Social Responsibility in Coffee Industry and High Street Retailing - Essay Example

Social Responsibility in Coffee Industry and High Street Retailing Introduction Supply chain in any industry would refer to the sequence of processesas per which a product is produced and reaches the final customer (Ganeshan and Harrison, n.d.). In both coffee manufacturing and high street cloth retailing, relevant issues pertaining to supply chain management is found to exist. These range from ethical issues arising out of differences in opinion due to perceptive dissimilarities as well as those related to producers, middlemen, retailers and consumers (Seuring and Muller, 2007). The ethical tensions may vary from country to country and also as per size of the firm. In case of international supply chain, a major problem emerges from difference in religion. Another persistent problem is infringement of intellectual property rights, especially when production is shifted from one location to another. It is often a matter of debate between the companies and middlemen regarding their fair share in the value creation process. Adhering to corporate social responsibilities poses to be a challenge in both these sectors and therein lay the main ethical problems (Schlegelmilch and Öberseder, 2007). Even so, in the coffee manufacturing industry, problems pertaining to agriculture and distribution of end products are considered to be the main issues of supply chain management; whereas, in high-end retailing, the problems are mainly related to labour injustice and lack of adequate facilities. In comparison, ethical problems in coffee industry are lower in number since only the agricultural and distribution aspects are labour intensive. The more labour intensive an industry is, more are the issues relating to ethics, which is the case of retailing. However, most of these issues can be dealt with if interests of each group are well-managed. Case study and research play a significant role in this regard (Barrientos, 2012). Ethical issues in supply chain relating to coffee manufacturing Before proceeding towards discussing the issues of supply chain in coffee manufacturing industry, it is important to know the supply chain structure of the same. This is given below: Figure 1: The structure of supply chain in coffee manufacturing industry. (Source: EMAF, n.d.) Main ethical issues and their solution The needs of interest groups and the way to deliver the same must be carefully thought upon and executed. Interest groups here refer to different parties involved in the business such as, suppliers, logistic providers and consumers. Consumers are often not satisfied with the increased use of biotechnology in coffee production, whereby fertilizers and high growth organic supplements are used to improve production. Studies reveal that they pose threats to the health. Under such a scenario, it is justified for consumers to be agitated. Therefore, it becomes a matter of consideration for producers to reduce the usage of chemicals in production as much as possible. Manufacturers must clear the health and safety tests implemented by the respective governments. Environmental factors are required to be considered during the cultivation process (Lamming and Hampson, 2005). Several issues have risen especially in the US with regards to soil and water damage and deforestation. A notable example in this regard is the preferred supplier programme initiated by Starbucks, which rewards suppliers who produce by keeping the environmental factors in mind. From consumers’ point of view, the main issue emerges from price and issuing fair prices. Coffee producers should make sure that the cost of production does not exceed much as it has an effect on the total price charged from consumers (Maloni and Brown, 2006; Burritt, 2011). Labour and human rights are also an aspect to be considered. This involves paying true and fair wages as well as ensuring good working conditions for labourers. It is seen that in order to counter labour issues, many organizations bring in cheap labour; hence, leading to unauthorised labour problems. Since cultivation of coffee involves use of certain chemicals and fertilizers, children should be prohibited from working in these farms. It is also observed that coffee growers receive only 5 to 10 per cent of the total retail price of coffee, which leads to poor standards of living for them (Nicholls, 2005; Pritchard and Neilson, 2011). It has also been observed that fair trade practices take a toll with regards to import and export of coffee. Although WTO established rules are generally meant to be followed, challenges such as, increased presence of arbitrage pricing and illegal exports, act as hindrances in this industry. It is seen that the main reason for companies to opt for such means is greater competition and availability of substitutes. At present, coffee industries all over the world adhere to world class standards of