Building a sustainable supply chain
An IKEA case study

Page 1: Introduction

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It is easy to think about the present without considering the future. Consumers want more goods and services to improve their standard of living. The problem is they make choices about goods and services that have long-term consequences for the environment. In our modern world, organisations need to show responsibility. This means that they use resources efficiently, do not harm the environment...
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Page 2: Sectors of industry and sustainable supply chains

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When consumers go to a retailer like IKEA, they will be looking at the different ranges of products and how they are presented. They may also look for quality customer service. However, consumers may not be aware that before products reach them, they must move from being raw materials through a variety of stages to become finished products suitable for sale. This is known as the supply chain. The...
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Page 3: The primary sector

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IKEA is not a primary sector organisation but it needs raw materials to develop its products. It therefore works closely with primary sector suppliers to ensure a sustainable impact on the people and the environment in which it operates. The primary sector involves the development of the raw materials. IKEA designs its own products. At the design stage, IKEA checks that products meet strict...
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Page 4: The secondary sector

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Manufacturers within the secondary sector create IKEA products from raw materials. As products move through the supply chain, the process of value-added takes place. IKEA designs many of its products so that the smallest amount of resources can make the best products. For example, IKEA saves on resources by using hollow legs in furniture (e.g. the OGLA dining chair). Another example is by using...
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Page 5: The tertiary sector

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Businesses in the tertiary sector provide a service, such as banking, transportation or retailing. They do not extract the raw materials or make products themselves. 11% of businesses within the UK are retailers.  In the tertiary sector, IKEA's retail stores add value to manufactured goods by providing a form of shopping different to the usual high-street experience. IKEA has more than 260...
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Page 6: Conclusion

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IKEA's long-term ambition is to become the leading home furnishing company. However, for IKEA, getting there is not simply about developing profitability and market share. As a global organisation IKEA has chosen to undertake a leadership role in creating a sustainable way of working. It has educated suppliers to understand how and why sustainable production is vital. This has helped IKEA...
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Teaching resources for this case study

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    These are the teaching resources associated with the case study: Building a sustainable supply chain

    This case study looks in detail how IKEA has achieved its aim to be a responsible business in each of the three sectors of the supply chain.

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