According to HBR Case Solutions, the global sourcing challenge is a challenge for IKEA because of its suppliers in India. HBR Case Solutions found that IKEA relies on Indian rug makers whose conditions are sometimes dangerous and exploitative. This case study will discuss how IKEA responds to the IKEA Global Sourcing Challenge: Indian Rugs and Child Labor (A).

IKEA first began sourcing products from India. As a producer, IKEA started with garden rugs and bedding in India. It quickly discovered the vulnerability of its suppliers and sent a team to investigate. While they were there, they were able to get signatures on a petition that called for better labor conditions for India’s rug makers.

In response, IKEA updated its supplier standards and instituted a compliance program. In addition, the company made it a requirement that all its suppliers adhere to best practices regarding the use of forced labor and other abuses. In 2020, IKEA presented a new sustainability commitment to address the concerns raised by its customers and reaffirmed its commitment to increasing its efforts in curbing abuses.

In 2020, IKEA revisited its supplier guidelines and made a second commitment that made clear IKEA’s desire to work with suppliers who adhere to the requirements of its policy. In January, IKEA announced that it would continue to strive to reduce the risks that it faces as a result of its supply chain and to move toward complete supply chain transparency. For IKEA’s partner suppliers, which had not yet completed its supply chain, IKEA provided training and other tools to help improve labor conditions.

IKEA provided the same assistance to its Indian partners that it offers to its partner suppliers worldwide. According to the HBR Case Solutions report, while the company did not offer any financial incentives, it offered education on developing country standards and advocacy in the labor sector. Moreover, the company contributed financially to organizations in the region that seek to improve conditions for child laborers.

In India, IKEA’s leadership continues to focus on its supplier guidelines and processes. The company is making efforts to improve standards and work with its suppliers to comply with the Global Sourcing Initiative. In a nation where the government has yet to regulate forced labor, the company is committed to working with the government to ensure better laws and enforcement of existing laws.

IKEA is also pursuing its global sourcing initiative through the use of sustainable sourcing, an approach that leverages technology to improve supply chain practices and the supply chain itself. IKEA has used various technologies in combination with economic and social policies to ensure that the companies it works with follow ethical and sustainable practices. IKEA’s approach to sustainable sourcing has been especially successful in bringing good practices to its suppliers in India.

Through its “Sustainable Supply Chain” program, IKEA is working with Indian suppliers to support the government’s efforts to enhance labor protections. IKEA is one of the very few major retailers to implement a “Sustainable Supply Chain” platform. Through this platform, IKEA was able to begin conversations with the government to help improve the living standards of India’s carpet and rug producers.

IKEA’s product-policy-sustainability initiatives support the government’s efforts to protect children in the country. IKEA makes a strong statement that it values the protection of children in India. Thisincludes protecting these children from child labor violations.

To better understand how IKEA addresses the issue of forced labor, one can look at HBR’s investigation. We found that while IKEA acknowledges that forced labor exists in its supply chain, the company’s supply chain begins with suppliers who, which is quite different from a chain where forced labor takes place at the production stage of the business.

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