The Importance of Ethical Supply Chains - Assignment Example

Debating the Importance of Ethical Supply Chains Table of Contents Introduction 3 Critical Analysis of Academic Literature 4 Case Study Findings 7 Summary and Conclusion 9 References 11 Introduction Supply chain plays an important role in every organisation. It involves the process of transit of goods or services from the supplier to the customer. Supply chain is of several phases such as sourcing, procuring, storing, order processing, managing logistics, warehousing, manufacturing, scheduling, delivering and managing returns. The process to be effective and efficient needs to be ethical from the initial phase of storage of raw material to the deliverance of the goods. Ethics in the supply chain signifies increasing the value of the goods by procuring high quality product and delivering it with added value. The concept of ethical supply chain entails the maintenance of transparency in the organisations to avoid risk and issues regarding the goods. The risks are usually associated with the suppliers’ selection, their culture and the business objectives. The dimension of ethical supply chain aims to maintain the quality of goods and services throughout the chain to avoid issues and scandals. Moreover, the concept of ethical supply chain facilitates to provide, store goods and deliver goods along with services at the right time with safety to the end user. Ethics, transparency and accountability in the supply chain affect the environment and society at large (Fredendall & Hill, 2000). The essay aims to evaluate the importance of the ethical supply chain in the environment and the society. The evaluation of importance would help to determine the role of ethics in the supply chain process from the beginning to the end user. Critical Analysis of Academic Literature Ethical supply chain is of huge importance for the organisations as it helps to ensure health and safety. It is noticeable that ethical supply chain leads to Fair Trade movement. The aim of the movement is to assist the poor suppliers by sourcing raw materials from them. The adherence to ethical norms in the supply chain helps in coping up the stress regarding the social responsibility by bringing transparency in the operational activities involved in a supply chain. It facilitates in creating ecological awareness and aids in protecting the property by having transparency in the process of supply chain. It is at times observed that the suppliers force the labourers and pressurise the farmers for the raw materials but with the advent of ethics in the supply chain these issues can be resolved. Ethics in supply chain makes the process of marketing effective by providing proper detailed information regarding the goods to the customers. It is noticeable that ethics in supply chain is critical as it affects the middleman in the process. A lack of focus in terms of ethical perspective within the supply chain might lead to the increase in the price of the goods and at times affect the quality of the goods as the suppliers do not comply by the rules of the company working with. An ethical consideration amid the stakeholders facilitates the process of the supply chain to be simpler and effective. Moreover, it is addressed by Schlegelmilch & Oberseder (2007) that a lack of ethics permits the producer to force child labour, engage in unfair wages along with upholding violation of the property. If ethics is followed then the producers will be liable to follow the norms, rules and comply with the ethics of the supply chain. They would provide better quality products, fair wages to the labourers along with ascertaining better working environment (Deckers, 2011). Proper working environments have a positive impact on the health of the labourer and the goods produced by them (Schlegelmilch & Oberseder, 2007). Packaging is another aspect of supply chain wherein the adherence to ethical norms will enable to avoid tampered products or unclear labelling. It is ethical for the producers to have a written labelling of the ingredients used with clear labelling in order to guide the customers in the best manner as reflected by Fredendall & Hill (2000). Furthermore, ethical supply chain of an organisation leads to ethical positioning in the market and enables to get a competitive edge over the others. It is viewed that at times the consumers want to gain information about the products they buy. They are keen to know about the source and the ecological aspect of the product they purchase (Ontario Ministry of Government Services, 2009; Fredendall & Hill, 2000). If the supply abides by ethical norms, it will render several benefits for the stakeholders. It is observed that ethics leads to the increase in the profit of a company and helps in increasing the customer base. It also has a great impact on the brand image of the company on the basis of its product deliverance to the customers. The product offerings and the quality assurance