IKEA CASE STUDY 1
To Build "Circular" Operations, IKEA Takes Aim at its Supply Chain
School of Business,Liberty University
To Build "Circular" Operations, IKEA Takes Aim at its Supply Chain
The case study focuses on Ikea's efforts to create a circular supply chain to reduce total
waste emissions throughout the business. At the time of this article, Ikea generated 0.1% of
worldwide greenhouse gas emissions (Simchi-Levi et al., 2021). Four case study questions will
be answered to identify the impact sustainable business practices can have on local and global
business operations.
Coronavirus Epidemic Impact on Everyday Life
The coronavirus epidemic has caused significant disruptions in the personal and
professional sectors. People were advised to stay at home while many businesses were required
IKEA CASE STUDY 2
to adjust business practices to have non-essential workers working from home and essential
workers working in-office. All of these changes created positive and negative impacts on the
sustainability of worldwide air quality and quality of life. The main finding by Ming et al. is that
the Covid-19 pandemic has improved worldwide air quality (Ming et al., 2020). These changes
have created disruptions in production operations and return-to-work policies for organizations,
allowing this improvement in air quality (Ming et al., 2020). The most surprising find was the
improvement in GDP per capita by $103 due to the improvements in worldwide air quality
(Ming et al., 2020). The main drawback of the Covid-19 air quality impact is that it is temporary
as businesses resuming normal operations return the air quality to a pre-Covid-19 standard (Ming
et al., 2020).
Disruption and Impact of Carbon Emissions
Reducing carbon emissions has become an important topic in modern business (Simchi-
Levi et al., 2021). The inability to improve carbon emissions creates global business and
personal well-being disruptions. For example, a product can be produced overseas but create a
smaller carbon footprint simply with the utilization of different forms of transportation, with
ocean and air creating less waste than truck freight (Simchi-Levi et al., 2021). Ikea's goal to
create a circular supply chain is one strategy that drives organizations toward more sustainable
business practices to reduce carbon emissions (Simchi-Levi et al., 2021). Ikea identified that they
contribute to 0.1% of the worldwide greenhouse gas emissions, which brought them to outline
various reasons and improvement opportunities to reduce these emissions (Simchi-Levi et al.,
2021). The circular strategy has been proven to utilize available resources better to reduce waste
and carbon emission generation (Yazdani et al., 2019). Any discretion in this cycle significantly
impacts organizational carbon emissions (Yazdani et al., 2019).
IKEA CASE STUDY 3
Company Coordination between Supply Chain Risk Management and Sustainability
Strategies
Supply chain risk management and sustainability strategies are crucial to the long-term
success of modern businesses. Both risk management and sustainability strategies work together
to create a more holistic business supply chain strategy (Duong & Ha, 2021). Sustainability
practices are "essential to the supply chain performance and the long-term development of the
global supply chain. These social sustainability incentives should be widely encouraged in the
global supply chain to raise managers' awareness about its benefits and significance to firm
performance" (Duong & Ha, 2021, p. 1). Organizational leaders must combine both
sustainability and risk management strategies to create a complete competitive advantage for the
organization's supply chain (Rajesh, 2019). The creation of Ikea's circular supply chain is one
example of this strategy. They outline various areas of the business that are creating
environmental risks while creating action plans to reduce wasteful emissions and risks for the
business's long-term success (Simchi-Levi et al., 2021).
Food Retailer Waste Reduction
Reducing waste in any organization is a successful strategy to cut costs, improve
efficiency, and obtain a competitive advantage. Food waste is but one of many issues plaguing
the food industry. The first step to reducing food waste is to identify the key areas that this waste
is being identified. These can be analyzed to create a Pareto analysis using data measurement to
outline the top areas of waste creation. The Pareto analysis was created by "Italian economist
Vilfredo Pareto developed the concept of 'vital few, trivial many,' also known as the '80-20' rule.
Through Pareto analysis, a vital few are identified with significant impact as trivial many for the
quality-related issues and helps to prioritize" (Patel & Patel, 2021, p. 5). The business leaders can
IKEA CASE STUDY 4
then further review the foods creating the most waste to create the needed action plan for the
business. The driver for destruction will be within the data that is collected. The data will drive
action toward the necessary destruction of food waste. The identified action plans would then be
acted upon to create a continuous process improvement cycle for waste reduction within the
organization.
Conclusion
Ikea has re-invented itself to transform the word waste into a business opportunity to
create a circular supply chain that can maximize waste reductions (Simchi-Levi et al., 2021). The
Covid-19 epidemic created massive worldwide disruptions that positively and negatively
impacted global air quality. Carbon emission reduction has become an important topic in modern
business to help improve sustainability and create a competitive business advantage. The
combination of supply chain risk management and sustainability strategies is necessary to create
long-term organizational success. The final area of analysis included utilizing a Pareto analysis
to identify and reduce food waste for retailers.
References
Duong, N. H., & Ha, Q.-A. (2021). The links between supply chain risk management practices,
supply chain integration, and supply chain performance in southern Vietnam: A
moderation effect of supply chain social sustainability. Cogent Business & Management,
8(1). https://doi.org/10.1080/23311975.2021.1999556
Ming, W., Zhou, Z., Ai, H., Bi, H., & Zhong, Y. (2020). Covid-19 and air quality: Evidence from
China. Emerging Markets Finance and Trade, 56(10), 2422–2442.
https://doi.org/10.1080/1540496x.2020.1790353
IKEA CASE STUDY 5
Patel, A. S., & Patel, K. M. (2021). Prioritization of lean Six sigma success factors using Pareto
analysis. IOP Conference Series: Materials Science and Engineering, 1070(1), 012133.
https://doi.org/10.1088/1757-899x/1070/1/012133
Rajesh, R. (2019). Social and Environmental Risk Management in Resilient Supply Chains: A
periodical study by the Grey-Verhulst model. International Journal of Production
Research, 57(11), 3748–3765. https://doi.org/10.1080/00207543.2019.1566656
Simchi-Levi, D., Kaminsky, P., & Simchi-Levi, E. (2021). Designing and Managing the Supply
Chain: Concepts, Strategies and Case Studies (4th ed.). New York, NY: Richard D.
Irwin, Inc.
Yazdani, M., Gonzalez, E. D. R. S., & Chatterjee, P. (2019). A multi-criteria decision-making
framework for agriculture supply chain risk management under a circular economy
context. Management Decision, 59(8), 1801–1826. https://doi.org/10.1108/md-10-2018-
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