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

IKEA’s Global Sourcing Challenge: Indian Rugs and Child Labor (A)

Marianne Barner Response to the Invitation

The German video program informed IKEA that they were going to broadcast a documentary showing children working at looms at Rangan Exports. However, compared to the Swedish program, it was clear that this German-produced program planned on taking a confrontational and aggressive approached aimed directly at IKEA and one of its suppliers. Due to this reason, Barner should decline the invitation. There are too many unknown factors that can lead to bad publicity for IKEA and coming out to this broadcast can imply that IKEA is admitting to this implication.

IKEA’s Supply Contract with Rangan Exports

Barner should not make a hasty decision to drop the supply contract with Rangan Exports. Although there are still shots from the filmmaker producer, there is only one source stating that Rangan Exports is using child labor. Also, this source can be unreliable to the fact that they are purposely targeting IKEA and is planning to take an aggressive approach in terms in reporting. I believe it is in IKEA’s best interest to investigate further and make a decision to terminate or continue the contract once all the information is presented.

IKEA’s Long-Term Strategy in India

IKEA should still stay and continue operation in India. However, IKEA should put more emphasis on monitoring child labor practices at its suppliers in India. IKEA has been using a third-party company to provide external monitoring of companies’ quality assurance and to even conduct random audits for child labor practices at suppliers’ factories. Although IKEA might incur more expenses, it is in IKEA’s best interest to maintain these external “auditors” and raise awareness amongst workers about the issue of child labor practices.

IKEA or Rugmark

IKEA should not sign up to Rugmark as a way of fighting child labor problems on products sourced from India. The reason being is that the label itself certifying that carpets were “made without the use of child labor” is something that should not be advertised on IKEA’s products. If IKEA were to put these labels on their products and Rugmark was unable to stop the use of child labor for these products, leading to another scandal, IKEA’s reputation will be heavily impacted in a negative manner. IKEA should continue to maintain their monitoring and control processes that it currently implements.