Ethical Issues in the Supply Chain for Tea - Case Study Example

Ethical Issues in the Supply Chain for Tea Name: Institution: Introduction In order to achieve competitive advantage in the global market, it is critical for companies to ensure genuine sustainable supply chain management. the supply of tea in the international market require the companies and the suppliers to consider certain ethical issues that will enable their products to be acceptable by the consumers. Some of the ethical issues revolve around environmental sustainability, community relationship, sustainable agricultural practices, international regulatory standards and social issues. However, the supply of agricultural produce in the global supply chain is meant to improve the social wellness of the people involved and to reduce poverty in the developing countries like India. Considering the global market and demand, tea is one of the major agricultural produce that plays a significant role in the global economy, especially in the developing countries (Clay, 2005). In India, tea industry has created a substantial employment to the local people, with an estimation of 35%. The product is the major export to the global market such as UK and USA. However, the industry has been facing a major challenge of sustainability of the supply chain such as the increasing competition from other countries and the increasing cost of production that reduces the export earnings and share in the market. Moreover, social issues and sustainable production also affect the demand for tea in some regions such as UK and other regions in the global market. The discussion in this paper is based on the case study of tea plantation in the state of Assam in India and the ethical issues that need to be considered in the supply chain . Supply Chain Management Supply chain management of tea can be defined as the collective integrated planning and controlling of the activates and processes in the tea supply chain to provide value addition and services while cutting cost of the stakeholders in the supply chain. The management of the supply chain consist of activities that transfer processed tea and production information and revenues between countries. The production information for part of the ethical issues that need to be considered in the global market and those that need to be taken into consideration while producing made tea. If Ethico Supremica is to sauce made tea from the State of Assam in India, the producing companies must consider all the ethical issues in the production process and the supply chain management (Neilson & Pritchard, 2011). Supply chain management in the global market is targeted to maximising on the company revenues and the general performance of the company as opposed to achieving an individual cost reduction in terms of production. However, in the supply of tea, transferring the cost of production to the workers does not make the tea to gain a competitive advantage in the global market. This is because some of the exporting countries are known to be exploiting the workers with an expectation of gaining the profit while using little funds to conduct the operations (Clay, 2005). The observation has placed place strategic alliances between partners in the tea supply chain so that a fair competition can be created in the market. One such organisation is the Rainforest Alliance certification, which requires farmers to ensure all the social and environmental issues are considered in the production process. For many decades, the competition for tea has been flexible with minimal consideration given to the production process, with no emphasis on the applicable labour laws that govern the minimum wage and the workers working conditions. Currently, the customers who buy the made tea have been sensitised to consider buying products that are produced in a legal manner of production and that meet the ethical issues through the production process (Calì et al. & World Bank, 2014). the existing non-governmental organisation that sensitize customers on the production process and quality of the made tea are meant to establish a good relationship between the parties involved in the production and those in the consumption stage. The strategy increase extra pressure to the supplies to meet the standards and ensuring social and environmental sustainability. Management of Tea Supply Chain Managing the supply chain for tea has been the interest of the tea producing states in India, including Assam. The management is necessary for the company to gain a competitive advantage in the international context for a continuous supply. Various organisations in the supply chain have developed strategies to create awareness and sensitise the customers and the workers in the developing countries of their expectations while undertaking the production process activities (Yawar, 2015). The organisations have developed capacity building programs and training of the workers on safety procedures and their legal right as workers. In the Assam state, the people who are earning their living through tea plucking are informed of the changes that are taking place in the supply chain. The growing of tea as a cash crop has mainly involved the cultivation, harvesting, processing and selling to the global market. The activity has however evolved, and tea has been considered as one of the international tradable product. The supply chain is now considering activities such as the chemicals that are being used in farming, the type of labour employed to work on the farms, safety measures and the payment of wages. The pressure is also arising from the producers and suppliers to engage in activities that are environmentally sustainable to ensure that products are interested in addressing the issue of global warming. The customers are well informed and will not prefer commodity that the suppliers are interested in making profit without consideration of sustainable agriculture (Clay, 2005). Ethical Issue to Ensure Sustainability of the Supply Chain The first ethical issue that will ensure a sustainable supply of tea to form the state of Assam is for the plantation to ensure conservation of the ecosystem. Natural ecosystems, where