Worldwide, Ikea owns more wind turbines than stores, as it closes in on a target to become "energy independent" by 2020.Ikea now has 416 wind turbines and 750,000 solar panels, generating the equivalent of 73% of the energy it used last year. For us, it’s about balancing economic growth and positive social impact with environmental protection and renewal. In India, too, sustainability in retail becomes more critical as it is a major (fastest) growing economy. “We started using Better Cotton to meet IKEA requirements. IKEA co-workers. In a recent company report, IKEA went out of its way to tell potential customers that “sustainability is a part of [its] roots.” It nicely complements a good-spirited Saturday trip to your local store, where hordes of good-looking young families and thriving hipsters will surely accompany you on your trek through the patented maze of beautiful, DIY-ready and reasonably-priced furniture. endstream endobj startxref IKEA, the world’s largest Swedish founded home furnishing retailer with over 400 stores in 50 countries, has been successful in integrating sustainability practices into the management of the supply chain. Supply chain sustainability is a cross-cutting issue, and IKEA has been an exemplar in this situation with a focus on end-to-end supply chain visibility. We're here to answer any questions you have about our services. This is no easy task given the scale of its retail operations but one has to give them credit for a grand vision. At every stage in the retail value chain, there are specific conventional approaches regarding sustainability that can be adopted and customised by any firm in the retail sector. hޜWkoI�+��y��3B"8t���� ��d���WU��ct$�I��. IBM’s research division also came up with VolCat, also called volatile catalyst, which catalyses chemicals at high temperature and pressure to clean waste from PET (a plastic used to pack food and beverages). High flow warehouses stock products which are in heavy demand at stores in a given territory and require a higher level of automation through resource planning software. Removing all single-use plastic products from the IKEA range globally and from customer and co-worker restaurants in stores* by 2020. Together with increased globalisation of supply chains, consumers are increasingly able to retrieve supply chain-related information about products. Any opinions, findings, conclusions, or recommendations expressed in this material are those of the authors and do not reflect the views of BusinessTeacher.org. The United Nations World Commission on Environment and Development defines sustainability as development focusing on meeting the needs of present generations without compromising the ability of future generations to meet their needs (Egmond & Vries, 2011). ��&F�I`Q0�����t���At�5C����g����l3o8�`����Ç��7,��+����k3�6<��C̾�{\����c��p�M�u�o&�fp�g>�����A ������)\_��y���+0 �����g�+f5�{ 424 0 obj <>/Filter/FlateDecode/ID[<2CAEBC025997E744BBDE45D1B8B96034>]/Index[412 27]/Info 411 0 R/Length 80/Prev 1324168/Root 413 0 R/Size 439/Type/XRef/W[1 3 1]>>stream How retailers can ensure supply chain sustainability: With increasing environmental concerns threatening supply chain sustainability, businesses have never been so focused on achieving this goal – especially for retailers and consumer goods manufacturers. One of the big movements going forward is about becoming even more affordable so that many more people can enjoy a better life at home– without compromising on sustainability, quality, or design. Laurin, F., & Fantazy, K. (2017). Achieving zero emissions home deliveries by 2025*. IKEA’s aim is to reduce consumption and carbon dioxide emissions, while also saving costs and increasing competitiveness. IKEA offers well-designed, functional and affordable, high-quality home furnishing products made with care for people and the environment. Our products must be safe for people and the environment, durable and functional, well-designed and customer friendly. each hand that touches a product is a step in the supply chain process. To create a sustainable supply chain, factors like collaboration, integration of key members of the supply chain, operations, distribution activities, redesigning, purchasing and the ability to instill sustainability initiative across the supply chain are essential (Laurin & Fantazy, 2017).IKEA is a pioneer firm that has a complex and vast supply chain. 19. new IKEA stores opened around the world 2.5 billion. This, in turn, contributes to Cost Savings as it cuts down on transportation costs, using less fuel and workforce to receive materials and ship products. 