Ikea’s Global Sourcing Challenge: Indian Rugs and Child Labor

The International Labor Organization (ILO) recently started looking at the child labor dilemma. It started notifying and forcing countries that are using the children labor to prevent the abuse that the children’s go through every day in their life in term of slavery, prostitution, pornography, drug trafficking and all other forms of criminal exploitation. The first nation to approve that kind of enforcement is the United State of America when United States Senate approved it and it was first signed by President Clinton.

IKEA’s social responsibility and sustainability is continuing to grow and progress according to Chief Sustainability Officer, Steve Howard. IKEA wants their business to have a positive impact on the world so they have implemented a strategy called the People & Planet Positive strategy which focuses on 3 areas (IKEA Group, 2014). The first area of focus is to get customers on board with living a more sustainable life at home

From this, A&F created a Vendor Code of Conduct. According to this code, the company actively took steps to make sure there is no human trafficking or forced labor in their factories. A&F also began to review the US Department of Labor’s list of laws to insure they are abiding by the law. They created a verification process that the suppliers must go through to gain the contracts of Abercrombie & Fitch. A new factory that wishes to work for AA&F must go through an approval process, and are monitored frequently to ensure they are keeping within policy through their auditing process. A&F hired a third-party firm who knows the laws monitor these facilities to ensure there is no human trafficking or child labor. Through a certification process, these auditors tour the factories, talk to the workers, review salaries, time sheets and employee age verification papers. These audits are unannounced, and usually happen at least once a year. If a problem is found, A&F is notified immediately. They have a zero-tolerance for human trafficking, forced labor or child labor.

“ Worldwide, there are an estimated 246 million children engaged in child labour. Some 180 million children aged 5–17 (or 73 percent of all child labourers) are believed to be engaged in the worst forms of child labour, including working in hazardous conditions such as in mines and with dangerous machinery. Of these children, 5.7 million are forced into debt bondage or other forms of slavery, 1.8 million are forced into prostitution or pornography and 600,000 are engaged in other illicit activities.”

In May 1995, Marianne Barner faced a tough decision. After just two years with IKEA, the world’s largest furniture retailer, and less than a year into her job as business area manager for carpets, she was faced with the decision of cutting off one of the company’s major suppliers of Indian rugs. While such a move would disrupt supply and affect sales, she found the reasons to do so quite compelling. A German TV station had just broadcast an investigative report naming the supplier as one that used child labor in the production of rugs made for IKEA. What frustrated Barner was that,

While the company, CEO, and staff were all dedicated to the nine cornerstones of the business there were still some issues that IKEA would have to deal with, suppliers and sub-suppliers. IKEA ran into trouble in 1981 in Denmark when government regulation was changed with regards to formaldehyde emissions for building products. When

The IKEA group sells quality furniture at a low price, to maintain a strong competitor. For that, the company has to try to cut cost without losing quality in the products that it sells.

IKEA is one of the largest multinational companies in the world dealing with several products. The company sells and designs furniture appliances and home accessories at an affordable price. Ikea has over three hundred stores worldwide enjoying the good name it has created for itself. While they are one of the most profitable furniture companies in the world there are significant challenges and threats that have been overcome and are still needed to be tackled.

Based in Denmark, IKEA International A/S is one of the world 's top retailers of furniture, home furnishings, and housewares. The company designs its own items, and sells them in the more than 140 IKEA stores that are spread throughout approximately 30 different countries worldwide. The company also peddles its merchandise through mail-order, distributing its thick catalogs once a year in the areas surrounding its store locations. IKEA is characterized by its efforts to offer high-quality items at low prices. To save money for itself and its customers, the company buys items in bulk, ships and stores items unassembled using flat packaging, and has customers assemble many items on their own at home. The company is owned by

Ikea's mission is to offer a wide range of home furnishing items of good design and function, excellent quality and durability, at prices so low that as many people as possible can afford to buy them (www.ikea.com)

IKEA is a privately held, international company that designs and sells ready-to-assemble furniture such as beds, chairs, desks, appliances and home accessories. The company is the world's largest furniture retailer.

4) For those recommending that IKEA continue to source carpets in India, would you suggest

Ikea is a Swedish international home products company that designs and sells ready-to-assemble furniture. It was founded in 1947 by 17-year-old Ingvar Kamprad, who currently is one of the richest people in the world. He borrowed some money for his parents and create a small local furniture store, 65 years later Ikea is one of the leading home furnishing companies in the world with its vision to ‘’create a better everyday life for the many people’’ (Kamprad). The company’s 2011 sales jumped 6.9 percent to €24.7 billion and its net profit rose 10.3 percent to €2.97 billion ($3.85 billion) (Local, 2012).

Groups of people that are against the issue of child labor, or child exploitation, cooperate and begin organizations. Founded by a few, to grow into a much more effective project was the way to let the rest of the world aware about the current situation of children being exploited. A well-known organization named International Labor Organization (ILO), has created a project to take action against child labor. The project is named International Program on the Elimination of Child Labor (IPEC), which was created in 1992. IPEC has reached milestones to be closer to eliminating child labor, according to ILO-IPEC (2013), “Global number of children in child labour has declined by one third since 2000, from 246 million to 168 million children. More than half of them, 85 million, are in hazardous work (down from 171 million in 2000).” It can be seen that progress and action has been made, a potential to making a difference in the issue. There may be an effect, but awareness alone cannot solve this issue. Using awareness like this need to think their strategies and improve

IKEA is a multinational group of companies that designs and sells ready-to-assemble furniture (such as beds, chairs and desks), appliances, small motor vehicles and home accessories. As of January 2008, it is the world's largest furniture retailer. The company is known for its modern architectural designs for various types of appliances and furniture, and its interior design work is often associated with an eco-friendly simplicity.