SUPPLY MANAGEMENT

Ethics in Supply Management



Ethics in Supply Management

Introduction

It is commonly accepted that organizations consider societal responsibilities without regarding the economic constrains to the profit and the goal of share holder wealth maximization. In fact, organizations are deemed to consider such values and carry out such activities that are in favor of the society (Carroll, 1991; Murphy and Poist, 2002). Studies have shown that role of ethics in organizations and carrying out ethical responsibilities has become a major factor to gain public confidence (Reham et al., 2009). It is very important for organizations to behave ethically as it shapes their public actions. This is valid whether the public is a share holder, a consumer, a humanitarian, supplier, a bank depositor or an electoral voter.

Supplier Ethics management is a not a very old business practice which facilitates organizations, through programs and strategies, to administer their suppliers and supply relationships to support the suppliers' business conduct with the purchase standards. The aim is to minimize the overall risk of the purchasing company in term of supply chain corporate integrity failure. The risk is reduced by aligning supplier conduct with the purchaser standard in the areas of integrity that include social responsibility, ethics and compliance.

The world has become a global village where the large organizations acquire their inputs from the developing countries where raw materials are in abundance and wage levels are very low. These small firms of developing countries often overlook their social responsibility that can be very detrimental to the large organizations consider them as their major supplier. Being ethical just by itself is not sufficient for the company. Large organizations and brands are also evaluated on the company they keep. Suppliers are not alienated from the company. Investors, regulator, customers, media organizations and business partners now want a company along with all its supply chains to be ethical. The large firms need to realize that sooner or later, the companies are bound to hold suppliers which are ethical and socially responsible. If the supplier is found involved in unethical practices, it's the big brand that will get the maximum blame.

Discussion

Although CSR has a long history, the applications in Supply chains have surfaced in the last decade. Teun Wolters (2003) defines Supply Management as modes and techniques intended to enhance the social, economic as well as environmental performance of the procedures required to sell and transport a product. Sustainable Supply chain management allows organizations to work together at different levels of supply chain and produces a sustainable product to bring to the market. The producers can have the direct link with the purchasing company with no dominant company in between.

However, in the global world, supply chain relations play extremely critical role as more and more companies are going towards outsourcing their suppliers to developing countries and China where the cost is reduced because of cheap labor. In this way, various risks of the corporation, including health risk, safety risk and environmental risk, are moved out of corporate boundaries that can have ...