the farming activity is taking place, are integral elements of the state of Assam. The farmers must ensure the tea plantations are conserving the natural water bodies and controlling soil erosion to ensure continuous growth of tea. If the farms are established in a degraded habitat, the farm management team must come up with strategies that will try to restore the habitat to its natural state through reforestation to restore the lost habitat (Calì et al. & World Bank, 2014). The farms are to ensure the tea production areas are located in areas that do not have a negative impact on the conservation areas such as parks and buffer zones. The tea plantations are not to be expanded by clearing natural vegetation, which serve as habitats for the wildlife. Secondly, the farms must ensure that wildlife in the area are protected to promote the relationship between the wildlife conservation agencies and the farming activities. Habitats that harbour migratory species should be left undisturbed. The migratory birds and animals are considered national and international wildlife resources that promote tourism. Therefore, the company will not accept tea from the state of Assam if the activities are interfering with other business and conservation practices (Hill & Jones, 2007). Moreover, the estate owners should keep an inventory of all the wildlife found in the region so that the important habitats can remain conserved. Thirdly, the company will only accept tea produced from the state of Assam if the production process considers water conservation. The practice of water conservation is to ensure the local communities that are using the same water source such as rivers remain healthy by the plantation not using chemicals that can contaminate the water. Effluent from the tea processing plant should not be discharged directly into the environment without being treated. The most important one is that the farm that uses herbicides should resort to manual weeding so that the amount of chemicals that are being discharged into the environment can be minimised. The forth ethical issue is the most important that is addressed in the case study the state of Assam. The working condition and the fair treatment of workers is the key reason that can make a company to loose market share and customers as well. According to the case study, the Woking conditions are described as horrible, and the workers are not paid in accordance to the existing labour laws. The issue of poor working conditions and low wage payment do not only affect the state of Assam in India, but is also been widespread in Kenya, Sri Lanka and other tea producing countries. Although most of the tea producing states prefers cheap labour, the buyers are now informed of the acceptable standards of production and supply in the global market (Neilson & Pritchard, 2011). Since poor working conditions and poor wages form the better part of the challenges facing the tea plantation in Assan estate, the management have to develop mechanisms and policies that will help address the issues so that Ethico Supremica can be able to buy the tea. In the first place, the state must have a social policy for the tea workers that show their level of commitment to comply with the existing India labour laws as well as the international agreement for sustainable crop production (Yawar, 2015). The organisation rights and responsibilities are to be stated in the policy including those that apply to company workers. The aim of the policy is to discourse the most evident issues that have been realised in the case study such as the poor working conditions, training needs, and issues of occupational health and safety. It is critical for the farm management not to discriminate the workers when hiring and promoting the employees. With that, the management must be in apposition to provide equal pay to the employees, train the employees on safe working conditions and ensure all the workers benefit from the work done. According to the international standards in the sustainable agricultural practices, the companies are expected to directly hire the workforce with an exception of workers who are to bring a special input to the company. The standards also stipulate that the company are not to engage third party contractors or apply mechanisms that prevent direct hiring of the workforce. Corruption must not be part of the dealings while hiring the workers. The corrupt practices such as issuing money to seek for favours is considered an illegal act that should lead to dismissal or suspension of the parties involved. This also applies to the stages of supply chain whereby the producers are not allowed to bribe the buyers so that their products can be purchased (Hill & Jones, 2007). Concerning the payment methodology, the management in the Assam region that deals with tea are expected to have a policy and procedures in place that guarantee the payment of the labour force and the agreed payment dates as stated in the contract form. All the workers are to be paid in the workplace or the legal monetary institution such as banks depending on the terms of the agreement. The workers must be informed on the salary that will be payable and any other cost that may be educated or added to the payslips. The management are to come up with a working formula that indicate the recommended working hours and time to rest. Any work done beyond the working hours should be done willingly, and appropriate payments be made as compensation for the additional job done. According to the labour laws, the overtime hours are paid hourly and should not exceed twelve hours in a week. With regards to the working formula, the people are to be given one day to rest and the national holidays must be observed. Unless there is a need for a certain task to be completed, the workers must be paid accordingly. Most importantly, the workers are to receive their pay according to remuneration above or equal to the average wage of the state. Since the state of Assam is currently paying below the government minimum wage, the state does not qualify to be granted a good market in the supply chain. The workers should be given an opportunity to negotiate their working