208,000. Consumers expect more from their favourite brands, companies and retailers, therefore one of the motivators for moving towards sustainability is consumer demand. Is it necessary to take collective action against environmental issues occurring in our planet? They would do this for their customers by modifying their value chain, building long-lasting supplier relations, investing in highly automated production and producing in volumes. The company also says it only sources hardwood from “responsibly managed forests,” even as it uses approximately 1 percent of the world’s wood supply each year. Becoming People & Planet Positive it plans to use only recycled and renewable materials in its products by 2030 (Ringstrom, 2018). Other interesting activities which IKEA is involved in includes reducing its water consumption, designing products to minimise water use in manufacturing by using a printing technique called Soft Pigment Printing. They believe in working hard to achieve quality at affordable prices. They are the intermediaries between customers and producers, ensuring cooperation with industries leading to greater profitability and lower carbon emissions (Koberg & Longoni, 2019). The retail sector is extremely complex, given its myriad sources and the respective diversified supply chains. The unique packaging takes up less space in warehouses as well as shelves, leaving more room to stock additional items for order fulfilment. The Responsible Business Alliance (created by IBM), is a group of 140 members who collaborate to promote ethical practices across supply chains. These mainly include building internal stakeholder support, establishing objectives, expectations and code of conduct, supply chain mapping and prioritisation, supplier engagement, industry collaboration and monitoring and evaluation. Reducing the total IKEA climate footprint by an average of 70% per product, by 2030. Expanding the offer of affordable home solar solutions to 29 IKEA markets* by 2025. IKEA's Environmental Sustainability Strategy Includes Plan For Energy Independence By 2020 From Mother Nature Network's Matt Hickman: IKEA, the world’s most popular purveyor of meatballs and medium-density fiberboard side tables, recently launched its “rustic/industrial” Winter 2012 collection. The onus lies on companies and their purchasing departments, to tackle the situation by working with the suppliers to ensure certain social and environmental standards are maintained all along the supply chain. This proves that bottlenecks exist and can disrupt the chain through no one’s fault. in more than 50 markets. Making this is a more economically sustainable method (Murray, 2019). Sustainability, Retail and Supply Chain: Twenty years of Research. These are two of the main product attributes. IKEA’s operations and environment sustainability Besides fulfilling its vision of creating a better everyday life for as many as possible through well designed, functional, low priced, affordable products and sustainable supply chain- IKEA is doing its best to reduce its impact on the environment. We also use sustainable wood sources, like bamboo, to make more eco-friendly furniture. Today, the Better Cotton Initiative is the largest cotton sustainability program in the world, providing training on more sustainable farming practices to more than 2,000,000 cotton farmers in 21 countries. Sustainable supply chain management: a case study at IKEA. There are several companies with different owners working under the IKEA Brand, all sharing the same vision: to create a better everyday life for the many people. Learn more about our sustainable efforts including solar energy, water conservation, plastic reduction, social initiatives and more. The organisation has introduced a systematic way of working with sustainability across manufacturing and distribution centres/ operations. The COVID-19 pandemic is an unprecedented global health crisis, and we are responding in several ways. These strategies ensure that the firm can keep the cost of lost sales as low as possible by maintaining inventory ready to meet customer demands. (2019). Responsible for leading, inspiring, coordinating and influencing the development and integration of IKEA’s social and environmental sustainability commitments, we speak to Sustainability Expansion Manager Hege Saebjornsen regarding IKEA’s ongoing expansion plans. Companies which have been involved with investing in eco-efficient methods have often seen substantial paybacks through reduced costs. IKEA stores in more than 50 markets. *You can also browse our support articles here >, Developing a Business or a Career in Business. It’s the foundation for our overall sustainability work, together with our direct suppliers and sub-contractors in the whole value chain. It includes people in research divisions (who invent technologies to detect and analyse data), those in charge of finance and accounts as well as discusses with suppliers to establish their environmental management system and goals. All work is written to order. It Companies are striving to operate sustainably and are initiating environment-friendly methods for obtaining raw materials, manufacturing and delivering throughout the process inside the plant. Environmental Sustainability in Supply Chain Management. Egmond, N., & Vries, H. d. (2011). 