Sustainable Supply Chain Management Assignment Discussion - Essay Example

? Sustainable Supply Chain Management Assignment Discussion Recently, multinationals dealing with food and drinkshave been under a lot of pressure from civil society; this has intensified after the recent horse food scandal involving Tesco and several other firms (Cofino, 2013). It is becoming increasingly apparent that despite the sizeable responsibility placed upon them by their customers their standards do not reflect sufficient commitment to the task of ensuring a supply of safe and high quality products. Furthermore, there have been increasing concerns over the long-term effects of these processed foods such as diabetes and obesity and a myriad of other dangerous health conditions. According to research by Oxform, none of the top 10 big multinationals has registered a positive overall rating in their public health policies or commitments especially as pertains to their supply chain. This is probably why in recently millions of packaged food products containing horsemeat instead of beef were distributed in America and Europe; that a firm with such a wide scope could make a great error in their supply chain is evidence that they were not taking their corporate social responsibility very seriously. The aim of this paper is to discusscorporate social responsibilities concerning global supply chains and the development of shared values within the corporates. The Oxform report, “Title Behind the Brands” goes on to place the multination to task for their extreme secrecy in operations, which makes it difficult for sustain and verify their claims of social corporate responsibility (Cofino, 2013). According to this report, despite the fact that 80% of the global populace is perennially hungry; enormous tracts of land are used in the production of unhealthy foods and snacks which in no way address the problem. There is a direct connection, according to oxform, between the global poverty endemic and the food and beverage industry, this is because the sourcing strategy for the fast food industry. Poor nations have supplied the multinationals; most of which are located in the West with products such as tomatoes, soy, coffee, tea, corn and so on; the final products of their exports are fast foods retailed in the west and are of little use in dealing with the hunger issues. In this nations there are a myriad issues ranging from child labour, unfair wages and poor working conditions, as a result firms sourcing their supply from these countries often be highly criticized for profiting from the problems therein (Schlegelmilch and Obersede 2007, p.14). The report is highly critical of the corporates actions since in their attempt to assist the farmers who produce these raw materials, they focus on superficial aspects such as training farmers on matters, such as irrigation. However, they fail to address the underlying problem of poverty and in a way of their help, they are actually just enhancing their supply base as opposed to actually, assisting people solve the underlying problems(Agbonifo, 2011). In case they were willing, the corporates can ensure workers earn decent pay, asses and eliminate the root cause of hunger and poverty from the areas where they get their supplies. Nevertheless, majority choose to do nothing significant in those respects and do not feel obligated since they lack proper polices for guiding their supply chain operations. The study involved some of the leading food producers in the world such as coca cola, Unilever associated British foods and nestle; these firms were judged based on their standards in several areas such as transparency and their consideration for the rights of workers and food safety. Sadly, very few were able to give a substantiated account of how they deal with suppliers and how they ensure that ethical practices are maintained throughout the supply chain. Associated British foods were ranked last with 19%; its transparency was the lowest, among other things it was discovered that much of the sugar it produces comes from plantations that are fraught with land and violations. While one must concede that these companies take part in many charity and philanthropic programs, there is need for a long term initiatives that can be monitored; not exercised at the convenience of the firm, but according to prevailing circumstances. The concept of shared values was originally proposed in a Harvard Business Review article was described as the connection between a firm’s competitive advantage and the social corporate responsibility. The justification for the creation of shared values is the fact that the competiveness of a firm and the wellbeing of the communities surrounding it or those that associated with it are mutually dependent (Kenneth et al, 2008 p.230). Thus, it is crucial that organizations realize the link between the societal and economic progress since therein lies the power to spur global development and redefine capitalism (Shister, 2004). Notwithstanding the unequivocal importance of having shared values, the question of their attainment in the corporate world is not as easily answered. Creating Shared Value exceeds matters of compliance and sustainability; it has to do with creation of new and greater values for the society as well as the firm’s shareholders and customers. Multinational companies have morphed into globally integrated enterprises, which with an overriding objective of managing the wider and more intertwined global supply chains (Palmisano, 2006). In modern day supply, chains have become highly complex and multi-layered; this can be attributed to a variety of factors not the least amongst which is globalization (Manuj 2008, p.213). Firms not only source for raw materials, but also services and labour; for example, a company in America may be fully reliant on sugar exported from morocco or cocoa beans from West Africa. The situation is such that even the most minor merchants will be affected by changes in the supply conditions albeit indirectly. One of the major roles of supply chain managers over the years has been to manage and mitigate the relationship; they often impose standards and even audit supplier facilities to enforce their compliance. As such ideally, when the suppliers fail to meet the minimum requirements in term