conditions and should not be subjected to forced labour. The current supply chain does not permit the supply of products produced under forced labour but rather prefer products that are produced in a sustainable manner. The same apply to Ethico Supremica, which will not accept tea that is produced from forced labour. The farmers or the management is not to threaten the workers and subject then to sexual harassment or abuse, either verbally, psychologically or physically. The management and workers themselves are to maintain respect and peaceful coexistence among each other (Neilson & Pritchard, 2011). In line with that, the workers are to give opportunity to make decisions regarding the policies and rights and also to come with appropriate recommendations that will improve their working conditions. Another critical ethical issue in the workplace is concerned with safety while at work. The workers are to be dressed in appropriate working gears that will protect them against injuries and accidents while picking tea or operating the machines. The people employed to work in the field as tea pickers are to wear protective overalls and gumboots that protect them against sharp tea tranches. Before the workers are allowed in the field, they should be trained and get informed on the company policy requirements as far as personal safety is concerned. The company is expected to develop a permanent and continuous training program that educates the workers on the recommended ways of picking the tea and interacting with the machines while in operation (Yawar, 2015). The provision on the ethical issues in the tea supply concerning occupational health and safety require the workers that handle agrochemicals to be trained and supplied with appropriate personal protective equipment. The chemical that are being applied in the field should be those that are internationally recognised and are recommended. In case the chemical handlers encounter an accident while applying the chemicals, there should be a ready emergency procedure or a first aid to be administered by trained personnel. the people who handle the chemicals are also expected to go for medical check-ups so that early detections can be made in case the chemicals are affecting their body systems. In a nutshell, the farm management must take adequate measures to reduce the risk at the workplace and accidents that may result from agrochemicals, transport and machinery (Calì et al. & World Bank, 2014). If the workers are being provided with shelter, the houses are to be in a good state and be supplied with basic need such as water and adequate ventilation such as chimneys. Facilities such as toilets and good drainage systems have to be ensured to prevent contamination and possible pathogenic diseases. The workers are to have recreation grounds and social amenities such as hospitals and learning institutions for the school-going children. Moreover, the farm is not allowed to employ underage workers such as the school going children. The children or the underage should be permitted to work during part-time hours and only if they belong to the families employed in the farms (Hill & Jones, 2007). Finally, another ethical issue that are important to the tea business are concerned with community relations. The farms are expected to engage in activities that will not result in conflicts or difference between the company and the local community. Therefore, the plants should not pollute the environment or use chemicals that pose a negative impact to the natural water resources such as rivers. Therefore, the farm is recommended to engage in integrated tea farming that will minimise or eliminate the use of chemicals (Neilson & Pritchard, 2011). Pest management on the farm should be based on ecological principles that involve biological control methods. The State of Assam should also consider integrated management of waste and conservation of soils to ensure the farming activity is sustainable and be available for the future generation. Conclusions and Recommendation Drivers for sustainable tea supply chain are expected to meet the end users and stakeholders expectations and requirements with regards to the applicable performance indicators in all the operations. The operation are to be environmentally friendly and ensure sustainability. If the State of Assam wants to join the global supply chain for tea, for example, supplying made tea to Ethico Supremica, the state management in the tea business must abide by the laws and regulations governing the market (Yawar, 2015). The management must bear in mind that the environment is the representation of public good, and the company cannot be sustainable if the business does not support and motivate the workers by offering better pay. Relationship and collaboration with the workers are important for the company, which also extend to the global supply chain. Sustainable development in the tea business greatly depends on the ways in which the companies will be interacting with the partners from both the state of Assam and those in the international market such as Ethico Supremica. Therefore, for Ethico Supremica Company to buy the made tea from the state of Ethico Supremica, the factories in the state must first comply to the social and environmental ethical issues that ensure sustainable tea farming. The cooperation will put the state to fair trade in the global market where products compete in terms of quality. References Calì, M., Farole, T., Kunaka, C., Waglé, S., & World Bank. (2014). Integrating border regions: Connectivity and competitiveness in South Asia. Washington, D.C: The World Bank. Clay, J. (2005). Exploring the links between international business and poverty reduction: A case study of Unilever in Indonesia. Oxford: Oxfam Hill, C. W. L., & Jones, G. R. (2007). Strategic management: An integrated approach. Boston, Mass: Houghton Mifflin. Neilson, J., & Pritchard, B. (2011). Value Chain Struggles: Institutions and Governance in the Plantation Districts of South India. Hoboken: John Wiley & Sons. Yawar, S. A. (2015). Corporate Social Responsibility in Supply Chains: Relevance of Supplier Development. Kassel, Hess: Kassel University Press. Read More