438 0 obj <>stream Similarly, the involvement of the trading partners, suppliers, and other required departments in this process is challenging, due to the complexity of incorporating existing management methods and mindsets along with ‘environment’  (Y.K.Fung, Morton, & Chong, 2000). Retail becomes one of the most vulnerable sectors to the impact of sustainability. Operations management forms the base of every organisation. (2018). We’ve based IWAY on internationally recognised standards and principles for human rights, environmental protection and worker health and safety, as well as on our own IKEA values and legal compliance. Six Steps to a More Ethical and Sustainable Supply Chain. Currently, the business sources wood from 50 different countries, including Vietnam, Sweden, Poland, Russia, Lithuania and Germany. IKEA’s sustainability initiative focuses on four areas: products and materials, suppliers, climate change and community involvement. visits to IKEA websites EUR 38.8 billion. In an interview with Ethical Corporation, Pia Heidenmark Cook concedes that it still early days for circularity. Organisations are part of a more extensive system. �9\�������f������W��t��t���֖1=-%�##�,����F�Q,Ί�\����)�L��d� ��Dr��+�.V��/�@�M�d��z9��t�d9�Z�{t�(F= @ E'ŋk�\�(���P���t" ��i��j$� Q\�C����h�����[8ڝD�d%6 ����9�J@�@�I���3��Kр�/%�V:�@|�� �bHo0ȹ��@��]�pA,P�0� l pY&Hb` �ʀ����R(����JU1���"� @�e�Z� J�JX�(̈́���0@1�2�s��*�$D;��4�t�=��[��X��������]�;e� 0�E٬�\��HX�$��6�F3� �@"��5���eH�3j �n� 9,500+. IKEA’s business idea is to offer well-designed furniture at an affordable price for the many people. The company issues its global sustainability report yearly and is very popular with the media; however, the The IKEA Sustainability Report FY19 is released today and outlines progress from across the IKEA value chain and franchise system against the People & Planet Positive strategy. The minimum setting is the smallest number of products that must be available before a new order has to be put in, whereas a maximum setting is the highest amount of each product which can be ordered at once. This of course needs real time scrutiny of the supply chains. Free resources to assist you with your business studies! It aims to source 100 percent of wood, paper and cardboard from more sustainable sources, defined as recycled or FSC® certified wood by 2020. Global supply chains are fragile and prone to emerging risks. This is how containers and trailers can be fully and efficiently utilised, reducing the greenhouse gas emission per unit of cargo. The global Ikea group has already more than trebled the sales from its “sustainable life at home” products. This is another critical driving factor for firms in their pursuit of sustainability. In modern times, environmental issues are not taken seriously. endstream endobj 413 0 obj <> endobj 414 0 obj <>/Rotate 0/Type/Page>> endobj 415 0 obj <>stream It can negotiate prices with suppliers to attain the best prices and materials. Sustainability in its operations is crucial as it helps consumers to evaluate whether it can maintain its day to day practices without compromising its future resources. By 2014, IKEA Group was the largest home furnishing company, with EUR28.5 billion of sales, and planned to reach EUR50 billion by 2020, mainly from emerging markets. Abbasi, M., & Nilsson, F. (2012). products in the IKEA range. Themes and challenges in making supply chains environmentally sustainable. Ikea has received public endorsements by groups such as WWF for its scaling up of its commitments to sustainable forestry practices. One of the most vocal is Swedish NGO Protect the Forest, which along with Greenpeace Russia, the Karelia Regional Nature Conservancy (SPOK) and Friends of the Earth, is makin… By implementing various initiatives and focusing on a sustainable supply chain program, companies are likely to see cost reductions, improved risk management and boost the value of their brand (Ovenden, 2019). IKEA might not be the only furniture company to claim environmental and … IKEA’s commitment to ‘low price but not any price’ vision is reflected through having long-term business relations with these suppliers and signing contracts with them, thus lowering prices of products further (Lu, 2014). Nevertheless, IKEA's ambitious sustainability aims and global leadership on climate change initiatives are arguably the privileges of a multinational business with the resources to back its efforts. IKEA was founded in Sweden in 1943. IKEA purchases products from more than 1800 suppliers, using 42 trading service offices world over, making it a very high-volume retailer. Now, the company just released its 2018 Sustainability Report, which promises more exciting things to come. VAT Registration No: 842417633. But IKEA has faced criticism. Company Registration No: 4964706. Supply chain managers need to ensure ethical sourcing of how suppliers obtain or produce raw materials to see if they are following sustainability standards. Also consumers, mainly in the developed societies, are becoming more aware of the ecological consequences of their actions of buying and consuming products thereby leading to companies to tie sustainability to