This case won the Production and Operations Management category at The Case Centre Awards and Competitions 2023. #CaseAwards2023
View photos from the awards presentation on 31 July 2023 at Georgetown McDonough School of Business.
View photos from the awards presentation at Lund University.
Who – the protagonist
IKEA, the world’s largest furniture company.
What?
For much of IKEA’s existence, their strategy relied on selling furniture directly to customers in its brick-and-mortar stories.
But in 2017, IKEA introduced a sophisticated app that deployed augmented reality (AR) and allowed customers, when in-store, to use their phones to visualise products in a virtual room and order them. This proved particularly popular, especially in smaller city centre stores.
In May 2019, the Scandinavian company announced the launch of a new app to provide customers with the ability to shop remotely, meaning they would no longer need to head in-store to visualise products. Customers could simply input their room dimensions and other variables into the app.
Why?
Online sales grew rapidly: by 45% between 2017 and 2018; and 43% between 2018 and 2019.
IKEA promoted online sales aggressively in virtually all its global markets, including the investment of USD$1.41 billion in China.
But this growth in online orders created challenges for IKEA’s already complex supply chain, as it delivered approximately 25,000 different products and replenished - often daily - the stock in its 433 stores in 50 countries.
This system was designed essentially for a brick-and-mortar structure, not for online sales.
Where?
IKEA had 1,000+ suppliers in 52 countries, 41 trading centres in 41 countries, 27 distribution centres in 17 countries and 11 customer distribution centres in nine countries.
When?
Production needed to improve its agility, especially since the introduction of online orders, and IKEA relied upon the use of manufacturing systems of the future (MSF), such as machine learning for sorting defective wood panels.
It was in 2017 when IKEA started its MSF initiative, aiming to create a systematic and company-wide approach for developing the requisite manufacturing capabilities for the foreseeable future.
The idea was to improve the agility of IKEA’s factories and the supply chain in potentially three ways: by increasing the factories’ capability to produce small batches efficiently and quickly respond to changes in production schedules; by capturing and providing timely and reliable data for planning, maintenance, quality management, and other tasks; and by providing enhanced visibility in the supply chain through sharing timely, reliable, and detailed data.
Key quote
What next?
IKEA’s MSF strategy signalled a radical change in current practices, and the required investment needed to be justified.
If projects that improved agility could be shown to make direct savings in the factories, then justifying them would be easy.
However, if the benefits were elsewhere in the supply chain, then justifying them would be more complicated.
IKEA’s supply chain was vast and the switch to online shopping for customers meant this had to be overhauled, which was far from straightforward.
This is Kasra Ferdows’ and McDonough School of Business’ third win in the category (2005, 2017, 2023). Meanwhile, it’s Jan Olhager’s first Case Award and Lund University’s second (Outstanding Case Teacher: 2021).
Winning the award
Kasra and Jan said: “It is an outstanding acknowledgement of the work we put into the case. It is very rewarding to know that the case has been used by many university teachers, and some have contacted us to let us know that the case has been very useful.”
Case popularity
Kasra and Jan continued: “Many people across the globe can relate to IKEA based on their own experience, and they may even have a strong opinion about the company. However, they may not know that IKEA has its own manufacturing in the IKEA Industry group, but understand that an increasing share of online sales will affect the supply chain – but how?”
Writing the case
They explained: “We had very good support from the practitioners at IKEA Industry during all stages of writing the case, and plenty of interesting discussions.”
Case writing advice
They added: “The case should have a good balance between complexity and simplicity. It should be easy to get a good overview of the context, but the questions should require some imaginative thinking. The teaching note should allow for some flexibility in teaching the case.”
Teaching the case
Kasra and Jan commented: “The case has stimulated many interesting discussions. While every participant has a long experience of the brick-and-mortar system of traditional retail operations, they have differing views on what constitutes a good omni-channel system and the role of manufacturing upstream. The case shows that manufacturing operations and the downstream supply chain have strong interrelationships, and that a holistic view is required."
Final word
Kasra and Jan concluded: “We’d like to thank The Case Centre for the unique and valuable services that it is providing for both case writers and teachers worldwide.”
Discover how this case works in the classroom.
“The IKEA case is a beautifully structured case with plenty of insight into IKEA’s world class operations. Everyone knows IKEA - making the case accessible and exciting to the students. The case description is detailed yet versatile for different teaching objectives. We used it to ‘self-assemble’ a student assignment relevant to our course Global Operations Strategy. The students loved it.”
“Examining online business transformation impacts on manufacturing and supply chains is an essential topic for business graduate students and practitioners.
“This case study is an invaluable resource for business students/industrial engineers and:
- highlights a real-world case familiar to many students
- discusses the impacts of online business and digital transformation on different functional areas, roles, and responsibilities, from sourcing to manufacturing to distribution
- presents the debate opportunity about dozens of digital technology advancements, explaining what they are and how they could be used to improve manufacturing/supply chain practices
- integrates traditional in-store information/logistics systems concepts and contemporary online business, and the digital transformation concepts
- provides a framework and a set of tools to prepare the future of manufacturing and supply chain for the era of online business.”