affect the image of the company which is directly related to ethical supply chains. Ethics at every area of the supply chain from the source of production, to the packaging, to the warehousing and eventually the delivery of the goods and services have great impact on the business functioning. As stated by Zaman (2011) and Amaesh & et. al. (2008), the dimension of ethical supply chain has its concern towards the environment by safeguarding it through reducing the level of carbon emission, which is termed as key component of corporate social responsibility (CSR). This is possible by creating collaboration amid the suppliers in order to improve the working condition which will result in the reduction of the carbon emission (Zaman, 2011; Amaesh & et. al., 2008). Ethical supply chain has various explanations according to the concepts of the stakeholders. Certain observers judge the ethicality of the supply chain on the basis of human rights and few base it on the principles of the International Labour Organisation (ILO). An ethical supply chain gives rise to various benefits as it assists the suppliers to source their products with quality and ensure humanitarian behaviour with their farmers by providing them proper working environment and wages. Ethical supply chain is creating an atmosphere wherein the producers of the goods are taking care of their products and assuring quality with no artificiality. It has been observed that with the increase in the demands for the goods in the food retail industry, the suppliers are at times using unfair means to meet the demands without even assuring the quality of the goods which displays a lack of focus on ethics in the supply chain (Fredendall & Hill, 2000). Warehousing of the goods in a systematic manner is another key aspect in the supply chain. It is observed that a lack of ethics leads to staking of the goods in the warehouse which creates an unnecessary crisis in the market. This leads to the increase in the price of the goods in the market. Thus, ethics in supply chain is important to reduce the unfair activities involved in the storing facility. Usage of the advanced technologies such as bar code and monitoring of the stored goods for proper allocation are other significant factors which lead to a proper ethical supply chain (Neef, 2004). Consequently, ethical supply chain is of great importance for the safety of the environment, society and for the maintenance of the economy. Adherence to the aspect of ethics in the supply chain has its importance in every area such as sourcing of the goods from the supplier to the warehouse, marketing and finally to the end customer. Ethics adds value to the product and increases the trust of the customers on the company following the ethical supply chain dimension (Neef, 2004). Case Study Findings The best example of the ethical supply chain is evaluated by stating about Tesco. Tesco follows “Trading Fairly” programme which implies to the fact that Tesco will buy as well as sell goods with quality and added value for the customers by following a proper ethical supply chain (2Tesco Plc, 2014). This facet correlates with the findings in the literature wherein it is determined that a lack of focus on quality of goods due to unethical supply chain activities hampers an organisation’s progress. Tesco engages suppliers who communicate the same values like the company and have strong standards. The aspect of supply chain in Tesco is transparent to create awareness about the product and have a strong monitoring over the reports. Tesco’s ethical trading is based on the pillars of value, monitoring, improvement and transparency. This is adhered in order to bring improvement in the supply chain and add value to the goods. The products of Tesco ensure high quality on the basis of the ethical supply chain. The strong customer base is the key reason for such engagement of the suppliers, producers and the warehousing facility that Tesco possesses. Due to the upholding of ethical norms in the supply chain, the suppliers have a long-term association with the company with quality assurance along with values which is beneficial for both. The primary reason for such ethical consideration at Tesco is to improve and increase the customer base. This is possible as the customers are provided with the information regarding the source of the product, its condition and the fairness involved throughout the supply chain. This makes Tesco one of the foremost retailers in the world because of its effective ethical supply chain which enables it to maintain transparency (1Tesco Plc, 2014). Conversely, McDonald’s, the leading fast food chain had to pay price for lack of ethics practised in the supply chain activities. In the year 2000, McDonald’s saw a decline in the sales of its offerings which was mainly due to a lack of ethics in sourcing from the suppliers. It has been observed that the supply chain partners to meet the demand for the raw materials forced the