Building a sustainable supply chain
An IKEA case study
Page 1: Introduction
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 and consider how what they do affects the ability of future generations to meet their needs. [pic]
IKEA aims to be a responsible organisation. It sells low-price home furnishing products around the world. These include furniture and accessories for kitchens, bedrooms, living rooms, bathrooms and children”s rooms. IKEA now has stores in 36 countries around the world. It has come a long way in its 60 years of business. IKEA vision
The direction for the organisation is provided by its vision. This acts as a guide for everybody within and outside the organisation about what IKEA wants to achieve. IKEA's vision is 'To create a better everyday life for the many people.' To meet its vision IKEA provides many well-designed, functional products for the home. It prices its products low so that as many people as possible can afford to buy them. [pic]
However, in creating low prices IKEA is not willing to sacrifice its principles. 'Low price but not at any price' is what IKEA says. This means it wants its business to be sustainable. IKEA supplies goods and services to individuals in a way that has an overall beneficial effect on people and the environment. Customers all over the world have responded positively to IKEA's approach. This is evident in its increasing sales. In 2006 IKEA had a group turnover of nearly 18 billion euros. Page 2: Sectors of industry and sustainable supply chains
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. [pic]The supply chain involves a flow of production and processes through each of the three industrial sectors: [pic]
IKEA takes its responsibilities seriously and organises its operations in order to have a positive effect upon the environment: [pic]
• It aims that all the products and materials it takes from the primary sector do not harm the environment. • Its products are manufactured in a responsible way.
The 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.
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. Environmental impact
IKEA uses a tool - the 'e-Wheel' - to evaluate the environmental impact of its products. The e-Wheel helps IKEA to...
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