Reverse logistics presents unique challenges and opportunities. To meet these challenges and take advantage of these opportunities, companies need to be both prepared and flexible.
Ikea, a company known for innovation, is facing the enigma of reverse logistics head on. As part of the company’s sustainability strategy, Ikea is challenging the perception that its products are disposable by creating opportunities to recycle and reuse products.
In a recent interview with Fast Company, Chief Sustainability Officer Steve Howard outlined several of the company’s initiatives. They include programs that allow consumers to return plastics, batteries, furniture, compact fluorescent light bulbs, mattress, and textiles to the store. These items are then sold “as-is” or recycled.
These programs have proven successful. For example, in just a few months, over 6 tons of batteries were collected in Moscow, and 25 tons of used textiles were collected in Norwegian stores last year.
Ikea is looking at other ways it can provide end-to-end supply chain solutions. One idea is to take returned products and recycle them into other products. In his interview with Fast Company, Howard shares: “We would basically be taking old bookshelves, old furniture, or an old door that’s finished its first life and sending it into new products. You’ll have a kitchen that used to be a bookshelf, without seeing any visible difference in them. It’s not a revolution, but you have to actually fundamentally change your supply chain to do that.”
Ikea has recognized that old, broken, and unwanted products are an opportunity. Through these innovative reverse logistics initiatives, Ikea is not only acting in a more sustainable manner and reducing the company’s environmental footprint, it is also increasing engagement with consumers and creating positive economic opportunities for the company.
Editor’s Contribution: IKEA Leading the Way in the Circular Supply Chain
5 Things to Aid in Setting up A Circular Supply Chain
If you recall from our blog post yesterday where we explained the evolution of the supply chain from a linear supply chain to a circular supply chain, we touted the benefits of a circular supply chain. We also shared a great infographic from Tradeshift.com and the CEO of Tradeshift.com also explains 5 things to aid in setting up a circular supply chain:
1. Outputs become inputs because your goods don’t end their life with their customers, but become an input in your supply chain. This means your accounts payable and accounts receivable processes will form a loop instead of a straight line.
2. Without a digital supply chain, it will be almost impossible to coordinate all the moving parts a circular supply chain requires in real time.
3. Assess your suppliers and work with the top tier for a common vision and goals towards a circular supply chain and ensure your CSR standards are met as you assess reuse opportunities.
4. Figure out the cash flow demands of a circular supply chain, compared to a linear one. Your margins might improve, but your suppliers’ need for cash may change.
5. Make a plan to manage the components like the evidence, materials, production information and components for the entire lifecycle.
Given the changing consumer, business, and government attitudes toward consumption and the environment, the circular economy looks poised to make businesses operate smarter and more collaboratively – while discovering new sources of profit and a competitive advantage by redesigning supply chains.
Kate Lee, Director of Research and Strategy at Fronetics Strategic Advisors. Nearly 20 years of domestic and international experience working with a range of people from senior executives at Fortune 100 companies to academics to refugees. Experience in content development, business intelligence, demand generation, qualitative and quantitative research, social media, and in forging strategic partnerships.