IKEA is known far and wide for their inexpensive home solutions. The company, which was founded in Sweden, but now operates stores across the world, offers furniture, kitchen gadgets, home décor, lighting, and much, much more. Many of their products are designed to be easy to assemble and use while still fitting within a modest budget.
Anyone who has shopped at one of their large stores may have had to look through their small warehouse area to find the boxed furniture products they want to buy, but this part of the store is tiny when compared to the huge warehouses IKEA operates. The company has successfully implemented an automated warehouse system that has allowed them to save billions in costs over the years.
Think Globally, Act Locally
That’s IKEA’s approach to their warehousing solutions. One of their newest warehouses was built in 2011 in Georgia, and it’s founded on this principle. The warehouse model first recognizes that IKEA is an international corporation, and to that end, they’ve created one simple design that can be used in any warehouse, no matter where it’s located. The layout, operation, and even warehouse shelving is similar in all of these locations, making it very easy to create standardized training and operations.
But the location also has to be taken into account, and IKEA does that, too. By carefully selecting a centralized location, each IKEA warehouse can serve a number of different stores. This allows each warehouse to quickly restock these stores, keeping customers happy plus reducing the cost of shipping products long distances.
Another goal with each warehouse is to make them as automated as possible. The warehouse in Georgia makes use of an automated storage and retrieval system that uses 13 different cranes housed in a warehouse that’s 100 feet tall. This allows for the storage of a huge amount of products. When everything is operating at peak efficiency, those 13 cranes can move 600 pallets every hour. That’s an average of almost a pallet per minute for each crane.
This has greatly reduced the time it takes for store orders to be processed and shipped out. Prior to implementing this system, warehouses could take as long as 72 hours to find, bundle, and ship out orders. The Georgia warehouse can process most orders within 24 hours. The huge amount of cost reduction has allowed IKEA to turn a much larger profit than ever before.
There are several reasons IKEA decided to go with automating a large portion of the Georgia warehouse. One major reason was the industry. It’s difficult to find people who want to work in a warehouse, and with the younger generations believing they must get a college degree and look for positions outside of the trade industries, that’s only going to become harder and harder. An automated warehouse needs fewer, yet more educated, workers.
It also makes better use of the building. Over 90 percent of the building is used for storing products, which makes it a very cost effective facility.
Which of IKEA’s warehouse practices can you implement into your own? What could IKEA be doing better? Comment below to join the conversation!