In every business partnership, we believe in building long-term collaboration based on trust, openness and dialogue. Our suppliers know their business best, and we value their knowledge and expertise to produce home furnishing products, supply delicious meals or provide great services to the IKEA customers. For example, the average length of collaboration with our home furnishing suppliers is 11 years.
Still, we recognise that ensuring compliance every day plays an important role. We use verification activities to complement implementation of IWAY at our suppliers and as a tool to continuously develop the business. Through verification – such as auditing - we can understand whether the supplier achieves the positive impacts that we aim to create by working with IWAY.
At IKEA, we have our own teams of approved IWAY auditors who conduct the majority of IWAY verification activities at our suppliers. These activities are supplemented with additional independent third-party audits. All verification activities are paid for by IKEA. This means that where we conduct audits, we have first-hand knowledge of our supplier practices and can provide our suppliers with support, when needed. This first-hand knowledge is crucial in understanding and leveraging the relation between business performance and social and environmental conditions at the suppliers.
Each year we perform more than 1,000 verification activities at IKEA suppliers. They include gap assessments for new suppliers and full or focused audits for existing suppliers. Frequency of IWAY audits at our suppliers is defined based on regular risk assessments.
Every IWAY verification activity is conducted based on principles of integrity, confidentiality, impartiality, objectivity and evidence. IWAY auditors are responsible for documenting and reporting findings truthfully and accurately.
No verification is the same as our goal is to identify risks or problems and help suppliers implement sustainable changes to improve. Here’s a glance at the typical approach to IWAY verification:
- In preparation, an IWAY auditor gathers information about the supplier: type of supplier operations, size of operations, number of workers, languages spoken by the workers, etc. The IWAY auditor reviews previous IWAY verification reports and gap assessment documentation, gathers information from the respective IKEA business team on how the supplier performs on other business topics, as well as publicly available information about the supplier.
- The IWAY audit may be announced or unannounced, as well as cover the full scope of IWAY requirements or focused on just selected requirements.
- Verification may include a site tour. The site tour covers both indoors and outdoors, when relevant, and areas of significance for IWAY, for example, rest areas, workspaces, loading and unloading bays, warehouses, production lines, storage of chemicals, maintenance areas, etc.
- Verification may include worker interviews. Information gained from worker interviews is used to put an extra focus on certain topics during the audit. For example, if several workers do not know what to do during an evacuation drill, the IWAY auditor will additionally follow up whether the supplier has documented routines in place and drills have taken place when the workers interviewed were not on site.
- Verification also includes a process review to understand the supplier’s system, routines and ways of implementing.
At a sewing factory an auditor may look at how materials arrive at a warehouse, get unpacked, then get cut, sewed, and packed. They also pay attention to workers’ canteen and resting areas, as well as other areas that workers use. The site tour will include visiting areas which can incur environmental impact, such as waste areas or an effluent treatment plant, if there is one at the supplier.
During an audit at a customer delivery service provider, the site tour can include, for example, visiting loading bays, warehouse, inspecting vans or trucks, drivers’ rest areas, outdoor environment etc.
Following a verification activity, the IWAY auditor evaluates the supplier’s performance against each IWAY Must and IWAY Basic requirement in the relevant IWAY Standard Sections. Follow up action is dependent on the outcome. For example:
- Failure to comply with IWAY Must requirements results in a stop of delivery or other business consequences. This stop is lifted when the IWAY Must non-conformity is corrected or when a corrective action plan is agreed.
- In case of non-compliance with IWAY Basic requirements, the supplier is responsible to perform a root cause analysis of the non-compliance and define and implement actions to correct the non-compliance within an agreed timeline and prevent it from happening again. Following the verification activity, the IWAY auditor verifies whether the supplier has closed all corrective actions and is compliant with the IWAY requirements.
- For a successful implementation of IWAY, it is important that non-compliance does not repeat. IKEA teams will additionally follow up what the supplier is doing to prevent non-compliance from happening again and provide support to the supplier to implement IWAY.
- There are business consequences, including phasing out a supplier, that we implement, in case the supplier does not put the corrective actions in place or does not address the issues in a reliable and consistent way to fulfil the requirements according to the defined timelines.