Usage Of High-Flow & Low-Flow Warehouse Facilities
IKEA Inventory Management - High Flow Low Flow
IKEA’s store operations are supported by high-flow facilities (focused on the 20% of SKUs that account for 80% of the volume) and low-flow warehouses that are more manual. In its high-flow warehouses, IKEA employs automatic storage and retrieval systems to drive down its costs-per-touch. Products stocked in a low-flow facility are not in high demand, and operations rely on manual processes since workers will not be shifting and moving inventory around too much.
These strategies have made IKEA the world’s most successful furniture retailer with low operating costs and high product demand. This allows the company to stay competitive in the industry as it continually seeks more advanced methods to streamline supply chain management.
IKEA has a clear vision supported by complementary cross-functional logic. This not only differentiates IKEA from its peers, but also provides it with a competitive advantage that is difficult to duplicate at other organisations.
While it may be hard for other organisations to copy IKEA’s successful formula with stock management and order fulfilment, IKEA’s supply chain strategies pushes against boundaries. This will hopefully inspire you to develop your company’s inventory strategies suited for your company’s particular operations. For instance, the TradeGecko inventory management system may be the perfect answer for small to medium retailers or wholesalers. Our software is integrated with other software solutions such as the Shopify ecommerce platform and Xero accounting system to make backend operations even better for your business.
To end off, IKEA sets an optimistic trend where more companies will move away from traditional and out-dated supply chain management strategies used for generations to seek creative and better-suited solutions to handle inventory.