The case
Who – the protagonist
IKEA, the world’s largest furniture company.
What?
For much of IKEA’s existence, their strategy relied on selling furniture directly to customers in its brick-and-mortar stories.
But in 2017, IKEA introduced a sophisticated app that deployed augmented reality (AR) and allowed customers, when in-store, to use their phones to visualise products in a virtual room and order them. This proved particularly popular, especially in smaller city centre stores.
In May 2019, the Scandinavian company announced the launch of a new app to provide customers with the ability to shop remotely, meaning they would no longer need to head in-store to visualise products. Customers could simply input their room dimensions and other variables into the app.
Why?
Online sales grew rapidly: by 45% between 2017 and 2018; and 43% between 2018 and 2019.
IKEA promoted online sales aggressively in virtually all its global markets, including the investment of USD$1.41 billion in China.
But this growth in online orders created challenges for IKEA’s already complex supply chain, as it delivered approximately 25,000 different products and replenished - often daily - the stock in its 433 stores in 50 countries.
This system was designed essentially for a brick-and-mortar structure, not for online sales.
Where?
IKEA had 1,000+ suppliers in 52 countries, 41 trading centres in 41 countries, 27 distribution centres in 17 countries and 11 customer distribution centres in nine countries.
When?
Production needed to improve its agility, especially since the introduction of online orders, and IKEA relied upon the use of manufacturing systems of the future (MSF), such as machine learning for sorting defective wood panels.
It was in 2017 when IKEA started its MSF initiative, aiming to create a systematic and company-wide approach for developing the requisite manufacturing capabilities for the foreseeable future.
The idea was to improve the agility of IKEA’s factories and the supply chain in potentially three ways: by increasing the factories’ capability to produce small batches efficiently and quickly respond to changes in production schedules; by capturing and providing timely and reliable data for planning, maintenance, quality management, and other tasks; and by providing enhanced visibility in the supply chain through sharing timely, reliable, and detailed data.
Key quote
What next?
IKEA’s MSF strategy signalled a radical change in current practices, and the required investment needed to be justified.
If projects that improved agility could be shown to make direct savings in the factories, then justifying them would be easy.
However, if the benefits were elsewhere in the supply chain, then justifying them would be more complicated.
IKEA’s supply chain was vast and the switch to online shopping for customers meant this had to be overhauled, which was far from straightforward.
Author perspective
This is Kasra Ferdows’ and McDonough School of Business’ third win in the category (2005, 2017, 2023). Meanwhile, it’s Jan Olhager’s first Case Award and Lund University’s second (Outstanding Case Teacher: 2021).
Winning the award
Kasra and Jan said: “It is an outstanding acknowledgement of the work we put into the case. It is very rewarding to know that the case has been used by many university teachers, and some have contacted us to let us know that the case has been very useful.”
Case popularity
Kasra and Jan continued: “Many people across the globe can relate to IKEA based on their own experience, and they may even have a strong opinion about the company. However, they may not know that IKEA has its own manufacturing in the IKEA Industry group, but understand that an increasing share of online sales will affect the supply chain – but how?”
Writing the case
They explained: “We had very good support from the practitioners at IKEA Industry during all stages of writing the case, and plenty of interesting discussions.”
Case writing advice
They added: “The case should have a good balance between complexity and simplicity. It should be easy to get a good overview of the context, but the questions should require some imaginative thinking. The teaching note should allow for some flexibility in teaching the case.”
Teaching the case
Kasra and Jan commented: “The case has stimulated many interesting discussions. While every participant has a long experience of the brick-and-mortar system of traditional retail operations, they have differing views on what constitutes a good omni-channel system and the role of manufacturing upstream. The case shows that manufacturing operations and the downstream supply chain have strong interrelationships, and that a holistic view is required."
Final word
Kasra and Jan concluded: “We’d like to thank The Case Centre for the unique and valuable services that it is providing for both case writers and teachers worldwide.”
Instructor viewpoint
Discover how this case works in the classroom.
“The IKEA case is a beautifully structured case with plenty of insight into IKEA’s world class operations. Everyone knows IKEA - making the case accessible and exciting to the students. The case description is detailed yet versatile for different teaching objectives. We used it to ‘self-assemble’ a student assignment relevant to our course Global Operations Strategy. The students loved it.”
“Examining online business transformation impacts on manufacturing and supply chains is an essential topic for business graduate students and practitioners.
“This case study is an invaluable resource for business students/industrial engineers and:
- highlights a real-world case familiar to many students
- discusses the impacts of online business and digital transformation on different functional areas, roles, and responsibilities, from sourcing to manufacturing to distribution
- presents the debate opportunity about dozens of digital technology advancements, explaining what they are and how they could be used to improve manufacturing/supply chain practices
- integrates traditional in-store information/logistics systems concepts and contemporary online business, and the digital transformation concepts
- provides a framework and a set of tools to prepare the future of manufacturing and supply chain for the era of online business.”
