Responsible paper sourcing in a global matrix organised retail company

University essay from SLU/Dept. of Forest Products

Abstract: Pressure from regulation as well as customer demand on responsibly sourced and produced goods and services is greater than ever. IKEA is considered a bench mark company as regards CSR in global supply chains and now a system needs to be put in place to also secure responsible paper sourcing. In this study methods for working with responsible paper sourcing, traceability and reputational risk are evaluated according to internal and external prerequisites and conditions of IKEA. The mixed methods approach included supply network mapping, interviews and use of secondary data. Paper supply networks were described at an overarching level for all IKEA organisations purchasing paper, and were mapped at a detailed level for the IKEA paper articles found in the retail store. A detailed mapping of IKEA paper products supply network and its risk exposure constitutes an important basis for change. Reputational risk can be managed in various ways and IKEA has chosen a proactive approach, where responsible sourcing and exclusion of unacceptable wood sources is seen as the preferred risk management tactic together with transforming paper sourcing into only so called More Sustainable Sources. More Sustainable Sources is material which according to IKEA represent higher sustainability standards and for wood based materials it is currently defined as recycled material and FSC certified materials. In the study, the traceability concept is developed not only to include transparency factors, as determined by supplier relations, but also to consider the level of network complexity, company control and how both these features are affected by the organisational set up for purchasing paper. Accordingly, the three main practical tools for addressing responsible paper sourcing isolated and evaluated in this study are 1) requiring and transforming IKEA paper supply to come from only More Sustainable Sources, 2) manage the prerequisites for traceability and responsibility by developing the way paper sourcing is done at IKEA and 3) to develop Due Diligence working methods for paper. Cost aspects of different alternatives are not evaluated in detail but is considered as recommendations are made to IKEA based on the study. Results reveal that the complexity of IKEA paper supply networks is not only caused by the long and complex supply networks of the paper industry but also by the scattered way in which paper is purchased by different IKEA organisations. Addressing the matter of traceability at a time of fast expansion and developing sourcing practices at IKEA inevitably put a strong focus on how traceability prerequisites and company control is related to the organisational set up for purchasing paper. All IKEA organisations purchase paper that reaches the customer. Many advantages are expected from increased alignment and cooperation within and between the different purchasing organisations in order to increase traceability by decreased supply network complexity and fostering closer business relations with paper producers which has potential to increase transparency in the supply network. The results also reveals that if the company does not set clear requirements on the material used for its products, these will be contaminated by controversial materials in terms of unacceptable wood sources which, even though they come in small quantities, get widely spread in the product assortment. IKEA is recommended to prioritise increased control in paper supply chains through centralised purchasing, paper consolidation and cooperation between the different purchasing organisations. Responsible sourcing in general and traceability prerequisites in particular should be an outspoken objective in this development. Restricting the number of paper qualities used in products and packaging securing a convenient size of the paper sourcing should be seen as a central tool to decrease supply network complexity, enable purchasing directly from the paper mills and get access to FSC certified materials in a cost-efficient manner. Results reveal great production capacities upstream the current paper supply chain which is already FSC certified. IKEA should therefore take advantage of this situation and require certified materials. Targets for Mores Sustainable Sources, including FSC certified materials, should prioritise and be aggressive at high risk markets such as Asia. To support the development of working methods increased communication between paper purchasers through a communication network, training in areas of traceability and risk within the paper industry and common paper industry intelligence including responsibility evaluation of market actors is suggested. A common and consistent approach for responsible paper sourcing will additionally have to be based on a paper specific standard and a cross organisational steering model.

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