of environmental standards labour laws as well as safety and other ethical measures, the buyer terminates the contract or takes similar punitive action (Welford 2005, p 40). Notwithstanding with so many industry player around the world and with the advent of the modern telecommunication where business can be transacted without any physical contact, supply chains are increasing hard to monitor. Considering the case of coca cola; it is one of the world’s most recognizable brands and it is undauntedly the biggest soft drinks company in the world; in 2003, there was a public outcry as Centre for Science and Environment accused the company of supplying beverages with high levels of pesticide (Vedwan 2007, p.562). The NGO also accused coca cola of exhausting ground water as well as polluting the water sources around its plants. Later in 2006, the CSE published results showing that the pesticide levels in their soft drinks were 24 times higher than the accepted European standards, which were the same standards that had been proposed for India (Businessline, 2006). This was done to show that the firm had not stopped using pesticide despite the fact that they had been made well aware of their excesses; such behavior is a clear display of contempt for global ethics (Chen-Fong, 2008 p.155). However, coca cola kept denying this and other accusation about water pollution and land degradation, as a result the firm was embroiled in a series of legal battles with the Indian government (Sappenfield, 2006). The bad publicity reduced the sales of their drinks by over 40 % in less than two weeks; this spilled over to the united states where due to many demonstrations by students against the firm 10 universities temporarily stopped the sale of coca cola products in their campuses(Christina et al, n.d., p.54). Ultimately, this resulted in loss of face and profits; it was only in 2008 when the firm seemed to realize their mistake, but what was it? When the firm was first confronted with evidence of its actions, it jumped on the defensive; they tried to prove that their products were safe to drink. This was the wrong approach since as a firm, the first thing they should have done was to show concern for the situation and show that it cared about the quality of products. According to Etang a company will only avoid looking like a hypocritical corporate if it shows genuine concern and interest in sustaining a long-term relationship with its clients (p111), in this respect coca cola failed. Because of this failure in corporate social responsibility wherein the management proved devoid of shared values, companies’ profits went down considerably in a very short time; the customers saw coca cola as a corporate villain only interested in profits and with no concern for their customers. With time, Coca-Cola reinvented itself in India and took damage control measure to address the Indian community’s grievances; it published in 2008 its first environmental performance report and created the coca cola India foundation that works alongside local organizations to address water problems in the country. However, its most outstanding move was to launch various community water projects in India, which included a partnership with Central ground water authority and local NGOs to using methods such as rainwater storage to handle the perennial water shortage. It was only after several years of hard work that coca cola was able to claim in 2012 that its operations in India had fully achieved a balance between ground water used in their beverage production process which was replenished to nature and the communities in line with the global target 56 (Christina et aln.d., p.54). Thus, one can see that despite the goodness of the finished product, the sources have become a crucial aspect to the consumers. Coca-Cola learnt the hard way that consumers of the good will not only buy the firms physical product but the reputation and if the buyers deem the goods to have been “contaminated” ethically speaking, they will not be willing to purchase them. Companies are now taking cognizance of the fact that every customer is a crucial component of the community and their social corporate responsibility, this responsibility is not an option,but an obligation (Goran et al, p.91). A study titled the management of global supply chain, the difficulty of maintaining and sustaining CSR in a global economy is the geographical distances because although the world is a global village sometimes buyers are completely removed from their sources (Esben and Mette 2006, p.232). For instance, depending on the strictness of labour laws in a country, what is considered fair working condition or wages by buyers may not apply to the supplier. However, the consumers may not be very understanding since they may expect their service providers to apply the same standards as their home country. In the past, addressing social and environmental factors in production was seen as a ‘nice thing to do”(Stefan and Stephen, 2012); however failing to fulfil this obligation today often has grievous consequences on reputation and operational activities. In 1996, Nike was publicly criticized and lost a lot of business when it was accused of using child labour (Locke 2007, p25), Mattel was forced in 2007 to recall products worth over US $100 million since one of their suppliers had used contaminated paint on toys. This resulted to a drop in share prices by 18% and the company was faced with a myriad of civil suits from the parents of who had bought them for their children with ill effects. Recently apple one of Americas and indeed the world’s biggest phone and digital manufacturer came under harsh criticism when it was revealed that since 2008 it had not be paying valid overtime in firms where it had outsourced (Chang 2012). In case a manufacturer wants to get contracts with a multinational business such as apple Inc, they will most likely be looking to cash in the money as reputation that is likely to accompany an association with such apple. Consequently, the firm must present itself in a manner that lives up to apples standard, in some cases, these standards tend to be superficial; a firm may present itself in false light for the sake of economic gain. The hypothetical firm may be operating under unethical conditions such as underpaying workers