IKEA’s global supply chain crisis from 2021 to 2023 proves that even business giants and mega supply chain operations can stumble when shocks hit. In this case, it was the pandemic.
However, through this story, supply chain professionals can build stronger and more prepared retail, furniture, and manufacturing supply chain operations by understanding what went wrong, how IKEA responded, and what they fixed.
IKEA’s Global Supply Chain Crisis (2021–2023): What Happened
IKEA’s global supply chain crisis started when the pandemic changed everything. Lockdowns and “stay-at-home” orders drove record sales at IKEA (EUR 41.9 billion in FY2021) while simultaneously shutting factories and ports worldwide.
Suddenly, IKEA’s smooth operations faced a flood of orders and nowhere to fill them.
A Perfect Storm
The pandemic’s supply chain disruption hit IKEA with full force. Homebound customers wanted more desks, chairs, and shelves than ever, especially as remote work became popular. The company’s online sales jumped by 73% in 2021.
However, factories in Asia, which are the company’s main sourcing and manufacturing hub, remained closed. When it managed to churn out products, the ports were clogged with containers, trucks were hard to find, and wood became scarce.
The result was that prices shot up. IKEA’s leadership described the situation as a “perfect storm” of disruptions.
Global demand for home office and renovation products stayed high even after lockdowns eased, sustaining pressure on IKEA’s supply lines. In Davos 2023, CEO Jesper Brodin noted that “pandemic-driven interest in home furnishings remains elevated and sales numbers were still high
IKEA’s Just-in-time supply chain strategy, which had helped the company save costs for years, suddenly left the company vulnerable. With little safety stock, any delay caused empty shelves. And the pandemic was not letting up.
Shipments from China stalled. The Suez Canal and Red Sea, key routes for IKEA, became chokepoints. Prices rose fast, and IKEA delayed passing costs to shoppers.
Read more: Chowdeck’s food logistics principles and resilience in Nigeria.
IKEA’s Global Supply Chain Crisis Unfolds
Across 2021–2023, IKEA’s operations saw severe delivery delays and stock outages. Key impacts included:
1. Shipping Disruptions
Chinese lockdowns and port congestion slowed goods. And the Red Sea attacks in late 2023 forced ships to detour around Africa’s Cape of Good Hope, adding 10 days and $1 million per shipment.
2. Raw Material & Labor Shortages
Following the Russia-Ukraine war and the sanctions levied on Russia, wood prices jumped 50% as Russia’s timber vanished from the market. IKEA’s supply chain had to rush to source from Sweden, Poland, and Germany.
Drivers and warehouse staff were also in short supply. In the UK, IKEA missed 10% of its usual stock because of a lack of HGC drivers and port backlog.
3. Price Hikes & Financial Impact
IKEA’s beloved Malm desk rose from £99 to £150 in one year. Customers complained, but IKEA could not hold costs down any longer. Pre-tax profits fell 16% in 2021. Logistics and materials costs drained margins.
How IKEA’s Global Supply Chain Navigated the Crisis
Not one to lie down and lose market share, IKEA fought back with fast, smart decisions.
1. Logistics Tactics
The company chartered container ships, leased extra storage, and shifted some routes to rail.
2. Inventory Buffering
IKEA’s supply chain built safety stock on key items. This stopped stores from going empty.
3. Supplier Diversification
When Russian wood stopped, IKEA found suppliers in other European regions.
4. Regional Production
IKEA invested in European factories and explored building in the USA. Local production cut shipping risks.
5. Simplified Product Lines
IKEA’s global supply chain reduced its product range to focus on high-demand items.
6. Price Adjustments
IKEA eventually raised prices to cover costs. By late 2023, as prices fell, IKEA started cutting prices again.
7. Supplier Collaboration
IKEA worked closely with suppliers to fix bottlenecks. It used digital tools to map risks and improve transparency.
8. Sustainable Sourcing
IKEA doubled down on certified wood to secure supply and meet customer expectations.
The Outcome: Recovery and Renewal
By late 2023, IKEA’s global supply chain resilience strategies paid off. Profits rebounded to €1.95 billion, double the year before. Sales hit record highs at €47.6 billion. Availability improved, and prices started to fall back as costs eased.
IKEA’s quick shifts in production, sourcing, and logistics saved the brand from a deeper crisis. Customers found more products on the shelves, and investors saw profits return.
Read more: Dollar General’s inventory overstocking mistake that cost millions.
Lessons from IKEA’s Global Supply Chain Crisis
IKEA’s experience carries lessons for retail, furniture, and manufacturing supply chains.
1. Rethink Just-in-Time During Crisis
A lean supply chain is cheap but risky during a crisis. When shocks hit, just-in-time systems leave shelves empty. IKEA learned this the hard way and had to build buffer stocks for critical items.
More companies should blend lean systems with smart safety stocks to manage supply chain risk more smoothly.
2. Diversify Suppliers and Regions
Relying on one region invites disaster. IKEA’s China-heavy supply chain fell hard when lockdowns hit.
More manufacturers should develop multiple supplier relationships across local and international regions to avoid single points of failure.
3. Invest in Local Production
Shipping is fragile. IKEA’s move to European and American factories cut shipping delays. More manufacturing supply chains can invest in local production and assembly to reduce risk from global shipping shocks.
4. Strengthen Supplier Partnerships
When things got tough, IKEA leaned on its suppliers. They shared forecasts, adjusted orders, and found solutions together. African supply chains should treat suppliers as partners, not just vendors. Collaboration builds trust and stability.
5. Stay Flexible on Pricing and Products
When wood prices spiked, IKEA raised prices. When costs fell, it lowered them again. IKEA also cut product lines to focus on what sells. Retail supply chains should keep pricing strategies agile and consider product simplification to handle sudden changes.
Applying These Lessons to African Supply Chains
For businesses operating across Africa or looking to operate, the story of how IKEA’s global supply chain navigated the pandemic disruptions holds applicable lessons for African supply chains.
1. Strengthen Local Manufacturing
Factories close to customers reduce risks. They shorten delivery times and avoid shipping shocks.
2. Diversify Suppliers
Spread orders across regions. Work with suppliers from different countries to handle political, natural, or health shocks.
3. Balance Inventory
Don’t just cut stock for savings. Hold safety stock on high-impact items.
4. Invest in Digital Tools
Use real-time tracking and supplier mapping. Know where your products are and how risks build.
5. Support Supplier Development
Train suppliers on quality and forecasting. Offer financing support. Help them scale with you.
6. Build Flexibility into Plans
Have a clear process for raising or lowering prices. Cut low-selling products quickly if needed.
Read more: Target Canada’s failed expansion & supply chain Mismanagement.
Conclusion: IKEA’s Global Supply Chain Crisis Shows the Need for Agility
IKEA’s global supply chain crisis proved that even giants can break under pressure. The company’s success during this period came from rebuilding faster than they broke. African manufacturers and supply chain leaders can take these lessons to heart.
Diversify supply. Build safety stocks. Invest locally. Treat suppliers as partners. Use technology to see risks before they hit. Adjust prices to stay profitable.
IKEA’s supply chain crisis changed how the company worked. Let it change how African supply chains prepare for tomorrow.
Obinabo Tochukwu Tabansi is a supply chain digital writer & ghostwriter helping professionals and business owners across Africa explore various strategies that work and learn from the success and failures of various supply chains across the globe. He also ghostwrites social content for logistics & supply chain businesses
