Supply Chain Management’s Ethical Factors

Supply chain management The management of upstream and downstream relationships with suppliers & customers to deliver superior customer value at less cost to the supply chain as a whole. (Christopher, M. 1998)

What is Ethics  To do with what my feelings tell me is right or wrong.  To do with my religious beliefs.  Being ethical is doing what the law requires.  consists of the standards of behavior our society accepts.

Figure: Supply Chain Management Ethics

Raw material procurement(ethical)  Maintaining high standards of inventory  A sound distribution network  Marinating standard price  Maintained according to the expectations

Country selection:

Examples of unethical situations:  Nike  Primark, H&M, Marks & Spencer and Inditex (which owns Zara)

Suggestions:  Strong labor laws  Strict service regulatory commission.  Visiting factories  Evaluate the report of safety condition and safety tools  Inspection facilities  Quality and standard control commission or board

Suggestions:  countries that allover provide safety training to their entire industry  Crate contractual agreement with oversea suppliers  less corruption, less political instability and less calamities

Ethical consideration in supplier selection (cont.)  The Nike Controversy: i. Labor exploitation ii. Massive criticism in US iii. Main problem was with supplier iv. Some time wrong supplier selection creates problems  Supplier selection: one of the most important task i. Reduce risk ii. Cost reduction of entire venture iii. long term relation

Ethical consideration in supplier selection (cont.)  Unethical practices by supplier i. Providing low quality product ii. Not maintaining law/ legal issues (under aged worker, longer working hour etc. ) iii. Sub-contracting (In RMG sector)

Ethical consideration in supplier selection (cont.)  Steps to take to improve situation: Steps for improving situation Making ethics a must followed factor Ensure whether they follow or not Analyze it regularly Evaluate for maintainin g relationshi p

Ethical consideration in supplier selection  Factors to consider: i. Compliance with all laws: age, wage, health, safety, working environment, no discrimination between workers ii. Supplier Commitments to Environmental Standards (in terms of water, gas, electricity consumption etc.)

Manufacturing

Ethical Issues  Safe Manufacturing Environment  Environmental Effects  Secure Workplace  Safe Products

Prevention of Unethical Activities

WholesalerRetailersConsumerManufacturers Distribution

Argos is part of the Home Retail Group, the UK’s one of the largest distribution networks. Logistics and supply chain projects successfully completed with Argos include: Network strategy for warehouse Evaluation of call booking Warehouse capacity audit and location Warehouse facility benchmarking to increase storage capacity Transport benchmarking for small package home delivery network

Key points of distribution in supply chain management:  Transportation management  Energy  Real time information system  Velocity  Reverse logistics

Transportation:  Define transportation  Effect of transportation in the supply chain management  Modes of transportation.

Road or Railway Transportation Large consumer space Reduce cost Legal way of transportation

Water or sea way transportation:  Cheapest way of transportation.  Large volume of trading.  Legal agreement of EU & non-EU countries.  Unethical uses of water or sea ways transportation.

Package carrier transportation:  Provide value added services.  Examples of companies using this transportation.  Deliver improperly way.

Airways transportation  Main purpose.  Helps to satisfying higher customer demand.  Reduce damage and increase safety.  Unethical uses of air transportation.  Examples of companies that using that mode.

Recommendation: Raw materials procurement: Signing in agreement Reduction of Exploitation Maintain a minimum ethical view

To be continued… Country selection: Adequate research on countries Strong labor laws Clear image of working environment Sufficient tools Inspection Facilities Training method Standard contractual agreement Less corruption Less political instability

To be continued… Supplier Selection: Moral values Ensuring the code of conduct Focus on ethics Manufacturing Production: Reduce unusual use of electricity Moderate standard machineries Fair treatment Avoid harmful chemicals

to be continued… Distribution: Fulfillment of delivery requirements On-time delivery No false statement in case of product’s damage Mode of Transportation: Avoid defected road & railway transportation Adequate tools in waterways transportation Eliminate higher transportation cost