A modern supply chain can have several components, the figure below shows how a normal supply chain in Manufacturing industry like IKEA can be seperated into different sectors. The primary sector includes raw material acquiring, the secondary sector is manufacturing, and the rest of supply chain such as Distribution and Retailer can be categoried into Tertiary sector. One goal of a sustainable supply chain is trying to organize its operation in each sector to pose a positive impact on the environment.
Though IKEA doesn't own its Primary sector, it develops a very close relationship with all its raw material supplier. Price is an important factor when it chooses a supplier, but not the only one. In order to make it product environmental-friendly, IKEA has developed a set of standards to measure the quality of materials as well as the impact on the environment.
The tool IKEA used to evaluate the environment impact is called "e-Wheel", which helps IKEA to analyze the four stages of the lifetime of a product, including Resource Extraction, Production, Use, Recycle/End of Life, as well increase suppliers' understanding of sustainability. Some details are as follows:
1. Resource Extraction: Use wood more / Increase the proportion of renewable and recycled raw materials /
As little raw material as possible should be used
material is been used
Those suppliers who achieve the goal of eWheel and IWAY will have a volume commitments from IKEA to create long-term partnerships. By committing to buying large volumes in the next few year not only IKEA can negotiate lower prices, but also suppliers will be motivated to undertake sustainable practice with the security of having guaranteed orders.
1. Discrete and flatter design and compact packaging help IKEA to delivery more products in every load-carrying unit at a time, reducing both emissions and transport costs
2. Increase usage in Railway and Sea transport for national or international delivery
3. Applying low-energy light bulb to its workforce, and switched its fleet of company cars to low-emission hybrid models
4. Sets a goal in recycle 90% of materials from its waste products
5. Removed plastic carrier bags from its stores completely
6. Encourges employees commute by bike or on public transport by offering subsidised travel tickets