production and ensure that grievances from every department are low. Since this industry falls into the category of food and beverages, the companies need to clear various standards of quality inspection so as to be able to sell the end product in the market. Hence, special care is taken in the manufacturing processes. This paves the way for fair trade certification in coffee production that is given to those producers who abide by all the above-mentioned criteria. Coffee producers must make sure that they do not neglect the environmental factors. It is noticed that intense coffee farming has aggravated deforestation across the world alarmingly. As more and more coffee producers want to receive better ratings and fair trade certification, they tend to adhere to environmental, social and economical policies of trade (Haight, 2011). Ethical issues in supply chain pertaining to high street clothes retailing As consumers, we only notice the glitz and glam of the clothes lines in fashion industry. The trauma and problems involved in making the expensive apparels is known only to the cheap workforce of countries such as, India, Bangladesh, China and Cambodia, which are the hubs for manufacturing of high street fashion clothes. The demand for clothes in this sector is huge and never-ending, which means that pressure on workers is enormous. They need to fulfil massive contracts within very short deadlines for which they work relentlessly. They work in very poor conditions. The catastrophe of Rana Plaza, wherein more than 1133 people were killed, is an example of the same (Siegle, 2013). With the view of producing garments at lowest possible costs, manufacturers do not pay attention to health and safety issues. It is not just health and safety issues that the workers face; they also have to put up with low wages. The wages are hardly enough for their sustenance. On one end, where consumers are happy about being able to buy clothes at cheap rates, they are found to know little about hardships of the workers. Also, equipments that these workers use are not essentially regarded safe. In addition to that, they are most of the time given little or no financial help in case of accidents, while working with such machines. If consumers from Western countries take a walk around these factories, they would perhaps stop buying high street fashion wear. Such is the condition of these poor workers. How to deal with such cut-throat retailing If only retailers could extend deadlines of the orders of contract, the pressure upon workers could be reduced. Though increasing time would mean losing out on profit, it is a consideration producers must firstly make (Black, 2008). Secondly, manufacturers must pay attention to the health and safety issues of the workplace. Proper ventilation, adequate hygiene and safe work equipments are few pre-requisites. Thirdly, adequate steps must be taken so that worker problems can be addressed to in a timely manner. In this regard, it is worth mentioning H&M, the Swedish giant, which is a major player in Bangladesh. They have taken noteworthy steps to implement CSR at their work locations (Siegle, 2013). Fourthly, training workers and making them adaptable to modern equipments may reduce the chances of disasters at workplace. This is a solution that Marks and Spencer has considered. Re-engineering the clothes line also means developing able machine workers that leads to a raise in the salary. Hence, there is overall benefit for the workers. Fifthly, avoiding constant change of suppliers leads to better relations with the same. As a result, producers are aware of the workforce problems. For instance, People Tree is one such firm that assures that their supplier’s grievances are resolved without delay and they stick to long-term suppliers. Sixthly, there is a growing need for using recycled clothes in high-end fashion lines. This lowers the cost by a great extent (Fletcher, 2008; Seuring and Muller, 2008). What high-end retailers should focus at? High-end retailers neglect the low-end of the supply chain. An effective supply chain to them is one, which reaps maximum benefits including least costs. They fail to realise that their business would collapse, if not for the hard work of low-end work force. They need to pay more attention to the needs of workers. Since owners of such retail hubs are situated in Western countries and most of the workforces are located in Asian countries, it becomes a critical issue for the former to tackle with problems of the labourers. Under such circumstances, the most effective option is to run timely inspections and establish sound communication means with the low-end workers. Firms should ensure that labourers are working in good conditions and their safety needs are complied with. Sometimes, due to distance factors, factory owners and inspectors give false reports to the firms as well as indulge in other fraudulent activities. These factors should be dealt with