Optimizing Lead Time in IKEA’s Order-Initiated Flow: Enhancing Product Availability, Shelf Life while maintaining Cost Efficiency in the Food Category for Middle East Regions

Abstract

This thesis investigates the operational performance of IKEA’s Order-Initiated Flow (OIF) model for the Food Category in the Middle East and North Africa (MENA) region. It examines how extended lead times impact product availability, shelf life, and cost efficiency, and identifies the underlying factors contributing to these challenges. The research aims to evaluate the alignment between the designed OIF model which built on responsiveness and its current execution, which increasingly prioritizes transport cost optimization.

A qualitative case study approach was employed, combining semi-structured interviews, internal documentation analysis, and two process visualization tools: Business Process Model and Notation (BPMN) to capture the general OIF flow and Value Stream Mapping (VSM) to detail the current and future operational states. The empirical findings reveal significant misalignments between design and practice, resulting in extended lead times, reduced shelf life, and compromised availability, especially for items exclusively for MENA region.

Four root causes were identified: misaligned planning and forecasting, lack of operational guidelines and authority delegation, communication and system inefficiencies, and weak performance governance. To address these, two actionable strategies were developed. The first, a short-term “quick win” approach, focuses on immediate improvements through clearer planning coordination, role clarity, and basic system enhancements. The second, a long-term redesign, proposes regional demand aggregation and more integrated planning cycles. While both offer benefits, the short-term strategy is recommended as more feasible in the current operational context, achieving a reduced and predictable lead time (fixed at 120–121 days) compared to the current inconsistent range of (134–168 days) and improving shelf life from 46–79% to 60–82%, while maintaining acceptable transport efficiency.

This study contributes to the literature on demand-driven supply chains by demonstrating how theoretical flow models can be adapted to regional realities using integrated diagnostic tools like BPMN and VSM. Although limited in scope and duration, the findings offer practical guidance for IKEA and similar retailers how to implement order-initiated flows in real-world settings without undermining core principles of cost-efficiency and sustainability.

Popular Abstract

Global retailers like IKEA depend on efficient supply chain models to balance responsiveness and cost efficiency. However, regional challenges can disrupt even well-designed systems. This study examines the operational performance of IKEA’s Order-Initiated Flow (OIF) model for the Food Category in the Middle East region, revealing how extended lead times negatively impact product availability, shelf life, and costs hence proposing actionable solutions.
The Problem: When Design and Execution Diverge
The core issue lies in the misalignment between the OIF model’s design and its execution. While the model was built for responsiveness, in practice, the focus shifted toward transport cost optimization, resulting in three major problems. First, lead times became unpredictable, stretching to 134-168 days compared to the ideal target of 128-145 days. Second, perishable products arrived at the destination port with only 46-79% of their shelf life remaining, compared to the intended 43-80%, limiting flexibility for downstream distribution and reducing freshness at point of sale. Third, regional-specific items faced greater disruptions due to weaker integration with the broader supply chain. These issues underscore how even small deviations from the original model can create outsized operational impacts in time-sensitive, regionally complex food networks.
Root Causes: Why the System Struggled
A qualitative case study approach was adopted, integrating semi-structured interviews, internal document analysis, and two process visualization tools. Business Process Model and Notation (BPMN) was used to map the overall OIF flow, while Value Stream Mapping (VSM) provided detailed insights into the current and future operational states. Through this methodology, four root causes were identified: misaligned planning and forecasting, absence of clear operational guidelines and delegated authority, communication and system inefficiencies, and weak performance governance.
The Solutions: Short-Term Quick Wins vs. Long-Term Redesign for Future Growth
To address these challenges, two strategies were proposed. The short-term “quick wins” approach focuses on immediate improvements, such as clarifying planning coordination, defining roles, and implementing basic system enhancements like better data sharing. This strategy has already demonstrated promising results, reducing lead times to a fixed 120-121 days and improving shelf life to 60-82% with minimal cost trade-offs. The long-term redesign proposes more structural changes, including regional demand aggregation and integrated planning cycles. However, the short-term strategy is recommended as the first step due to its feasibility and measurable impact without requiring major operational overhauls.
Contribution of thesis
This study underscores how theoretical supply chain models can falter when applied in complex regional contexts. It demonstrates the importance of using diagnostic tools like BPMN and VSM to gain both a broad and detailed understanding of operations. For retailers like IKEA, these tools enable a more informed approach to balancing efficiency and responsiveness without compromising shelf life or product availability. The findings also emphasize the need to adapt global supply chain models to local market conditions, ensuring relevance and cost control. Moreover, when large-scale systemic changes are not immediately feasible, prioritizing targeted, incremental improvements can still yield meaningful operational benefits.

• author: Le, Ngoc Anh Thu and Mardesya, Novia
• supervisor: Louise Bildsten
• organization: Production Management; Engineering Logistics
• course: MTTM02 20251
• year: 2025
• type: H2 - Master's Degree (Two Years)
• subject: Technology and Engineering
• keywords: IKEA, Order-Initiated Flow, supply chain, lead time, BPMN, Value Stream Mapping, MENA, food logistics, process improvement, operational efficiency.
• other publication id: 6034
• language: English
• id: 9192094
• date added to LUP: 2025-06-17 17:05:09
• date last changed: 2025-06-17 17:05:09