invoice & Shipping Document Check Stock Status Check Customer Credit Limit Customer Order Entered into System (ERP)