Sustainable last mile at IKEA

Today we’re talking with Angela Hultberg, IKEA’s Head of Sustainable Mobility. Angela is new in the job – she used to be the Sustainability Manager for Customer Fulfilment – but so is the job itself: IKEA created the function in September 2018.

To kick off our conversation, Angela’s explaining IKEA’s structure in a few words: “What used to be IKEA Group, has now become Ingka Group. It’s IKEA’s largest franchise, with 367 stores. My job in the structure is to make sure that everything that moves, does so in a sustainable way. Besides Ignka, we have other franchise across the world.”

Logistics

When customers order furniture online, it’s not IKEA that will deliver the goods to their doorsteps. Logistics are outsourced to external suppliers who, often, also outsource to subcontractors; a vendor chain that sometimes ends with… “a guy and his truck”.

This explains the complexity of IKEA’s sustainability and electric vision: change needs to happen at supplier level. Innovation might be easier to communicate and reinforce with larger suppliers, but it can scare the small subcontractors.

2025

“Strategy without deadlines is only ambition,” says Angela. “100% of our last mile deliveries will be zero-emission by 2025. In addition, we have chosen 5 world cities (edit. Shanghai, Paris, Amsterdam, New York and Los Angeles) operations will be zero-emission by 2020. Shanghai is already there, the others will follow soon.”

“IKEA is part of EV100 and we report our progress into the Climate Group. It’s good to have that bit of extra pressure to reach our goals.”

Rationale

Angela continues: “The need for sustainable fleets comes, obviously, from IKEA’s heritage in respecting the planet and the environment, but there’s also a very down-to-earth aspect to it. We want to continue being able to deliver a flatpack to your doorstep, which means that we need to understand and adapt to the strategies of today’s cities. City representatives across the world have announced they tell us that there’s no more room for polluting vehicles. Sustainability for us means business: it’s risk mitigation.”

Supply chain conversion

“What we’re doing is deep transformation; this means that we’re not just dictating our suppliers to go electric, but that we’re integrating and reforming the entire logistics ecosystem to fit our objectives. We’ve been talking about the “guy with the truck”: finding for the small supplier a leasing or financing solution to buy an electric van, is part of our job. We’re also talking to OEMs and work with them on the design and development of new zero-emission vehicles. There’s really no limit in developing partnerships with vendors.”

“You know, going electric is much more than buying electric. IKEA looks at the conversion of our supply chain and the restrictions of last mile deliveries in cities, as an opportunity to improve.”

When asked how she manages her own time, Angela tells us: “You know, it’s not the sustainability department that initiates all of this. The transformation comes from the business and serves the business.”

Shanghai versus other cities

The first World City to reach IKEA’s 2020 zero-emission objectives is Shanghai. Electrification in China is written into the country’s roadmap and, consequently, IKEA’s local contractor, Beiye New Brother Logistics Co., was excited to partner up to reach the zero-emission goals. IKEA and the vendor collaborated on the project with dedicated resources on both sides. Also in Shanghai, a partnership was established with Shenzhen-based DST, a company that leases and manages 16,000 electric trucks and vans.

Angela: “This has allowed us to move much faster in Shanghai and reach 100% zero-emission deliveries well before the deadline. We understand that in cities where this type of supplier is not available, it will take more time. Nevertheless, each city has its own solution. In India for instance, we’re moving goods with electric rickshaws. Perfectly suitable for the narrow, busy Indian city streets and nice link with India’s traditions.”

Tips and tricks

Asked what advice she would give to corporate fleet managers, Angela says: “Again: transiting to electric is more than buying electric. There’s some change management to be done, be it in the supply chain, the charging infrastructure or the mindset of the users. A first tip is to prepare well.”

Angela continues: “Next, spend some time removing all of the misconceptions that exist around electric vehicles. Some people still think that EVs cannot function because they have trouble in hot or cold weather or that batteries are inefficient. Every year, better EVs and batteries come out. Also, good EVs are becoming cheaper; look at what Nissan and BYD are doing.”

“Finally, keep your eyes open. Electric is the best zero-emission solution today, but technology is advancing fast. Hydrogen might become a valid alternative in the near future.”

Angela concludes: “Here’s what I see: no-one comes back from electric. It might be an effort, but it’s the way forward.”