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From supplier to store
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Last updated September 2003
From supplier to store
For IKEA, distribution is an important part of the equation of creating home furnish-
ing articles at prices which are as low as possible. Today approximately 10,000
IKEA products are manufactured by 1,600 suppliers and transported to 186 IKEA
stores around the world, often via one of the companys 27 central warehouses
and distribution centres. At IKEA, distribution is all about making the route from the
manufacturer to the customer as short as possible.
In the early days of IKEA, the warehouse was a shed
on Elmtaryd Farm in the south of Sweden where the
founder of the company, Ingvar Kamprad, lived with
his parents. In those days products were despatched
from Elmatryd with the help of the county milk van
that visited the farm each day. Things have changed
a bit since then, however. Today IKEA operates 27
distribution centres in a total of 16 countries. From here
IKEA products are delivered to 186 stores around the
world 165 IKEA Group stores and a further 21 stores
operated by other franchisees.
Large volumes + flat packs = low costs
IKEA works in various ways not only to rationalise and
simplify distribution, but also to minimise the impact this
part of the business has on the environment. The secret
is to calculate as exactly as possible how many products
will be needed to satisfy demand. This eliminates any
unnecessary costs for production and warehousing.
The hallmarks of IKEA distribution are:

a global distribution network

large volumes

fl at packages

low costs.
The aim, of course, is to make sure that the right
products are always available at the store when the
customers wish to buy them.
Better efficiency means lower prices
The fact that IKEA products are sold packed fl at means
that they can be transported with greater effi ciency. By
minimising wasted space it is possible to transport and
store more packages at a time. And by increasing what
is known as the fi lling rate in containers etc. (in other
words, reducing the amount of wasted space), the cost of
transporting each item goes down. One good example of
this is HOTT kettle. Making better use of the available
space by stacking some of the kettles upside down makes
it possible to fi t ten kettles into a box instead of just six.
As a result, less packaging materials are needed and
distribution costs are kept lower.
More deliveries by rail in future
Today 60 percent of all IKEA freight is transported
by road, 20 percent by rail and 20 percent by sea. Less
than one percent is air freighted. The aim is to constantly
increase the proportion of goods transported by rail.
Within the next three years 40 percent of all IKEA
freight within Europe will be moved by rail.
For some years now, all the freight companies working
with IKEA have been required to provide statistics for
a so called Environmental Performance Sheet that
details how their operations impact on the environment.
This enables IKEA to keep a check on these companies
environmental work and to monitor what measures they
are introducing to reduce the use of fuel and minimise
emissions.