IKEA Indonesia deepens local sourcing ties

The retailer works with 18 Indonesian suppliers across three product categories.

PT DFI Retail Nusantara Tbk, the operator of IKEA Indonesia, is expanding ties with local suppliers of wood furniture, natural-fibre goods, and home accessories as it expands Indonesia’s role as a sourcing base for IKEA products sold worldwide.

“The 'Made in Indonesia' initiative is not driven by a single objective,” Charlie Landale, managing director at IKEA Indonesia, told Retail Asia. “It is an integrated approach combining responsible sourcing practices, close collaboration with suppliers in Indonesia, and investment in local capability development.”

IKEA Indonesia works with 18 local suppliers across the three categories. Landale said products made in Indonesia are sold domestically and exported to IKEA markets worldwide.

He said local sourcing helps the retailer reduce transportation distances, shorten delivery times, and respond more quickly to changes in customer demand.

Local production is also combined with flat-pack design, efficient logistics, and economies of scale to keep prices down, he said.

“Affordability is the result of a combination of factors—product design, flat-pack innovation, efficient logistics, economies of scale, and long-term supplier partnerships,” Landale said in an emailed reply to questions. “Local sourcing complements all of these.”

IKEA Indonesia also works with micro, small and medium enterprises through Teras Indonesia, a programme that helps local businesses access wider markets. Landale said the programme helps participating businesses reach more customers through IKEA.

The retailer identifies selected locally made products in its stores and shares information about their Indonesian origin, suppliers, and craftsmanship, Landale said.

IKEA Indonesia plans to deepen ties with existing suppliers and seek additional partners, he said. The company is working with Inter IKEA, IKEA's global franchisor, and IKEA Supply, its procurement arm, on investment, innovation, and sustainable manufacturing.

Landale said IKEA Indonesia's locally sourced products could contribute to the group's global supply chain whilst giving Indonesian suppliers access to overseas markets.