Purpose - The purpose of this paper is to analyse the prerequisites and
effects of centralised supply chain planning at IKEA, and to explore how
the planning process, planning system, and planning organization make
up a centralised planning approach. Design/methodology/approach - The
paper is based on a longitudinal case study of IKEA's implementation of
global supply chain planning. The literature review generated a
framework which identifies prerequisites for, approaches to, and the
effects of and obstacles to centralised supply chain planning. This
framework was used to analyse IKEA's supply chain planning before and
after the implementation. Finally, the authors reflected upon the
learning from IKEA and refined the framework. Findings - A number of
prerequisites for centralised supply chain planning were identified:
functional products, vertical integration, a dominating organization
possessing the power and competence to enforce the implementation, and
the use of one planning domain possessing all critical planning
information. The direct effects of centralised supply chain planning
were related to supply chain integration, standardisation,
specialisation, and learning effects. Implementing centralised supply
chain planning in an appropriate planning context led to several
operational performance improvements. Obstacles were mainly related to
human and organizational, as well as to software and data issues.
Research limitations/implications - This is a first approach towards
development of a framework of how to design, use and benefit from
centralised supply chain planning. The developed conceptual model, which
is refined through the case study, offers some generalizability in
researching centralised supply chain planning. Practical implications -
The findings show that centralised supply chain planning is a necessity
for a large and growing, global supply chain striving for low-cost
production and efficiency. Originality/value - IKEA is a unique case
with its supply chain characteristics and recently implemented planning
concept.