IKEA makes Malaysia it’s ASEAN Distribution and Supply Chain Centre
Malaysia has been chosen as the location for IKEA to set up its Regional Distribution and Supply Chain Centre for Asean. Noted as a strategic decision by the world’s largest furniture retailer which is headquartered in the Netherlands, the company is expected to invest RM908 million for the new centre. The centre will adopt the same structure and technology used in IKEA’s biggest Regional Distribution Centre in Germany. It will also be among the top 10 largest Regional Distribution Centres for the IKEA Group globally.
Once operational, the centre will manage an inventory of over 9,500 stock keeping units worth RM6.6 billion annually. To reduce dependency on labour and for greater efficiency, IKEA’s new specialised warehouse will use the latest integrated ICT systems and automation.This system will also greatly enhance the accuracy of its inventory management process.Malaysia has always been a significant market for IKEA and its retail stores here are among the most visited stores globally.With the establishment of the Regional Distribution and Supply Chain Centre, Malaysia will strengthen its role in supporting IKEA’s growth in the Asean region.
The Centre will serve 12 retail stores in ASEAN, which will increase to 20 stores by 2026. According to Malaysian Minister of International Trade and Industry, Datuk Seri Mustapa Mohamed, the project was the result of continuous engagements and facilitation by the Malaysian Investment Development Authority (MIDA). “This represents a significant milestone for both IKEA and Malaysia. IKEA’s decision of selecting our country as a base to support retailers in Malaysia, Singapore, Thailand, Indonesia, Vietnam, Philippines and India underscores its strategic fit of this country in supporting IKEA’s overall growth strategy in the ASEAN region,” he said. He said the establishment also adds momentum towards making Malaysia a Regional Distribution Hub and preferred logistics gateway to Asia as outlined in the National Logistics and Trade Facilitation Masterplan and National E-Commerce Strategic Roadmap (NESR).
“Deployment of technology in the logistics chain has been identified as the key factor in strengthening the capabilities of logistics service providers towards enhancing trade facilitation mechanisms. Thus, IKEA’s high-flow and automated warehouse is certainly well-aligned to this agenda,” he added. Mustapa said the Malaysian Government has also been actively encouraging large local conglomerates and MNCs to set up their regional establishment in Malaysia through various business models including the Principal Hub (PH) scheme.This scheme allows companies to centralise their global activities such as procurement and distribution. Such establishments bring along many multiplier effects to the country, ranging from creating high value jobs, incurring high business spending, intensifying usage of local ancillary services, increasing the flow of foreign exchange as well as strengthening the value chain in targeted industries,” he said.
To date, MIDA has approved a total of 26 PH projects since its introduction in May 2015. Over the next 10 years, these projects are poised to contribute RM16.8 billion in business spending, utilise local ancillary services worth RM2.2 billion and generate more than 1,800 high value jobs for Malaysians. Among renowned companies that have been accorded with the PH scheme include Honeywell, Super Group, Avago Technologies, Lotte Chemical Titan, Daikin and Sharp.