IKEA (China) – Kaifu Han – 2017

Goals 

IKEA has set an ambitious goal to phase out coal use throughout its supply chain as a way to reduce emissions and ensure long-term cooperation with suppliers. The company developed an internal sustainability benchmarking tool—the Supplier Sustainability Index—in an effort to achieve this goal. EDF Climate Corps fellow Kaifu Han was enlisted to educate suppliers around the function of the tool, improve 5-6 criteria to help two China-based factories improve their index scores from 20% to 50% by 2020. 

Solutions

To understand the operations, current issues and root causes at the two IKEA suppliers, Han conducted on-site energy audits. The audits identified the following problems:

• a weak management system, which inhibits lean production;
• blind spots in energy management. For example, lifecycle energy cost is not counted in price comparison, and equipment is kept running until it stops functioning;
• little knowledge about what can be done to improve efficiency and save money.

To address these issues, Han helped suppliers complete their management system, focusing on their visions, goals, action plans, maintenance procedures, and guidelines. He identified many practical and implementable energy-saving projects, opening the way for cost-saving opportunities. Projects included: a monitoring and targeting system, a comprehensive optimization for compressed air system, improvements in lighting system, and initiatives to improve workers working environment and after work activities.

In order for other factories to improve their sustainability without IKEA by their side, they must be motivated and educated. Han developed: a detailed action plan for the two suppliers for the upcoming three years, a sustainability management system framework, a casebook conveying informative, and persuasive message to encourage and instruct other suppliers to operate in a more sustainable way.

Potential Impact

The casebook will help many IKEA suppliers become better educated and aware of opportunities for saving both energy and money. IKEA has already implemented a number of Han’s proposals and plans to move forward with more in the future.