Swedish furniture giant Ikea has opened a regional distribution and supply chain centre for its ASEAN market.
Located in Malaysia, the new centre will cost the Netherlands-headquartered retailer some US$212 million and will manage an inventory of 9,500 stock keeping units annually, according to the Malaysian Investment Development Authority (MIDA).
Much like the firm’s largest distribution centre in Germany — in terms of structure and technology — the new Malaysia hub is among the ten largest regional distribution centres for Ikea globally.
Covering 100,000 square metres, the specialised warehouse will utilise its integrated ICT systems and automation to reduce the dependency on labour and significantly increase the efficiency and accuracy of its inventory management processes.
It will supply to 12 existing retail stores in the region. IKEA plans to grow its number of stores in ASEAN to 20 by 2026.
“The establishment (of the warehouse) also adds momentum toward 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,” Minister of International Trade and Industry Mustapa Mohamed told Reuters.
Via initiatives such as the principal hub scheme, the Malaysian government is bent on attracting large, multinational firms to set up distribution centres on its shores.
Earlier in the year, Chinese e-commerce giant Alibaba Group set up a regional distribution hub in Malaysia to cater to its fast-growing business in the region.
To date, MIDA has approved a total of 26 similar projects since its introduction in May 2015. Other companies taking part in the scheme include Honeywell, Super Group, Avago Technologies, Lotte Chemical Titan, Daikin and Sharp.