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Ikea's Global Sourcing Challenge - Indian Rugs

In: Business and Management

Submitted By salguod91
Words 6420
Pages 26
9-906-414
REV: NOVEMBER 14, 2006

CHRISTOPHER A. BARTLETT
VINCENT DESSAIN
ANDERS SJÖMAN

IKEA’s Global Sourcing Challenge:
Indian Rugs and Child Labor (A)
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, like all other
IKEA suppliers, this large, well-regarded company had recently signed an addendum to its supply contract explicitly forbidding the use of child labor on pain of termination.
Even more difficult than this short-term decision was the long-term action Barner knew IKEA must take on this issue. On one hand, she was being urged to sign up to an industry-wide response to growing concerns about the use of child labor in the Indian carpet industry. A recently formed partnership of manufacturers, importers, retailers, and Indian nongovernmental organizations
(NGOs) was proposing to issue and monitor the use of “Rugmark,” a label to be put on carpets certifying that they were made without child labor. Simultaneously, Barner had been conversing with people at the Swedish Save the Children organization who were urging IKEA to ensure that its response to the situation was “in the best interest of the child”—whatever that might imply. Finally, there were some who wondered if IKEA should not just leave this hornet’s nest. Indian rugs accounted for a tiny part of IKEA’s turnover, and to these observers, the time,…...

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