Supplier Partnership Case Study

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  • Topic: Puma AG, Athletic shoe, Herzogenaurach
  • Pages : 6 (1451 words )
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  • Published : January 5, 2013
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CASE BACKGROUND
PUMA AG (PUMA) is a German-based company that produces high-end sportswear. According to PUMA's financial report, in the year 2007, PUMA earned a profit of $510,944,031 excluding taxes. Although the company's headquarters is in Germany , its main production sites are in China and other developing countries. While the company can afford to invest millions of dollars in advertising, behind the scenes, workers who manufacture its products still earn the bare minimum. In the last three years, China Labor Watch (CLW) has been monitoring the conditions of PUMA's suppliers in China. During an investigation on Taiway Sports Ltd., a supplier that “has enjoyed an “A” ranking for years now” according to PUMA's 2005/2006 Sustainability Report, CLW has found deplorable conditions. Conveniently, on March 19th, after CLW notified PUMA about Taiway's conditions, PUMA said in a statement issued on April 2nd that Taiway is now only a “B+” factory and stated that many of CLW's findings on Taiway were either unfounded or largely exaggerated. In order to substantiate the accuracy of the report and emphasize the workers' poor conditions, CLW contacted Der Spiegel, a German media group, and arranged for them interviews with Taiway workers. After the interviews, Der Spiegel published articles on April 1 th and the 21st describing the conditions at Taiway. On May 5th , PUMA publicly responded to CLW, claiming that CLW has not sufficiently taken into account PUMA's efforts in improving the factory and stated once again that most of conditions described on CLW's report were unfounded. Between May and June, over the course of one month, CLW completed a report on Surpassing Shoe Co. Ltd., another PUMA supplier located only a few miles away from Taiway, after interviewing some of its current and former workers. Gravely concerned about PUMA's repeated accusation, prior to the release of the Surpassing report, they invited reporters from WirtschaftsWoche - The German Business Weekly to interview a few workers from the Surpassing factory. They firmly believe that only through independent media broadcast would PUMA recognize the problems at its suppliers. CLW resent PUMA's intention of using its efforts in a single supplier to portray itself as socially responsible. Poor conditions at Taiway have persisted for years, and it wasn't until the release of CLW's report on the factory that reform began to take place. Disappointingly, although the report on Taiway emphasized that PUMA should not limit its reforms to this one case, PUMA still failed to notice problems at its other suppliers. The problems that CLW had found are not limited to one or two of PUMA's suppliers, but rather, it is a reflection of poor conditions of PUMA suppliers in general.

TIME CONTEXT
June 2008

POINT OF VIEW
If I were the CEO, first, I will strictly command my subordinates to obey the Chinese Labor Laws and Regulations. I will not abandon our company’s supplier factories, but rather commit to them and to be resolute in making sure that violations are corrected. I will always monitor them to keep updated and be aware on their current issues. I will make a move whenever I know that our supplier is forcing overtime work for the employees without pay. I will urge our supplier to offer legal work hours, fair wages that allows sustainability and eliminate discrimination at work place. And also, I will warn our supplier to obey our terms of conditions, as well as the CLW laws and regulations, if not, I will replace them a more productive and trustworthy supplier.

STATEMENT OF THE PROBLEM

(Conditions in the Suppliers)
• Excessive Overtime; workers are forced to work overtime, working about 12 hours a day on weekdays, at least 11.5 hours and sometimes even overnight on Saturdays. • Workers are paid 64 cents an hour for each regular hour • Excessive fines; workers could be fired and given a 43.35 USD fine if they refuse to work overtime up to...
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