On Opportunities of Integrated Packaging, Logistics and Product Development - Experiences from a Case Study at IKEA

Abstract: The main ambition of companies is to deliver products (or services) to customers successfully in order to remain competitive. This requires an efficient and effective product development process, as well as cost reductions and higher service levels through improved logistics performance in the supply chain. Traditionally, these two areas, i.e. product development and logistics, have been treated separately in the literature even though their interdependence is obvious. A product that is distributed with poor efficiency is a product of less value (examples of this awkward situation can easily be found). Supply chain demands are not usually considered during product development, and the packaging is developed after the product design is decided upon. Thus packaging has to bridge the gap between product design and distribution environment. To further complicate the situation, the packaging is usually developed by an external packaging company with limited familiarity with actual supply chain demands. This situation makes it very difficult to achieve effective and efficient product development and high supply chain performance. The objective of this research is therefore to explore the opportunities of considering packaging and logistics during product development. This study started with an extensive literature review within the areas of packaging, product development and logistics. Literature within the field of organization has also been used. The output of the literature review served as an input for a pilot study conducted at two packaging companies, which, together with the literature review, was the input for a single-case study conducted at IKEA of Sweden in Älmhult. IKEA has been used as a “best practice case” because it is a product developing company famous for focusing on packaging and logistics issues. The product development processes at one business area and the packaging organization of IKEA has been studied to see how it impact on product development and supply chain performance. Among the conclusions that can be drawn is that there is a clear gap in the literature when it comes to the interaction between product development, packaging and logistics. The IKEA case shows that there are great savings to be made when logistics and packaging become a natural part of the product development process. To achieve this, the organizational makeup has to promote and enable collaboration between product packaging and logistics resources.