Building a sustainable supply chain An IKEA case study
Page 3: The primary sector
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 requirements for function, efficient distribution, quality and impact on the environment. Low price is one of the main factors that IKEA considers in producing well designed, functional home furnishings available to everyone.
IKEA buys products from more than 1,300 suppliers in 50 countries. It uses a number of trading service offices across the world. They negotiate prices with suppliers, check the quality of materials and analyse the environmental impacts that occur through the supply chain. They also keep an eye on social and working conditions at suppliers.
IKEA uses a tool - the 'e-Wheel' - to evaluate the environmental impact of its products. The e-Wheel helps IKEA to analyse the four stages within the life of a product. This also helps suppliers improve their understanding of the environmental impact of the products they are supplying.
Approximately 50% of IKEA's 9,500 products are made from wood or wood fibres. This is a good resource as long as it comes from sustainable sources. It can be recycled and is a renewable resource.
IKEA creates many design solutions to minimise the use of materials. For example:
some tables are made out of recycled plastic
some rugs are made of material clippings that would otherwise be wasted
products such as water cans are designed to be stacked. This means that more can be transported in each load, reducing the number of lorry journeys and therefore lowering fuel costs.
Each of these ideas helps IKEA's products to be more sustainable and reduce the impact on the environment.
Supplier codes of conduct
A key part of IKEA's success is due to its communications with materials' suppliers and manufacturers. During manufacturing IKEA specifies to its producers that waste should be avoided. Where waste does occur IKEA encourages suppliers to try to use it in the manufacture of other products. IKEA has a code of conduct called the IKEA Way of Purchasing Home Furnishing Products (IWAY). This contains minimum rules and guidelines that help manufacturers to reduce the impact of their activities on the environment. The IWAY code complies with international legislation.
A product in use should not have a harmful effect upon consumers or their environment. For example, it should not cause allergies. If it uses energy, it should do so efficiently. When a product comes to the end of its useful life, it should be possible to reclaim or recycle the materials that make up the product. Such materials can then be re-used for making other products.