Supplier Consolidation Programme — IKEA Latvia
IKEA · 9 months · 2021
Background
IKEA Latvia's operations had grown rapidly, and with growth came a fragmented supplier base. Across facilities management, logistics, and indirect procurement, the business was working with over 300 active suppliers — many with overlapping scopes, inconsistent contracts, and no formal performance management.
What We Did
P.A. Ltd conducted a full supplier segmentation exercise, mapping all 300+ suppliers by spend, strategic importance, and performance risk. From this we identified a target architecture: a smaller set of strategic partners with framework agreements, and a managed list of approved secondary suppliers.
We then ran structured selection processes for each category, using a combination of competitive tender and direct negotiation. Incumbent suppliers were assessed against the same criteria as challengers.
A new supplier performance scorecard system was designed, piloted with 20 strategic suppliers, and rolled out across the full preferred list. Quarterly reviews were embedded as a standard process.
Outcomes
- Active supplier count reduced from 312 to 203
- Average cost per category down 12% on blended basis
- Scorecard system adopted as standard across IKEA Baltic operations
- Zero operational disruption during transition
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