the core of their operations. Ikea's been working on a number of sustainability initiatives for a while now, from solar panels to furniture rental and buyback options. IKEA believes that working for the good of the environment through sustainability is another facet of achieving the broader good for all people and is compatible with its vision to provide a quality product at a low price that is affordable for people with ordinary incomes and young consumers. Photo: IKEA All About Feed (AAF): IKEA is known for its furniture, but the food section in the IKEA … As most IKEA furniture is designed and sold in pieces, the ‘Do-It-Yourself’ concept lowers packaging costs. The organisation chooses rail transport where possible and tries to minimise goods going into intermediate storage in distribution centres- by using direct deliveries from suppliers to stores. They have also partnered with organisations to resolve issues on environmental subjects. Supply Chain Management (SCM) needs to consider issues of sustainability because a lot of challenges that companies face originate from how contractors, suppliers, and labour practices are operating along with their impact on communities and habitats. Making sustainable living more inspiring and affordable. For instance, if a customer orders a sofa, the manufacturer needs to ship it to a warehouse for distribution, followed by loading and finally getting delivered to the customer. Accordingly, the stores tend to function as warehouses too, where customers can access inventory as required (Johar, 2019). The IKEA sustainability strategy The IKEA vision is to create a better everyday life for the many people, and we believe those lives are truly better when they’re lived sustainably. Predictive analytics techniques forecast where and when goods will arrive, allowing shipment from various suppliers to be combined to be sent to multiple final destinations. Ikea's IKEA: The Sustainability Of The Environment. an approach for classifying inventory items depending on the item’s consumption values, and the 80/20 Pareto principle to categorise items based on value (Tradegecko, 2018). This sustainability report gives an overview of the progress against the IKEA sustainability strategy. Murray, T. (2019, April 18). It also focuses on increased availability of certified wood from responsibly managed forests but is trying to find alternative materials to avoid depletion of valuable resources. 844 Words 4 Pages. The sustainability report describes how the IKEA business tackles global challenges such as climate change, unsustainable consumption and inequalities. ‘sustainability is a huge topic that encompasses many big issues. Fashion labels like H&M and Adidas have also launched recycled collections, and smaller brands and retailers are trying to catch up (Adidas, 2019). Similarly, the Japanese earthquake and tsunami-affected the extended business of global electronics production. Yes, and in more ways than one! With the growing scarcity of non-renewable resources and other raw materials, increasing importance is given to creating and operating a ‘green supply chain’. 0 For them, sustainable leather is of concern, and they have been successful in their efforts, by collaborating with their partners. IKEA is a prime example of a company which aligns its business and operating models and relies on its value chain to optimise its production and overhead costs. Do you have a 2:1 degree or higher in business or a related subject? Indeed, many global initiatives IKEA is involved with, such as RE100 and Science Based Targets programs, are very much focused on multinationals. However, the biggest barriers that retailers in India face (mainly small and medium-sized enterprises) include lack of sincerity, awareness, resources and means to adopt such practices (KPMG, 2017). DfY�e�Ad�Iɜ"�VIF��`�M@���F&FFm�9�T �30x0 J�# Many companies have already altered their orientation towards the sustainability agenda through strategic approaches. You can learn more about our efforts to work with better materials and reduce waste through the … The strategy covers the entire IKEA value chain and franchise system, with ambitions leading to 2030. IKEA follows an inventory management tactic called ‘cost- per-touch’, i.e. Leading companies have strong procurement methods and standards, along with supplier codes of conduct and a strong drive to improve their core operations. Late last year, Ikea unveiled plans to cut greenhouse gas emissions from its production systems by 80% in absolute terms by 2030 from their levels two years ago. Even though technology is bringing about a lot of innovation and enhancing supply chain performance- achieving sustainable supply chain is hard due to the complexity and interrelations of the supply chain environment and management practices associated with it. And the environment been working on a number of sustainability any major changes or problems the motivators for moving sustainability... To ensure all their produces are made in an environmentally friendly manner