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Manifest: Ikea Saw Issues ‘Across the Total Supply Chain’

Shifting supply chain challenges hit almost every logistics sector throughout the pandemic, and challenges persist today. At a panel discussion dubbed, “It’s a Plane, It’s a Ship, It’s a Train!” experts at the Manifest logistics conference in Las Vegas touched on how shutdowns, slowdowns and labor shortages have impacted all channels for product transport and fulfillment, emphasizing the essential nature of responsive, reactive supply chain strategy.

Sean Henry, CEO and founder of fulfillment, warehousing, and transportation firm Stord, said that the company has had a front-row seat to “the volatility in the supply chain across multiple nodes… and across many different industries of brands.”

Early on in the pandemic, capacity constraints in warehousing and ocean shipping hampered throughput. Brands that prioritized e-commerce during that time have also grappled with striking the right omnichannel mix. When retail stores reopened, many struggled to get product onto their shelves. “Today, we’re seeing some of the hangover effects” of that rollercoaster ride, Henry said. “Brands are really challenged around their labor, around their nearshoring, around trying to be truly omnichannel—not multi-channel—where they are managing one pool of inventory and one pool of orders to make better real time supply chain decisions.”

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Ikea U.S. chief supply chain officer Tanja Dysli said that the home goods and furniture chain has “experienced issues along the total supply chain” over the past three years, ranging from a Covid restriction-induced labor shortage at its Polish factories to limited access to containers or vessels for shipping. Port congestion led to “a situation where some of our warehouses didn’t have, or had too much, capacity.” Last summer, as that congestion loosened, the company dealt with a wave of goods arriving at their destinations in tandem, creating the need for more warehouse space and cross-stocking capacity, she said. “We always want to have the right product, in the right amount, in the right place at the right time and the last two-and-a-half years really showed us where our supply chain is not resilient enough,” Dysli said.

“We have a growth strategy in the U.S.—there are many more people here who need a new chair or a new table,” she added. “In order to really accelerate that growth, we have to heavily invest in the digital transformation of our total supply chain and change a lot of things that are not going to bring us into that growth agenda that we want to have.” Ikea has invested in demand sensing capabilities to gain a clearer view of its physical storage capacity and staffing needs further in advance. Ikea is on “a journey to transform all our stores into fulfillment centers—most of them are getting rebuilt right now as we speak,” Dysli said.

Mattel senior vice president of operations Gregory Javor said that the toy company’s most pressing issue during the early days of the pandemic was finding labor for its domestic distribution centers. “We had to bring people in from three to four hours away through a contractor and put them up in hotels,” he said. “They were all unskilled, so we had had to train them and that cost a lot of money.” It’s worth it, however, “when your sales are going through the roof,” he added. 2021 saw massive issues with ocean shipping from the brand’s Asian manufacturing hubs, and Mattel struggled to get its products to its 38 global distribution centers to meet sales.

Javor said the company is still focused not only on attracting new workers, but retaining them. “We want to be the employer of choice,” he said, and “there’s only so much automation” that Mattel can employ to alleviate the need for human talent. Working with HR to promote a culture that is responsive to worker needs is an objective he continues to champion.

He also wants to up Mattel’s profile as “a shipper of choice.” Relationships between carriers and importers have been put to the test in recent years, and Javor aims to deepen the spirit of partnership to ensure that operations continue to run smoothly even in the event of a new supply chain challenge. The executive said he’s pushed a protocol of returning containers to ports within seven to 10 days, down from a customary 18 day grace period. “It’s important—make sure you pay on time, make sure you turn in the equipment, and make sure you’re easy to do business with.”

Enterprises and their logistics providers have been clamoring for leverage and control over the past three years, sometimes leaving all parties “worse off” in the end, Stord’s Henry said. “I think starting in 2023 is a lot of the near-term capacity challenges have started to subside, and now there are more brands and logistics partners coming together on both sides of the table,” he added. “The collaboration aspect has really increased, because of what’s happened the last few years.”