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1 Introduction
This paper is concerned with when centralised supply chain planning is appropriate, what outcomes to expect, and how to achieve them. It provides a case study analysis of how IKEA, a worldwide leader in furniture retailing, has gone from decentralised to centralised planning of its network of suppliers, distribution centres (DCs), stores and forwarders. This has taken them from a fragmented management to a coordinated, centralised, supply chain planning.
A centralised supply chain planning strategy concerns common and standardised processes and working methods ([43] Rudberg and West, 2008), centralised organization ([31] Marcotte et al. , 2009), and an integrated IT infrastructure with advanced planning and scheduling (APS) support ([28] Jonsson et al. , 2007), and may result in benefits, such as improved transparency, visibility and synchronised processes ([12] Dreyer et al. , 2009). Coordinating and managing a supply chain through centralised planning is, however, not a general solution and research identifies different prerequisites for effective centralised planning ([23] Holmström et al. , 2002; [41] Rudberg and Olhager, 2003). Even though the right prerequisites for centralised supply chain planning exist, its implementation may result in problems or there may exist obstacles for its full implementation. Identified problems of centralised planning, for example, include incongruence of objectives and incentives of individual organizations that result in fragmented global supply chains ([35] Pibernik and Sucky, 2007; [29] Lorentz et al. , 2012). Most research on supply chain planning has studied individual process or organizational or IT perspectives, but few have used an integrated perspective to study all three and their effects ([36] Power, 2005). Such an approach should be especially helpful for generating understanding of centralised supply chain planning effects and obstacles in complex supply chains ([6] Bozarth et al. , 2009) like IKEA's, which has about 30,000 sales items, 1,400 suppliers, 30 central DCs and 280 stores globally. Supply chain planning in the retail sector has been studied before ([51] Wong et al. , 2005), but not in a supply chain of the same magnitude as of that of IKEA.
Apart from describing IKEA's centralised supply chain planning concept, the purpose of this paper is to analyse the prerequisites, effects and obstacles of implementing centralised supply chain planning at IKEA, and to explore how the planning...