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Ikea Retail US Adopts Returns Optimization Tech to Cut Supply Chain Waste

Ikea Retail US Adopts Returns Optimization Tech to Cut Supply Chain Waste
(Photo: An Ikea fulfillment center in Staten Island, New York. Credit: Ikea)

Ikea Retail US plans to implement returns optimization technology made by Optoro in 10 distribution centers, 50 retail stores, and their customer support center in the United States. The retailer expects that the platform will help reduce waste from its reverse supply chain.

Returns create costly financial and environmental problems, Ikea Retail US says. Citing data from the National Retail Federation, the retailer noted that $400 billion in goods are returned every year in the US. “Historically, many returns end up in landfills and the transportation of these goods contributes to retail’s carbon footprint,” the retailer said.

Optoro’s platform uses data analytics and machine learning to help retailers like Ikea manage and resell returned inventory efficiently.

“Our technology predicts the best destination for a unit to maximize its net value, and instantaneously communicates the routing decision with warehouse and in-store teams to physically route goods at the moment of handling,” the tech company explains. “The routing engine is customizable in real time.”

Ingka Group, which owns Ikea Retail US, reported recently participating in Optoro’s latest funding round through its investment arm. The group is investing in US-based businesses that share the brand’s values, including a commitment to “becoming people and planet positive.”

Javier Quiñones, president and chief sustainability officer of Ikea Retail US, said that partners like Optoro can help the retailer reach its mission to become a circular business by 2030. “Optoro’s solution will enable us to eliminate much of the waste created in the reverse supply chain, from minimizing the carbon emissions released in return shipping to finding the best next homes for returned items,” he said.

When the United States notified the United Nations in early November about plans to officially withdraw from the Paris Agreement, Quiñones sent a letter to his co-workers reaffirming Ikea’s commitment to the environmental accord. The company’s strategy for 2030 is to become “climate positive” by reducing more greenhouse gas emissions than the Ikea value chain emits — and grow the business at the same time.

“We still have it in our own hands to turn challenges into solutions,” Quiñones wrote.

We are currently accepting submissions for the 2020 Environment + Energy Leader Awards. Learn more here.

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