or compromising environmental standards; therefore, inspections by apple are not guaranteed to expose such action especially if apple had not anticipated them. There are undoubtedly considerable risks in mismanaging supply chains, however, this also creates opportunities for firms that can figure out how to manage and manipulate the complex supply chain to their advantage, they can successfully lower the cost of production and get better suppliers as well as ensuring punctual delivery. In such a situation, the paradigm can be seen to have shifted from one of compliance to gaining a competitive edge. The standard has changed from compliance to competitive advantage, and the new methodologyis characterized by robust relationships between buyers and suppliers formed around a nexus of mutual underrating and shared values (Bansai, 2013). The relationships between suppliers and theclient appears more like joint ventures as opposed to buyer seller relationships where both parties recognize each other’s role and objectives and sharing a common or related vision. However, these partnerships are not easy to form and maintain, as they require significant investment in time and trust, instead of the traditional approach where the buyer would demand compliance. The company engages openly with the suppliers to coach and train their personnelin order to generate and develop shared values, which will be core in achieving their joint goals. These progressive supply chains are not about inspections and investigations into the suppliers activities, where the latter are cutting corners to avoid being caught; these chains are about the identification of opportunities in which improvements can be made (Bansai, 2013). The buyer trains the supplier via a series of training programs and conferences so they may provide just what is needed. However, instead of making the supplier feel the need for compliance, they are help to reinforce their operations and voluntarily improve their ethical and environmental policies. At the end of the day, such relationships are more profitable since they are based on mutual trust and there are other benefits that may accrue and that had not been foreseen by either of the parties such as new innovative products. This is in addition to improving stability for both suppliers and buyer, the buyer can depend on one supplier they can trust and relate with while the supplier has the same advantage. An example of a company that has always upheld a culture of shared values is Honda Motors; when the Japanese firm is looking for supplies in America, it does not just look at the goods, it also considers the values that it can share with the suppliers (Jewett, 2004). As a result, the firm has over the year’s registered phenomenal success and always had stable and straightforward relations with its suppliers; this ultimately translates in its final products. When companies see supply chains as opportunities rather than risks, they acquire considerable competitive advantage, whichgoes beyond avoiding the public relation and media scandals such as the one that plagued Coca Cola. Furthermore, when suppliers and buyers have collaborative as opposed to antagonistic relationships they can achieve new and better levels of communication, and reciprocity without one aiming to take advantage of the other (Drake2007, p.856). Despite the increased popularity and relevance of shared values and social corporate responsibility, there are issues that have been raised about the ethical nature of the process with many arguing that CSR is no different from advertisement. It has been argued that when a company participates in social corporate responsibility they are advertising their behaviour as well as differentiate their product and increase their market share (Andrew and Wayne, 2005). This begs the query, how different is social corporate responsibility from tradition adverting; under normal circumstances, a firm would not advertise unless it was guaranteed it would make a profit. In the same way it has been postulated that the same logic applies when it comes to CSR, and firms only invest in projects where they can get publicity, at the end of the day the fact that advertising comes in form of corporate social responsibility does not mean CSR is not advertising. Nevertheless, few firms that would do their CSR anonymously; they ensure to get as much publicity as possible and they will often invite the media to come and witness, ultimately this makes them look good to their customers. Clearly, when the private profits of a company and the public interest are in a collision course the ideals of social corporate responsibility are often side-lined, many companies will simply do anything they can to boost their profits. This is because company executives, will in most events give priority to the interests of the company’s shareholders as opposed to those of the public which are likely to be relegated to a secondary position. For one to manage any process or endeavour, they must be able to measure and keep track of it, this is no different for the corporate social responsibility; for sustainability programs to be effective measurement and tracking are key. Thus, managers areable to gauge their progress; common examples of measurement include, the measurement of the resources used, the funds used or power consumption as well as waste created (PR News 2008). Throughout last decade, many companies have taken to making a report of their environmental sustainability performance among other aspects of CSR. This way, both the positive and negative aspects of the firm’s social and environmental interests, these reports also boost companies to compete in order to determine which firm has carried out the most CSR work(Hartman, 2005 p.274). This drives global competition to a completely new level, the consumer is the ultimate winner; however even the firm, and supplies benefit from CSR and shared values. A firm with a good relationship with its suppliers is likely to be more stable and will not be involved in scandals such as the ones Coca cola was faced with. This is because when firms form partnerships areopposed to buyer seller relationship, they will share all their information and will only operate under pre-agreed conditions. 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