farmers to ranch meats. This was affecting the environment due to the destruction of the rainforests. Moreover, the supply chain did not follow ethics as the farmers supplied infected meats to McDonalds. Besides, in relation to the activity of marketing through advertisement, it exhibited misleading information to the people regarding the food to be healthy and of quality. The sourcing of the goods to marketing all are part of supply chain which did not follow ethics in the initial years and hence it led to a decrease in market share and loss of its market reputation. To regain the market, McDonald’s inherited the importance of the ethical supply chain and hence selected suppliers who are certified by the government for their products. The products are subsequently being supplied from a well organised environment to ensure quality. Furthermore, transparency was maintained by the suppliers as well as adequate information was provided to the customers to make them feel content about the quality and health of the food (GlobalResearch.ca, 2011). The consumers were well informed about the ingredients used and the source of the goods used which started to display the positive aspect of ethical supply chain as the consumers were assured to what they are having. This case reveals the importance of ethical supply chain and its direct impact on the consumers, environment and the economy of the country. Ethics followed by Tesco facilitated it to establish its position as a leading retailer and helped it in having a strong bond with the suppliers. On the other hand, the case of McDonald’s demonstrated the side effects of not having an ethical supply chain in an organisation. The positive impact the business, economy, suppliers and customers have when ethical norms are followed is evaluated in the case of McDonald’s as well. Therefore, from the given case studies, it can be stated that ethical supply chain is an important factor for the companies as this reduces the risk from the suppliers and ensures quality product. Adherence to ethics in the supply chain would lead to the expansion of the customer base and create a strong brand image of the company in respect of its quality and price. Staking of goods, one of the major concerns will be reduced and the economy of the business as well as the country would upsurge, creating scope of expansion for the business. With the enhanced level of transparency, the success of the companies as evaluated through the cases will be more. Summary and Conclusion Supply chain is an activity which involves the manufacturers and the suppliers to meet the demand of the customers and to increase the profit of a company. It involves activities such as sourcing of the good, supplying it, transportation, warehousing, marketing and delivering the goods to the end user. Ethics in the supply chain is important to bring value to the product, create awareness and transparency. Ethical supply chain leads to long-term association with the suppliers and involves fair dealings. It is a continuous process of improvement which is beneficial for the environment it involves and the company it is dealing with. Ethical supply chain is important as it brings profit to the company and ensures safety in the environment and society. Ethical supply chain has a positive impact on the shareholders’ value as it aids in ensuring corporate responsibility. Supply chain with ethics leads to high brand image, adds value to the product delivered and helps in managing the social responsibility of a company by delivering quality goods. Therefore, ethical supply chain not only addresses the corporate responsibility of a firm but also ensures the health and safety of the consumers. References Amaesh, K. & et. al., 2008. Corporate Social Responsibility in Supply Chains Of Global Brands: A Boundary Less Responsibility? Clarifications, Exceptions and Implication. CSR Supply, pp. 1-32. Deckers, 2011. Ethical Supply Chain. Supplier Code Of Conduct, pp. 1-2. Fredendall, L.D. & Hill, E., 2000. Basics of Supply Chain Management. CRC Press. GlobalResearch.ca., 2011. The Globalization of “Fast Food”. Behind the Brand: McDonald’s. Article. [Online] Available at: http://www.globalresearch.ca/the-globalization-of-fast-food-behind-the-brand-mcdonald-s/25309 [Accessed February 13, 2014]. Neef, D., 2004. The Supply Chain Imperative. AMACOM Div American Mgmt Assn. Ontario Ministry of Government Services, 2009. Supply Chain Guideline. Chapter 1, pp. 1-65. Schlegelmilch, B. B. & Oberseder, M., 2007. Ethical Issues in Global Supply Chains. Emerging Issues in Management, No. 2, pp. 12- 23. 1Tesco Plc, 2014. Ethical trading at Tesco. Policies and Factsheets. [Online] Available at: http://www.tescoplc.com/site/library/policiesandfactsheets/ethical-trading-at-tesco.htm [Accessed February 13, 2014]. 2Tesco Plc, 2014. Trading Fairly. Tesco, pp. 1-8. Zaman, A., 2011. Ethics in Supply Chain Management. Professional Ethics in Science and Engineering, pp. 1-11. Read More