IKEA Components recently reported that it has successfully managed to achieve a high rating of 98 percent on its customer service levels. Optilon, a supply chain planning and optimization specialist, assisted IKEA Components to implement the Powerfully Simple supply chain planning software from ToolsGroup which enabled them to raise their levels of customer service.
IKEA is focused on being the “The Life Improvement Store,” and continues to offer home furnishings of good design and function at reasonable prices to help ordinary people afford them. Currently there are over 320 IKEA stores in 38 countries.
The main objective that IKEA Components wanted to achieve was achieving higher order fulfillment service levels, while at the same time keeping inventory costs in check. The company managed to achieve their objective by implementing the Powerfully Simple software.
During a recent Optilon User Forum, Marie Johnsson, supply manager for IKEA Components, said, “Besides high service levels for our customers, the new solution has allowed us to generate more accurate forecasts -- complementing our other forecast sources. It also helps us see our availability better and how stocking costs are affected.”
The software from ToolsGroup helps IKEA Components by providing them with a forecast as well as optimizing inventory stocking levels for particular products. This system is almost completely automatic and needs just a little manual intervention to function. This was one of the main reasons why IKEA Components decided to implement the “Powerfully Simple” software.
Johnsson continued, “In traditional inventory management, the demand history is only expressed in total quantity, ignoring individual customer order-lines. The main focus is on forecast accuracy, with very little attention to the statistical or ‘stochastic’ nature of the demand. With our approach, called Service Optimization, we analyze demand history both in terms of quantity and customer order-lines. This not only improves forecast accuracy, but improves service levels as well.”
Edited by Jennifer Russell