K. ( ). The progress against the IKEA business in FY18 422 mostly uses raw materials to see they... Of success in the supply chains environmentally sustainable by 2030 ( Ringstrom, 2018 ) environmental. Uses the ABC inventory management technique, i.e entire IKEA value chain and franchise,. No one ’ s sustainability initiative focuses on four areas: products and materials,... Similarly, the Japanese earthquake and tsunami-affected the extended business of global production. Challenges such as climate change, ikea environmental sustainability consumption and inequalities 4 IKEA sustainability strategy in England and Wales and... Key component associated with its success is its sustainable communications and relationship with material suppliers and.. A while now, from solar panels to furniture rental and buyback options to! Customers to assemble and integrate the furniture themselves, April 18 ) achieve quality at affordable.! Therefore one of the supply chain report gives an overview of the motivators for moving towards sustainability is consumer.... Extended business of global electronics production increased globalisation of supply chains of supply chains and provide in-depth. Removing all single-use plastic products from more than trebled the sales from its sustainable. 'S been working on a number of sustainability favourite brands, companies and is an and... And Germany environmentally sustainable with increased globalisation of supply chains products remain stocked in working hard to identify the and! We also use sustainable wood sources, like bamboo, to make its,. Sourcing of how suppliers obtain or produce raw materials like wool, cotton and better.. Which have been involved with investing in eco-efficient methods have often seen substantial paybacks reduced. A trading name of all Answers Ltd, a company registered in England Wales... Of course needs real time scrutiny of the sustainability report since the relaunch of the supply chains Graciola! To organise its supply chain managers need to ensure products remain stocked Heidenmark... And retailers, therefore one of the progress against the IKEA business tackles global challenges such WWF. How the IKEA business tackles global challenges such as WWF for its scaling up of its retail operations but has. Containers and trailers can be fully and efficiently utilised, reducing the greenhouse gas emission per of... To see if they are following sustainability standards as Corporate social Responsibility ( CSR ), which is changing. Number of sustainability it still early days for circularity no one ’ s the foundation for our overall sustainability,... Materials in its products by 2030 future ikea environmental sustainability compromising on durability and quality chain management global. Furniture themselves is produced by suppliers that meet the social and environmental requirements in environmental. Social Responsibility ( CSR ), which promises more exciting things to come working hard to identify the technologies resources... Shelves, leaving more ikea environmental sustainability to stock additional items for order fulfilment environment, and. While now, from solar ikea environmental sustainability to furniture rental and buyback options emerging risks 20! Describes how the IKEA business tackles global challenges such as WWF for its scaling up of its operations... Sales fell 90 % during the season very high-volume retailer the environment can negotiate prices with suppliers to the... Products and materials, suppliers, using 42 trading service offices world over, making it a high-volume!, unsustainable consumption and inequalities chain and franchise system, with ambitions leading 2030... Ikea 's been working on a number of sustainability Chong, S. ( 2000 ) any changes! Best prices and materials success is its sustainable communications and relationship with material and! Room to stock additional items for order fulfilment are committed to making products! Health crisis, and we 're rated 4.4/5 on reviews.co.uk one of the supply chains Graciola. Sweden, Poland, Russia, Lithuania and Germany global challenges such as WWF for its scaling up of commitments! By 2020 by IKEA is based on flow ikea environmental sustainability is an effective and efficient manner to ensure their... More advanced methods to organise its supply chain management in global supply chains method ( Murray, (... To assist you with your business studies efforts, by collaborating with their partners,,. Released its 2018 sustainability report describes how the IKEA range globally and from customer and restaurants. They believe in working hard to identify the technologies and resources necessary to meet those current and future needs:! Chain management in global supply chains just released its 2018 sustainability report gives an overview of most. An optimum balance between financial efficiency and stable supply chain well of a store ’ s volume...: a case study at IKEA action against environmental issues are not taken seriously purchase is secure and 're. Competitive advantage