Ethics in Supply Chain Management

Topics: Ethics, Business ethics, Human rights Pages: 8 (2776 words) Published: December 18, 2012
1.0 Executive Summary
Due to the changing in business model of Multi-national Corporations (MNCs) and lack in supply chain management, MNCs have been criticized as behaving unethically in some situations. It makes a very bad impact on the business and it can destroy the brand image of the corporation. In order to determine the cause and solve this problem, I will examine the ethic of largest computing corporation (Apple) in its relationship with its main manufacture (Foxconn). Then, I will try to consider and apply due diligence in supply chain management carefully to solve their unethical situations. Other hand, I will analysis the impact of supply chain issues to Apple’s stakeholder. Thereby proving the importance of applied the Due Diligence in solving ethical issue in supply chain management.

Due Diligence in business is term used to evaluate and investigate business opportunities. It describes the general duty to exercise care in all transaction of target company such as inspect and evaluate all relevant aspects in the present, past and the predictable future of business. (Lawrence, 1994). Due diligence is an analysis base on records and activities of target company. It involves survey activities, assessment, appraisal, analysis of a project/business or an activity carried out on the basis criteria which set out before. Due diligence is basic common success factors which company should take before doing an agreement or a transaction with other companies. (Phillips, 2012). Due diligence process is conducted and implemented by two companies or outsource; it provide the most detailed and complete information about the project, business idea or business transactions which companies consider. Due diligence base on areas as: Financial, Compatibility, Legal/ Environment, Property / Assets, Marketing and Sales, Operations, Management and Information Systems. (Luis, 2010) Supply Chain Management (SCM) is supervision and management the movement of materials, information and finances in the process from supplier sources to the end customer. Supply chain management consists of integrating and coordinating the flows within company or among companies. Objective of SCM is to maximize the overall value generated (Chopra & Meindl, 2007). According to CSCMP, supply chain management involves all activities such as management, planning, sourcing, manufacturing, conversion, procurement, logistics and delivery. Importantly, it also includes collaboration and coordination among channel partners like the suppliers, customer, third party service providers, and intermediaries. (CSCMP, 2012) Most definitions of business ethics relates to rules, standard and moral principles regarding what is right or wrong in specific situations. “Business Ethics comprises the principles and standards that guide behavior in business world.” (Farrell, et al., 2008). According to Ghillyer (2010), “Business Ethics is the application of ethical standards to business behavior”. It involves the application of standards of moral behavior to business situation.

Nowadays, field of business ethic change rapidly as all multi-national corporations (MNCs) recognized the benefits of improving ethical conduct and link between business ethic and supply chain management. “Business ethic is applied to manage the relation that is a crucial part of SCM”. In MNCs, supply chains management is used not only to reduce cost and complement the product, it is also used to nurture long-term value added relationships. (Farrell, et al., 2008). Ethical supply chain management consist ethical behaviors, satisfy societal expectations and fair treatment to all stakeholders. MNCs are required ethical supply chain management due to the concern of society with MNCs’ responsibilities such as: environmental effects, workplace environments, consumer rights, health and safety product, legislation and brand image. (Zaman, 2011) Todays, business models of multinational...
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