Ikea and the forest products industry

Martin Fairbank
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A few years ago, I visited a major department store to purchase a sofa, but the item I wanted was out of stock and had to be back-ordered.

I arranged to have it delivered a couple of weeks later, but I had to be at home between 1 and 9 pm in order to take delivery, so I arranged to work from home that afternoon. As it happened, the delivery company got the date wrong, and I got their phone call at work a day ahead of schedule to say that delivery personnel were waiting for me outside my home. I couldn't leave work, however, and had to reschedule the delivery.

Fast forward to this year, when I bought a sofa from Ikea. I chose the model I wanted on-line, made sure it was in stock, ordered it, drove to the store to pick up the three boxes it was packaged in, and loaded it easily into my compact car.

Companies that focus on online business models are thriving today, while many brick-and-mortar stores such as Eaton's, Zellers, Target and Sears have gone out of business in Canada. We could lament the loss in business for department store flyers this has brought the paper industry. But this changing business model is also bringing new business opportunities to the forest products industry, in several ways.

The flat-pack model that Ikea developed for shipping its products requires a lot of corrugated containers (three boxes for one loveseat in my case). Ikea has replaced all its Styrofoam packaging (for cushioning corners, for instance) with fibre-based honeycomb packaging. The assembly instructions are printed on paper. Ikea bought 96,934 tonnes of paper worldwide last year for its catalogues. And finally, many of its furniture products are made with a wood frame.

Ikea is a company very focused on sustainability and lowering its environmental footprint. I recently perused its 97-page 2016 Sustainability Report. One interesting figure: Ikea purchased 15.75 million m3 of roundwood equivalent in 2016. To imagine what this annual volume of wood looks like, it's equivalent to about 10 times the internal volume of the Rogers Centre stadium in Toronto! Ikea says that 61% of this wood is "more sustainable", which it currently defines as FSC-certified. It has a goal of reaching 100% FSC for 2020, but is beginning to recognize that some of its smaller suppliers are reluctant to go through the expensive certification process with no return on investment.

A future opportunity for the forest products industry in home furnishings could be replacing cotton (another high-volume raw material for Ikea) with rayon or one of the new wood or cellulose based textile fibres being developed at various research institutes around the world. Potential suppliers would have to show they can match or beat cotton quality, price and environmental footprint.

A final reflection on furniture delivery: I was recently given a tour of Dubrovnik, Croatia - a walled city built in medieval times where many of the streets are only a few feet wide. Most houses are four stories tall, with a narrow and steep staircase connecting the floors. Moving of furniture in and out of these buildings is traditionally done using a rope attached to a hook above the windows. Asked whether this is still the practice today, our tour guide said, "That's what we've got Ikea for!"

Martin Fairbank, Ph.D. Martin Fairbank has worked in the forest products industry for 31 years,
including many years for a pulp and paper producer and two years with
Natural Resources Canada. With a Ph.D. in chemistry and experience in
process improvement, product development, energy management and lean
manufacturing, Martin currently works as an independent consultant,
based in Montreal. He is also an author, having recently published
Resolute Roots, a history of Resolute Forest Products and its
predecessors over the last 200 years.

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Martin Fairbank Consulting

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