competently (Choi, 2011). Retailers must also encourage formation of unions and work groups so that if there is any injustice prevailing in the factories, then the workforce would have the right to counter it. This involves effective decentralisation of power. The union leaders must be given the authority to take adequate steps for the interests of their members. Top level managers and authorities should monitor activities of the union groups, thereby securing that they function properly. Conclusion Since both coffee industry and retail industry are labour intensive, it is quite obvious for them to be ridden with issues. The challenge is to manage these issues most effectively. Reducing labour and mechanization is not a sound solution. Rather, training workers and using semi-labour intensive machines should be considered. Complying with legal, economic and social responsibilities is important. Firms should know that society plays a significant role in development. If people are not satisfied, it can result in downfall of a firm (Hurst and Arnesen, 2000). Presently, there are several rating agencies for analysing credibility of a firm on the basis of their efficiency and diligence in handling ethical problems and striving for corporate social responsibilities. The media plays a substantial role in this regard as well. They are highly interested in stories of malpractices and are focused on harnessing interests of the public. Besides that, consumers are now also highly keen on knowing the details of their purchase. Hence, satisfying consumers is extremely necessary. Therefore, consumer rights have to be met with, such as, the right to be heard and right to choose (Crane and Matten, 2007). Many companies have also chosen the path of outsourcing their production work to more than one nation. This lowers the labour pressure as well as generates employment opportunities in other nations. For instance, if companies decide to outsource garment production to not only Bangladesh, but also to countries like, Thailand and Hong Kong, it will reduce the high work pressure in Bangladesh (Isen, 2012). Apart from this, firms must also provide different facilities to workers such as, health insurance, over-time wages and retirement benefits. They should conduct awareness programmes for the socially backward. All these would make the workers feel that their contribution towards the industry is worthwhile and that they are an important part of the supply chain (Zaman, 2011). Reference List Barrientos, S., 2012. Ethical Sourcing in the Global Food System. New York: EarthScan. Black. S., 2008. Eco-Chic: The Fashion Paradox. London: Black Dog Publishing. Burritt, R., 2011. Environmental Management accounting and Supply Chain Management. London: Springer Drordrecht. Choi, T. M., 2011. Fashion Supply Chain Management. Hershey: IGI Global. Crane, A. and Matten, D., 2007. Corporate Social responsibility. London: Sage. EMAF., n.d. Improving sustainability and competitiveness of the Italian agri-food chain with innovative environmental management tools; The coffee supply chain. Available at: [Accessed 5 March 2014]. Fletcher, K., 2008. Sustainable Fashion and Textiles. New York: EarthScan. Ganeshan, R. and Harrison, T.P., n.d. An Introduction to Supply Chain Management. [online] Available at < http://lcm.csa.iisc.ernet.in/scm/supply_chain_intro.html > [Accessed on 6 March 2014]. Haight, C., 2011. The Problem with Fair Trade Coffee. [online] Available at: [Accessed 6 March 2014]. Hurst, R. and Arnesen, M., 2000. Where Did that Come From?: A Study of Ethical Issues in the Supply Chain. London: Institute of Business Ethics. Isen, M. M., 2012. Developing a sustainable procurement strategy for Fashion Buyers in the German retail sector. Hamburg: Diplomarbeiten Agentur. Lamming, R. and Hampson J., 2005. The Environment as a Supply Chain Management Issue. British Journal of Management, 7(1), pp 45-62. Maloni, M. J. and Brown, M. E., 2006. Corporate Social Responsibility in the Supply Chain: An Application in the Food Industry. Journal of Business Ethics, 68 (1), pp 35-52. Nicholls, A., 2005. Fair trade: Market-Driven Ethical Consumption. London: Sage. Pritchard, B. and Neilson, J., 2011. Value Chain Struggles. New York: John Wiley & Sons. Schlegelmilch, B. B. and Öberseder, M., 2007. Ethical Issues in Global Supply Chains. Emerging issues in management, (2), pp. 12-23. Seuring, S. and Muller, M., 2007. Core issues in sustainable supply chain management – a Delphi study. Business Strategy and the Environment, 17(8), pp. 455-466. Seuring, S. and Muller, M.,2008. From a literature review to a conceptual framework for sustainable supply chain management. Journal of Cleaner Production, 16(15), pp. 1699-1710. Siegle, L., 2013. How ethical are high-street clothes? [online] Available at: [Accessed 6 March 2014]. Zaman, A., 2011. Professional Ethics in Supply Chain Management. [pdf] n.p. Available at [Accessed on 6 March 2014]. Read More