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IKEA’s Ethical Procurement Practices
Abstract
The case discusses the ethical procurement practices of the world’s largest furniture retailer, Sweden-based IKEA, a specialist in stylish but inexpensive furniture in Scandinavian designs. Initially, the company was accused of large-scale cutting of trees and using chemicals in furniture manufacturing. Thereafter, IKEA started working toward better procurement practices. In 2000, in an attempt to improve its operations and processes and minimize the negative impact of these on society and the environment, IKEA launched a set of environmental and social standards called the ‘IWAY’. Under IWAY, a set of directives was specified for IKEA’s suppliers; it was mandatory for all the suppliers to abide by IWAY that outlined the requirements for procuring the raw material, maintaining environmental balance, and waste disposal, among other things. IKEA terminated its contract with some of its suppliers due to their non-compliance with the IWAY standards. |
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Issuess
The case is structured to achieve the following teaching objectives:
- Understand IKEA’s Ethical Procurement Practices
- Study IKEA’s IWAY code of conduct that its suppliers were expected to follow
- Examine the various factors which led to establishment of IWAY
- Study IKEA’s relationship with its customers and suppliers
- Discuss the pros and cons for customers, suppliers, the environment, and for IKEA itself of having a stringent code of conduct like IWAY
- Discuss the ways by which IKEA could strengthen its relationship with suppliers and customers
| Contents |
| Introduction |
| Background Note |
| Ikea Culture |
| Environment Friendly Products |
| Bilding Awareness |
| Symbiosis With Suppliers |
| Ikea For Customers |
| Challenges |
| Exhibit |
Keywords
IKEA, Ethical Procurement, IWAY, Environmental balance, Waste disposal, Suppliers, Forestry , Sustainability ,Environmental Action Plan eWheel
