Building a sustainable supply chain An IKEA case study
Page 4: The secondary sector
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 a honeycomb-paper filling material instead of solid wood for the inside of table tops (e.g. the LACK series).
As manufacturers or suppliers add value to products, the IWAY code of practice identifies IKEA's minimum requirements.
The IWAY code of practice expects suppliers to:
follow national and international laws
not use child labour
not use woods and glues from non-sustainable forests
reduce their waste and emissions
contribute to recycling
follow health and safety requirements
care for the environment
take care of their employees
The application of the code raises standards. Each of the requirements within the code of conduct helps to develop sustainable business activities. They have a positive impact on the business environment in which the suppliers operate. They also improve the experience of people working for those businesses. To monitor suppliers, IKEA regularly carries out an IWAY audit. This involves talking to employees and inspecting documents and records. IKEA visits suppliers on-site on a number of occasions to ensure that they are following the code of conduct.
The code of conduct for suppliers and the work with other organisations underlines IKEA's commitment to 'low price but not at any price'. Although IKEA wants its customers to enjoy low prices, this should not happen at the expense of its business principles.
In 2000 IKEA formed a partnership with UNICEF to work on a community programme in Northern India. The aim of the work was to prevent child labour by raising awareness and addressing the root causes.
IKEA has also formed a partnership with the World Wildlife Fund (WWF). IKEA and WWF have committed themselves to promoting the sustainable use of natural resources. This helps to ensure that forests can be used both now and in the future.
To support sustainable partnerships with suppliers, IKEA works with other organisations.
For example, IKEA and WWF actions have led to:
a series of training courses for people in Russia, Bulgaria, Romania and China on responsible forest management
the development of forestry plans in China
demonstrations to managers in Latvia on the benefits of responsible forestry
All these projects show IKEA's commitment to supporting sustainable practices.