Ethics & Supply Chain Management: General Motors and Nike

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Presentation transcript:

Ethics & Supply Chain Management: General Motors and Nike Business Ethics Ethics & Supply Chain Management: General Motors and Nike

Whose Responsibility? Dominant Firm in the supply chain should be responsible for the ethical conduct of its suppliers Why? The most powerful value chain member bears the greatest burden of responsibility ‘With greater power comes greater responsibilities’ Examples in this case: Nike and GM How? Identify & develop suppliers whose policies & values mirror their own Able to influence supply chain due to its relative size & buying power Willingness to end relationships/contracts with unethical suppliers or repeat offenders Move from traditional SC sustainable SC Includes environmental, social & ethical issues Reference: Phillips & Caldwell, Value Chain Responsibility: A Farewell to Arm’s Length

Sustainable Supply Chain Management Environmental Issues Natural resource use Emissions, waste Energy loss Use of biodiversity & deforestation Nuclear radiation ozone depletion climate change Social Issues Role & responsibility with local community Direct & indirect employment in developing countries Investment in education & training Ethical issues Labour practices (child labour, discrimination, wages, unions, working hours, health & safety) Irresponsible marketing (marketing to children, misrepresentation) Supporting oppressive regimes Honesty, trust, respect & fairness in corporate relations Bribery & corruption Source: www.shef.ac.uk/uni/companies

GM’s Gift Policy Positives: Negatives: Minimizes opportunities and sets expectations Facilitates unbiased business decisions Provides guidelines and examples Outlines process to handle exceptions Applies universally across the company Negatives: Grey areas: Applicability not always clear Makes exceptions in certain cases depending on business interests Adopts a relativist stance – leads to inconsistency Difficult to distinguish expected social courtesy from bribes

GM’s Gift Policy Does this policy do enough to Ensure ethical conduct? It is an important means of promoting ethical conduct, but… A policy by itself cannot ensure ethical conduct. Other aspects are essential: Training, education, culture, environment, leadership Ultimately, each employee is entrusted with the responsibility for ethical conduct

Nike Goes Green Starting in 1993, Nike has made big efforts to “green” its supply chain. It began using best practices and demanded the same from its suppliers. It educated them on: Corporate environmental policy A master substances list Legislation concerning products and packaging Executive summaries on all programs so factories know which programs apply to them A sustainability assessment Labor practices programme information

Questionable Labour Practices?? Although Nike educates its suppliers, it has had to contend with allegations of at least one account of a subcontractor using sweatshop labour. This has sparked much controversy and large boycotts of Nike’s shoes But, Nike has made huge strides in environmental awareness…

Does one Good Act Balance a Bad One? There is no way one “right” can make up for a “wrong” - this is a form of rationalization. Nike has had to deal with issues facing many MNCs and it needs to lead by example. Inappropriate labour practices can never be balanced by a sound environmental policy.