Ikea has recently announced a new artificial intelligence programme to tackle the handling of merchandise waste.
The Swedish furniture retailer sells approximately $44.6 billion worth of its 12,000 products a year, out of which sources reveal roughly one of every 10 items is returned and 15 of which become waste.
In the wake of the announcement, Ikea speaks about the impending problem waste creates. In its statement it said, when a product leaves Ikea, the company does not have much control over its return, over its sale to institutions, or over its discard into landfills.
The company has therefore come up with the initiative to prevent waste. The AI platform was installed in 50 locations last fall, as reported by the Wall Street Journal. Reports suggest the program so far covers items returned from in-store purchases. The software however is expected to also include online returns soon, which would further help in predicting best possible destination for the returned merchandise. This includes the items discarded on the floor, on the website or even donated to charity, and sold to third-party wholesaler. The algorithm developed by the logistics software company- Optoro Inc. focuses mainly on bringing majority profits for Ikea.
The latest venture follows the company’s efforts into reducing its carbon footprint. Jesper Brodin, the CEO of Ingka Group, which is responsible for Ikea’s retail outpost, has voiced the company’s ambitions of minimizing its carbon foortprint. The retailer giant has announced aims to be “climate positive” by the end of the decade and has invested roughly $223 million for research and invention of energy-efficient alternatives for its most popular products.
Sources further allege the software is less dependent on Ikea employees, except in the early stage of processing, during which sales associates are required to enter identifying information about the product, the SKU number for instance, in addition to its condition when returned. By referring to earlier transactions and other data, the Optoro system determines the fate of the product. The newly launched AI system further also provides a road map for all places where the parts of the products can be discarded before they go to waste.
“By working with Optoro, we are using the system to help us minimize any waste from our products or our return flow,” explained Selwyn Crittendon, IKEA’s business development manager for the U.S. “That will help us [achieve] 100% circularity and zero waste.”