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1) 1 page in length In the attachment, on pages 8 – 10, optional steps are liste
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1) 1 page in length
In the attachment, on pages 8 – 10, optional steps are listed as viable opportunities to achieve a sustainable wood supply chain in 2014. Is this achievable in today’s climate or would other extreme strategies be an option?
As a leader in the IKEA Group, what would you do as a Supply Chain Manager or CEO now, in 2022, for IKEA to sustain their sustainability strategy?
IKEA is a company that took the initiative to try and find ways to become more sustainable. This is a very important topic in the world today as many companies are looking to become more sustainable. IKEA is a leading furniture company and with that comes the need for a lot of wood. The reading outlines four different ways the company could have gone and outlines the pros and cons to each choice. Looking through these choices I do not see a clear and easy choice. Each option comes with their own downsides, it just depends which downside IKEA is willing to take on. The first option laid out was for IKEA to lease more land to use for their production of wood. The biggest pro for this option is that IKEA would have complete access and control to the wood from start to finish. Integrating vertically can considerably strengthen the control of the origin and the sustainability aspects of the wood (Rangan, Toffel, Dessain, & Lindhardt, 2017). This would eliminate the need to go through local saw mills in Russia where their prices are constantly changing. The cons to this option are that IKEA would need more capital to cover the costs of leasing all this new land. The lease would only last 49 years which is not even long enough to accomplish the goal of being more sustainable. IKEA would also need to sell all of the wood and use all of it in order for it to matter which is hard to do. When you lease the land, the company is also responsible for everything that happens on that land and must abide by all the legal laws and protecting the wildlife. This is a costly endeavor. I do not see option two working out for IKEA in the world today, especially if they wanted to lease the land in Russia. There is such a lumber shortage and a work shortage due to COVID that this whole industry is suffering. Option 2 looks to be a better option with more pros than cons. In this option, IKEA is driving higher procurement targets and standards. IKEA is sending a message to their customers that they are willing to work harder to make sure that their wood is FSC-certified. IKEA wants to use and make available FSC-certified material to use for their products. IKEA also partnered with WWF to work on projects around the global in 13 different countries. The focused on improving forest governance, responsible forest management, responsible and transparent trade, and improving production efficiency. In this option, IKEA is stepping up and showing that they are willing to go out and protect the forest and do what is right and partnering with foundations that protect. They are trying to fix their company and make it more sustainable by doing this. I think this option is the best in today’s climate because it is hard to put down an exact plan or change in the production of wood, but by doing this they are headed in the right direction. While option 3, using more particleboard, sounds good on the surface, there are some kinks that just do not seem feasible in 2022. IKEA said they “can get more particleboard than solid wood from one log of wood” (Rangan, Toffel, Dessain, & Lindhardt, 2017) which is great but people do not want particleboard, they want real wood. Particleboard is more sustainable but would not have a big appeal to customers. IKEA would also have to redesign all their products and manufactures to be able to even use particleboard which is a big investment. Option 4, using recycled wood, is similar to option 3. Using recycled wood from countries that have an overabundance sounds good but only some countries have landfill regulation and bioenergy subsides. IKEA would have access to those countries, but that supply could dry up and then all the plants that use the wood would have to adapt their processes to used recycled wood which is a heavy investment. Options 3 and 4 are good on paper and sound sustainable but with all the modifications that would have to be done it would cost a lot of money and might not even work out in the long run. If I were to make the decision and only chose one option, I would chose 2. This option came with the least amount of cons and actually was very helpful to the company and the environment.
Now more than ever, companies are trying to find ways to sustain planet earth’s natural resources. If worldwide economy activity was left unchecked, it would be on track to consume 150% of earth’s resources (Rangan, Toffel, Dessain, & Lindhardt, 2017). For that reason, IKEA launched the “People and Planet Positive” strategy in 2012 to focus on sustainability throughout the entire value chain. Within that strategy, there were a few optional steps listed to achieve a sustainable wood supply chain. The first option was owning more forests, which would ensure that it was managed in a more sustainable way and provide them the ability to trace wood from the forest to the end customer (Rangan, Toffel, Dessain, & Lindhardt, 2017). While this option has many other benefits like diversifying procurements away from China’s costly market, there are downsides as well. I do not believe that this would be achievable in today’s climate due to areas getting warmer with less rain. Forests need the necessary climate to grow, and even then, it takes a long time for them to grow back. With their lease period being only 49 years, and forest rotation periods being subject to climate, they would not be able to reap the benefits in that amount of time. They would be spending loads money on things like forestry planning, managing, and leasing throughout those years and not get enough money from actually owning the forests. In addition to that, the cost of the products would have to go up due to all the extra work put into the wood. Option 2 of driving higher procurement targets and standards is a good one. This is accomplished by partnering with different groups like the WWF to work on themes such as responsible forest management, responsible trade, and improved production efficiency. By doing those things, forests can become FSC-Certified. I believe that this option is better than option 1 because it promotes sustainability over a greater range of forests. By the end of 2013, nearly 28 million hectares of forest in Russia were certified and 2 million hectares in China (Rangan, Toffel, Dessain, & Lindhardt, 2017). That affects millions of more forests than IKEA deciding just to purchase and own some. It also shows consumers their desire for sustainability at a greater level. That many forests becoming FSC-Certified, with the goal of getting more certified, shows their immense dedication to preserving the earth’s resources. Option 3 of using more particleboard sounds like a good idea because it would reduce the global amount of wood used. Unfortunately, particleboard is worth a lot less than wood, not as strong as wood, and lacks the ability to be produced in certain areas of the world. In China and India for example, the production capacity would not be able to meet IKEAs standards. To add on, using particleboard would steer some people away from purchasing IKEA furniture. Consumers love IKEA because of their reasonable prices and sturdy furniture. By using particleboard, consumers might shy away and think the products are produced weaker.
Stepping away from the options given in the book, I think one way to sustain their strategy could be to become as energy dependent as they can. IKEA is obviously a hugely successful company with billions of dollars. They can use money to put investments into things like wind turbines and solar panels. Those wind turbines and solar panels would help to produce as much energy as they consume. By 2015, IKEA already figured out a way for 100% of their cotton to come from sustainable sources such as recycled cotton, cotton grown with less water, and cotton with less fertilizers. To do the same for wood and as the text mentioned, I think a great strategy is to only use wood from FSC-Certified forests. By only using wood from those forests, IKEA and consumers can feel good about knowing that it will be taken care of and grown back in ways that are better for both the environment and local communities.