Supply Chain Management: Ethical Supply Chains
Article 5 Review
Guthrie, D. (2012, March 9). Building sustainable and ethical supply chains. Forbes. Retrieved from https://www.forbes.com/sites/dougguthrie/2012/03/09/building-sustainable-and-ethical-supply-chains/#3b3a63834179
Synopsis
The main idea in the article “Building Sustainable and Ethical Supply Chains,” by Doug Guthrie (2012) is the need to incorporate social responsibility and ethical business practices across supply chains. The author acknowledges that in today’s business world, companies often forego values for fiscal imperatives, such as managing costs and scaling growth (Guthrie, 2012). He finds the practice expedient and encourages firms to develop a genuine commitment to corporate social responsibility (CSR) in their local operations (Guthrie, 2012). The author believes that by adopting social responsibility and codes of conduct at the organizational level, corporations can easily influence suppliers to indulge in similar practices, regardless of their geographical borders.
To build on his work, Guthrie utilizes real-life scenarios of companies that have suffered economic loss and faced considerable criticism in the past because of failure to uphold values and social responsibility across their supply chain. The author discusses the case of Nike, which saw a 69% decline in earnings in the 1990s following reluctance by its management to monitor its suppliers’ compliance with the then established code and local regulations (Guthrie, 2012). While the firm dismissed accountability for the activities of independent contractors, its reputation and image in the international market were wrecked by its supplier’s unethical behavior. The writer also gives the example of Apple’s experience in 2012, whereby the entity was highly criticized for the practices of its overseas supplier who failed to adhere to safety and fair wage regulations despite Apple being a participating venture in the Fair Labor Association (FLA) (Guthrie, 2012). Based on such case scenarios, the author attempts to enlighten leaders on the efficacy of aligning their supply chains with the established value standards and collaborating with advocacy groups to monitor compliance across the supply chain structure.
How This Relates to Chapter 15
Chapter 15 connects with the article since it highlights some of the factors that affect outsourcing and the purchasing law in supply chain management. Guthrie (2012) avers that global purchasing is associated with new challenges that include varying sets of standards concerning health, safety, and environmental regulation. For instance, as companies in the United States source raw materials from global suppliers, they are likely to experience difficulties associated with adhering to rules and regulations that are unfamiliar to them. Often, these variations in standards can adversely affect a firm financially due to the imposition of fines and trading restraints, especially when the management fails to comply with the established requirements. Additionally, Guthrie discusses the law of agency in regard to large corporations such as Nike and their affiliated suppliers. The author remarks that corporate citizenship should encompass both parent companies and their contractors, regardless of their distant shores (Guthrie, 2012). This statement embodies an essential element of the law above, which implies that independent contractors act on behalf of parent firms, thus the latter is liable for ensuring that social responsibility and business values are streamlined across its supply chain.
Opinion of the Article
In my opinion, ethical behavior and social responsibility are some of the most undervalued elements, yet very critical to the success of organizations. Corporations should ensure that they indulge in CSR in every location that they establish their activities. Besides, codes of conduct formulated in parent companies should be reinforced and monitored across the supply chain. In the event of non-compliance, firms should seek alternative global suppliers.
