IKEA purchases products from more than 1800 suppliers, using 42 trading service offices world over, making it a very high-volume retailer. The increasingly stringent environmental legislation passed by ruling public bodies as well as social pressure on organisations is also positively inducing them to become aware, responsible, and push forth improvements in the environment (Mueller, 2018). Currently, the business sources wood from 50 different countries, including Vietnam, Sweden, Poland, Russia, Lithuania and Germany. Consumers expect more from their favourite brands, companies and retailers, therefore one of the motivators for moving towards sustainability is consumer demand. 208,000. ‘sustainability is a huge topic that encompasses many big issues. Business Assignment Leading companies have strong procurement methods and standards, along with supplier codes of conduct and a strong drive to improve their core operations. 438 0 obj <>stream 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). IKEA was founded in Sweden in 1943. Sustainability can be associated with social, economic and ecological resources and an organisation’s corporate social behaviour is closely monitored by investors, employees, regulators, customers and communities (Rassart, 2019). Information in this assignment should not be used to form the basis for any kind of financial or investment advice, as the content may contain inaccuracies or be out of date.. 3579 words (14 pages) Business Assignment, 14th Dec 2020 *You can also browse our support articles here >, Developing a Business or a Career in Business. 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. The company issues its global sustainability report yearly and is very popular with the media; however, the Making this is a more economically sustainable method (Murray, 2019). A systematic review of sustainable supply chain management in global supply chains. 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. Y.K.Fung, R., Morton, B., & Chong, S. (2000). 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. Another key component associated with its success is its sustainable communications and relationship with material suppliers and manufacturers. These steps increase costs for both the manufacturer and retailer hence, IKEA allows customers to assemble and integrate the furniture themselves. IKEA uses more renewable and recycled materials than ever to eliminate waste in our operations and to change how we design products. (2019). endstream endobj 413 0 obj <> endobj 414 0 obj <>/Rotate 0/Type/Page>> endobj 415 0 obj <>stream Fashion labels like H&M and Adidas have also launched recycled collections, and smaller brands and retailers are trying to catch up (Adidas, 2019). 4 IKEA SUSTAINABILITY REPORT | FY18 | PEOPLE & PLANET POSITIVE The IKEA business in FY18 422. Six Steps to a More Ethical and Sustainable Supply Chain. IKEA wants to offer sustainable home furnishing solutions that enable the many people to create sustainable lives at home. Do you have a 2:1 degree or higher in business or a related subject? Becoming People & Planet Positive it plans to use only recycled and renewable materials in its products by 2030 (Ringstrom, 2018). We also use sustainable wood sources, like bamboo, to make more eco-friendly furniture. 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. The pieces are placed into flat packages, which are convenient and take up less room in trucks, thereby increasing the number of products which can be shipped in the limited area. Laurin, F., & Fantazy, K. (2017). 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. 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. Koberg, E., & Longoni, A. Achieving zero emissions home deliveries by 2025*. Murray, T. (2019, April 18). Incorporating sustainability into a company’s supply chain is complex but can help to reduce risks using several initial steps (Culp, 2012). Knowing the level of environmental impact and viability of different vendors and customers is becoming common as most industries move towards a more sustainable future. As most IKEA furniture is designed and sold in pieces, the ‘Do-It-Yourself’ concept lowers packaging costs. “At IKEA, we’re moving ahead with sustainability while working to understand the important and urgent needs customers have, and how to support them through these unprecedented times.” This does not mean, both panelists emphasized, any reduction in their companies’ commitment to environmental and social sustainability. Expanding the offer of affordable home solar solutions to 29 IKEA markets* by 2025. Egmond, N., & Vries, H. d. (2011). IKEA offers well-designed, functional and affordable, high-quality home furnishing products made with care for people and the environment. Similarly, the Japanese earthquake and tsunami-affected the extended business of global electronics production. Reducing the total IKEA climate footprint by an average of 70% per product, by 2030. In a statement issued along with the group’s 2030 sustainability strategy document, Torbjorn Loof, Inter IKEA CEO, said, “Through our size and reach we have the opportunity to inspire and enable more than one billion people to live better lives, within the limits of the planet.” 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). in more than 50 markets. 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. 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. visits to IKEA websites EUR 38.8 billion. 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. For a product and its packaging to be classified as more sustainable, it must score a certain number of points in the IKEA Sustainability Product Score Card. h�b```f``��\ZB ���� Sustainability: The search for the integral worldview. Clothing and shoe brand Timberland attempts to ensure all their produces are made in an environmentally friendly manner. IKEA’s sustainability initiative focuses on four areas: products and materials, suppliers, climate change and community involvement. These are two of the main product attributes. For us, it’s about balancing economic growth and positive social impact with environmental protection and renewal. The idea of environmental supply chain management is to create synergy and support efficiency throughout the steps in the supply chain, to enhance environmental performance, minimise waste and save costs. It is working on developing new products like ‘MISTELN mist nozzle’ with a start-up called Altered, which can reduce water use by more than 90% and ‘GUNRID air purifying curtains’ which are being developed with universities in Asia, Europe, IKEA suppliers and innovators. Reference this, Tags: Business AssignmentsInternal AnalysisExternal AnalysisBusinessSupply ChainIKEA. Themes and challenges in making supply chains environmentally sustainable. These techniques and processes grant a competitive advantage to IKEA as it seeks more advanced methods to organise its supply chain well. Abbasi, M., & Nilsson, F. (2012). 844 Words 4 Pages. 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). You can view professional samples here. The inventory reorder points and products are supervised by the in-store logistics manager who uses the inventory replenishment process developed by IKEA and known as ‘minimum/maximum settings’ to replenish stocks. Graciola, A. P., Rizzon, F., Milan, G. S., Toni, D. D., Rocha, J. M., & Olea, P. M. (2018). %PDF-1.3 %���� The global Ikea group has already more than trebled the sales from its “sustainable life at home” products. You can learn more about our efforts to work with better materials and reduce waste through the … This is where IKEA uses the ABC inventory management technique, i.e. The sustainability report describes how the IKEA business tackles global challenges such as climate change, unsustainable consumption and inequalities. VAT Registration No: 842417633. 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. 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. Sustainability, Retail and Supply Chain: Twenty years of Research. In an interview with Ethical Corporation, Pia Heidenmark Cook concedes that it still early days for circularity. However, it has also been receiving less welcome attention from other environmental groups who are claiming that Ikea is willfully deceiving its customers and hiding behind a "flawed" certification system. It aims to source 100 percent of wood, paper and cardboard from more sustainable sources, defined as recycled or FSC® certified wood by 2020. ��&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�{ Free resources to assist you with your business studies! Ikea has received public endorsements by groups such as WWF for its scaling up of its commitments to sustainable forestry practices. 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. This is how containers and trailers can be fully and efficiently utilised, reducing the greenhouse gas emission per unit of cargo. 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. 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. Now, the company just released its 2018 Sustainability Report, which promises more exciting things to come. Christoph Mathiesen, Sustainability Developer at IKEA Food, works directly with suppliers and advisors on how the IKEA Food business can achieve the sustainability goals that it has set. 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