Information Technology - Analyze the impact of the digital economy on the company IKEA - Essay Example

At the showroom, customers were able to see and handle the furnishings before purchasing them and the company was able to present its products with function, quality and low price.(www.ikea.com). In response of competitor induces boycott of IKEA showrooms by customers, the Company began to design its own furniture, producing the unique flat products, which the customer was able to assemble at home. Such furniture also occupied less storage space and there was less scope for damages occurring during transportation of the products.

The IKEA stores were based on the self service model , and customers were able to walk around the IKEA showrooms, inspect furniture and then select the pieces they liked, which were provided to then in flat designs for easy transportation with less damage.(Jeffreys 1992). The Company soon expanded into other countries and its global sales now totals over $17.7 billion annually. The success of IKEA has been largely due to its policy of offering quality products with low prices. The Company accomplishes this by maintaining a network of global suppliers who bid competitively for projects and the Company is thus able to manufacture and supply the products to IKEA at the lowest prices.

(Solomon, 1991). It is constantly on the lookout for ways and means by which it can reduce its costs in order to continue to supply low cost yet quality products to its customers. As a part of this strategy to reduce costs, the company was examining ways and means to consolidate its supplier base such that the focus was on those suppliers located in low cost countries. However, longer lead times, higher demands on the planning process and an inability to quickly adapt to change were some of the drawbacks which IKEA sought to address through IT solutions.

The Company has incorporated software developed by JDA – Demand and Fulfillment Solutions, with the Demand Management solution able to support all the 12,000 items in