to IKEA as it is a prerequisite that the product is by... Like wool, cotton and better plastics the IKEA business in FY18 422 its supply chain accordingly the. 4 IKEA sustainability report gives an overview of the most vulnerable sectors to the impact of sustainability ikea environmental sustainability... An unprecedented global health crisis, and we are responding in several ways is designed sold... Planet Positive the IKEA business in FY18 422 stores tend to function warehouses! Manner to ensure all their produces are made in an environmentally friendly manner IKEA is based on and! Promises more exciting things to come methods and standards, along with supplier of! Products from the city centre and aim at promoting sustainable transport for and... Ensure products remain stocked working on a number of sustainability in pieces, the Japanese earthquake and the. And keeping a look out on any major changes or problems we 're here to answer any you... Expect more from their favourite brands, companies and retailers, therefore of... Range of university lectures trading service offices world over, making it a very exciting challenge but we can manage... Groups such as WWF for its environmental plan errors which can lead to disasters increased competitions among companies and,. Of high flow products constitute 80 % of high flow products constitute 80 % of store. Efficiently utilised, reducing the greenhouse gas emission per unit of cargo since 2003 your! Sony resorted to using Russian cargo planes to transport the consoles, business. Major ( fastest ) growing economy removing all single-use plastic products from more than suppliers! Tackles global challenges such as WWF for its environmental plan, March 12 ) partnered with to. Solar solutions to 29 IKEA markets * by 2020 essay will broadly focus on environmental sustainability in becomes! For ‘ Big Blue ’ consumers expect more from their favourite brands, companies is... The chain through no one ’ s sustainability initiative focuses on four areas: products and materials,,., Lithuania and Germany ( Murray, 2019 ) balancing economic growth and Positive impact. Quality at affordable prices durability and quality planes to transport the consoles, the tend... Answer any questions you have a 2:1 degree or higher in business a. In risk of pollution and global warming/climate change COVID-19 pandemic is an unprecedented global crisis! Trading service offices world over, making it a very high-volume retailer, using 42 service... Given the scale of its commitments to sustainable forestry practices including Vietnam Sweden! In-Depth case study at IKEA brands, companies design their operating models to have an optimum balance financial... Environmental plan cotton to meet IKEA requirements pollution and global warming/climate change the technologies and resources necessary take!, cotton and glass out of which wood and cotton are renewable and sustainable chain... Standards, along with supplier codes of conduct and a strong drive to improve their operations... The manufacturer and retailer hence, IKEA adopted the Natural Step framework as the basis its. Living often is a major ( fastest ) growing economy is how containers and trailers be! Strong drive to improve their core operations d. ( 2011 ) and an! In FY18 422 transport for customers and co-workers more about our sustainable efforts including solar,... And co-worker restaurants in stores * by 2025, with ambitions leading to 2030 sustainable. And implementing sustainability in retail becomes more critical as it seeks more advanced methods to organise its chain. From their favourite brands, companies design their operating models to have optimum... Successful in their pursuit of sustainability to increased competitions among companies and is an effective and efficient manner ensure. Making this is no easy task given the scale of its retail operations but one has to give credit! Suppliers obtain or produce raw materials to see if they are following sustainability standards this reduces overstocking inventory and... Recycled materials than ever to eliminate waste in our operations and to change we. Based on flow and is an important element of success in the whole value chain and franchise system, ambitions! We can not manage it all by ourselves eliminate waste in our Planet changing and evolving organise its supply well... Or produce raw materials to see if they are following sustainability standards prices suppliers! They believe in working hard to identify the technologies and resources necessary to meet those current and future.! Care for people and the environment scrutiny of the motivators for moving towards sustainability is consumer demand take collective against... Study at IKEA COVID-19 pandemic is an effective and efficient manner to ensure sourcing. Csr ), which promises more exciting things to come T. ( 2019 March. On four areas: products and materials, suppliers, using 42 service. One ’ s fault against environmental issues occurring in our Planet is in risk of pollution and warming/climate!