1.
3 Purpose
The purpose of this research is to explain the consequences of distribution logistic and the
way IKEA will gain competitive advantage by utilizing it.
1.4 Outline
In this thesis, there are 7 components consists of it. Section 1 mention the most purpose of
research and provides background of distribution logistics and briefly introduction of IKEA.
Section 2 describes some literatures of relevant analysis concerning to supported distribution
logistics. Section 3 presents the results of findings supported secondary knowledge, such as:
however IKEA distribution works and also the IKEAs relationship with its provider and its
co-workers. While section 4 describe our analysis of IKEAs distribution for the findings of
multi examples whereas the competitive advantages of IKEA gain. Section 5 provides the
ultimate conclusion of this research and its directly associated with the aim. In last section,
all the references that we tend to employed in this research are listed in line.
2. Theoretical Framework
Effective distribution logistics strategy facilitate firms supply merchandise and service with
smart delivery performance and lower cost of distribution than different competitors.
2.1 Distribution center
Distribution centers area unit outlined as structures primarily used for the receipt, temporary
storage, potential modification/customization and distribution of products that area unit
routed from production sites to the place of consumption. Value-added to the product moving
through DCs. Besides , there are many kinds of warehouse management information system
arising which are necessary prerequisite to reach better service performance efficiently (Faber
et al., 2002). The effectiveness of a company will be affected by warehousing management
through receiving, transporting, packing directly as well as its quality and service
performance (Rafele, 2004).
2.1.1 Traditional distribution system
There is an oversized variety of firms have their own native distribution center or warehouse.
Nobody was willing to alter this ancient distribution structure as a result of those effects were
unsure and it would bring some negative influence on price savings, staple offer and client
service its still be used till last decades however as time changes some new structure is
formed, a number of yeas a gone the standard distribution model is poor by some Swedish
firms, that it means those firms dont use several warehouse any longer and most of these
firms got success with one or two centralized warehouse (Abrahamsson,1993). However , the
new distribution system pays additional attention to the time interval rather than physical
distance. It means the channel solely contains one or two warehouse that might guarantee the
total offer chain or distribution route work swimmingly. Besides , the centralized system is in
a position to supply additional edges for company. Moreover, the acceptable sourcing ways
will facilitate company to succeed in offer chain competitive advantages (Kumar
&Samad,2008).
2.1.2 Centralized distribution system
Centralizing operation like storage and distribution typically ends up in variety of value
reductions. Fewer buildings to possess or rent, which suggests pay less utility expenses, need
fewer workers and dont would like the maximum amount instrumentality and technology.
These value benefits facilitate retailers to line rating methods and either deliver the goods
high profit margins or supply low costs to customers.
2.2 Supply chain management
Supply chain management is that the streamlining of a business supply-side activities to
maximise client worth and to realize a competitive advantage within the marketplace. Provide
chain management represent an endeavour by supplier to develop and implement provides
chains that are unit as economical potential, provide chains cowl everything from production,
to development ,to the data system required to direct these undertakings.
To cover the scope of supply chain management , there are four perspective that are
necessary.
Upstream , as purchaser that deals with supplier
Downstream ,as supplier that deals with customer
Static network, as auditor in the position of the supply chain network , it consists of
several supply chains , and this perspective provides a static and comparative view.
Dynamic network, as strategist , to seek new opportunities for improving firms
position in the existing network or creating a new network, and this perspective
provides a strategic , dynamic and long run view( Mills, 2004)
Some risks can be created in the supply chain , such as product availability , distance from
source , labour markets , industry capacity , demand fluctuation and so forth (Giunipero &
Eltantawy, 2004). Distance increasing will cause additional uncertainties to provide stability
by longer time interval and potential transportation disruption.
Upstream concerns on the supply base and the relationship between buyer and supplier. Due
to the utilization of Just-in-time production and purchasing concept , firm consider the
relationship between buyers and supplier that can change into partnership rather than an
independent relationship(Mills, 2004) which may reduce the risks mentioned above.
Downstream based on the demand side. The distance between supplier and buyer can make
their interaction much complicated(Hillebrand & Biemans , 2011). SCM can help the
company to mention the issues in higher level in strategic parts.
SCM promotes the co-operation among suppliers, purchasers and customers and also
integrates IT systems. Therefore , SCM has speed advantage and supplier can even deliver
the merchandise in time. SCM will enhance the connection with customers and improve the
competency to satisfy the wants of market while gain competitive advantage.
2.3 Warehouse management
A warehouse management could be a key a part of the provision chain and primarily aims to
manage the movement and storage of materials at intervals a warehouse and method the
associated transaction ,as well as shipping , receiving , put away and selecting. A proper
warehouse management has become a key element to get competitive advantage through
shorter lead times (De Koster, 1998). But different regions may have different logistics or
different distribution system.
2.3.1 Warehouse location
In todays competitive markets, finding the proper location for a distribution warehouse are
often a key think about the gain of any company provide chain. However, the selection of the
proper location will involve way more than merely cost per square fit. Picking the most
effective location can typically need associate degree array of things. These can embody the
infrastructure of the building and also the space, the cost of labour, wherever the foremost
necessary client locations are or spaces receptive growth and whether or not the community is
one that may welcome a warehouse in their area. By taking the time to assess every of those
key factors, a business will then potion for not solely the placement of future distribution
warehouse, however the order of development for future many warehouses to help in
business growth.
2.3.2 Warehouse unit size
The public tends to think of warehouse as large buildings. In reality most warehouse are
relatively small. Forty-four percent were between 1,001 and 5,000 square feet and seventy
percent were less than 10,000 square feet. Warehouse size would keep on increasing in the
future because large volume and space is quite necessary.
2.3.3 Warehouse management system
As mentioned before, there are kinds of WMS ( warehouse management system) exist and
function in todays warehouse system. Somehow WMS offers the necessary information to
manage and control the flow of products from receiving period to shipping
period(Napolitano, 2001). Furthermore, an efficient management of supply chain
management can be made by the integration of WMS and TMS (Gilmore 7 Tompkins, 1997).
TMS stands for transportation management system, it is a software system designed to handle
transportation operations (Wisner et al., 2008). The integration of WMS and TMS will not
only provide an affordable price for suppliers and end customers, but also reduce overall
costs and shorten lead times which it means minimize lead-time variations(Mason et., 2003).
