Challenges Faced By Suppliers to Low Cost Retailers
Introduction
Fiscal imperatives often prevail in the business world over values such as social responsibility and ethical behaviour. This is because most organisations are more focused on mitigating costs and reducing uncertainty. This drive for pure certainty and containment of costs is more compelling in the supply chain that in any other area. There are many challenges which organisations face in creating and maintaining an ethical supply chain. Maintaining an ethical supply chain is usually the responsibility of all employees including managers and the supply team. Some of the factors which affect the supply chain usually arise if an organisation is not treating its employees well. If an employee is not treated well, then they will not give their full potential to the production of a certain material. The absence of properly functioning machinery also plays a part in posing challenges to the ethical supply chain. This is because it may result to a malfunction which may lead to errors in the final product. This may also take up much time which is essential for the production of more quality products. Organizations which act as suppliers to low cost clothing retailers may also face challenges since their customers will not be in a position to pay up enough revenue for the production of high quality products. As a result, these suppliers are forced to use poor quality raw materials as well as a production process which is not ethical. This makes them less competitive in the clothing industry because as usual customers consider the kind of product produced before getting into any contract with suppliers. This paper analyses the ethical responsibility of retailers in the supply chain in ensuring the safety of employees working in the supplier companies. Consumers should take responsibility for ensuring that the products they purchase are made in a safe and ethical way.
Unethical and Dangerous Manufacturing Processes
When purchasing goods and services, most customers opt to go for cheaper ones. What they do not know is the danger that they are putting themselves into as well as the many others who are employed in the production units (Burnes 2009, p. 360). Just recently, a factory building in Bangladesh collapsed in on many employees (Sanchez-Runde, Nardon & Steers 2013, p. 690). A minimum of 258 people lost their lives and around 1400 survivors lived to tell the tale. Just a day before this tragedy struck, a very big crack scared some of the employees running out of the building. Unfortunately they were forced back in and threatened to loose a whole month’s pay if they fled again. The company had already received a warning from the authorities that the building was not in good working conditions, however since the owners wanted to make a profit from the manufacturing of cheap clothing, the management did not use any of the cash available to fix the problem (Sanchez-Runde, Nardon & Steers 2013, p. 692). This is just one of the many tragedies which have resulted from ignorance and poor managerial skills.
The supply chain in this example was unethical since it featured the use of a dangerous environment which risked the lives of thousands of employees (Burnes 2009, p. 361). The manager did not heed the warning by carrying out an analysis so as to prove the authorities wrong, instead the warning was ignored without further research. The employees of this company were not being treated well mainly because the owners were greedy for money and making profits. This can be proved by the fact that the employees were threatened to work in a dangerous environment or else they lose a month’s pay. An organisation which is a supplier for a low cost retailer will not have enough revenue to keep it moving and to ensure an ethical supply chain. The organisation will only be focused on bringing in more money than using it on maintenance practices to ensure ethical production (Conaway & Fernandez 2000, p. 30).
Not all low cost retailers are affecting the supply chain negatively. A good example of a company which has used good managerial skills to make the most out of both options is the Primark clothing company. This company is able to offer both value products and low prices mainly because its business model is designed in a unique way (Jones, Temperley & Lima 2009, p. 930). It is mainly based on high sales volume as well as low retail margins with very minimal advertising. The main area whereby companies loose revenue is by advertising excessively. As a result they spend more than what the advertisement guarantees in return. This leads to a direct loss at the end of the month. Primark on the other hand keeps its costs down by purchasing large quantities of raw materials and hence enjoying the benefits resulting from buying items in bulk.
The Duty of the Retailer in the Supply Chain
The retailers have a duty in the supply chain to ensure the safety of all employees working in the supply companies. Therefore what happens to the employees in the production unit totally depends on them. This is because it is the choices they make that affect these employees (Burnes 2009, p. 362). If they decide that certain clothing will sell at a very low price, the production unit will be forced to use processes which are not ethical and safe just so the production unit does not go at a loss. On the other hand, if they expect ethical products, the working conditions in the production unit will also be ethical so as to ensure that the resulting product is of very high quality. At Primark, for example, it is clear that the code of conduct within the supply chain has saved many employees in the production unit (Jones, Temperley & Lima 2009, p. 934). According to the Primark code, it is stated that employment is freely chosen by all, therefore in case an employee wants to quit, they will not be forced to stay. It is also stated that the working conditions must be safe and hygienic. This is to ensure that no accidents will occur during the process and also to safeguard the health of the employees so as to promote productivity. Working hours are not excessive, and this is important as it gives employees an ample time to relax and recuperate for the next day’s work (Conaway & Fernandez 2000, p. 31). No harsh or any inhumane treatment is allowed. For example, the way the employees from the collapsed Bangladesh factory building were treated was not human. When they tried to run for fear of losing their lives, they were chased back into the factory with sticks.
The Primark Company works very closely with the companies that supply them with their goods (Jones, Temperley & Lima 2009, p. 936). It plays a part in the supply chain by bringing together suppliers and the buyers, and training them so as to help them understand better the ethical issues in the industry. For example, it has offered guidance on ethical issues such as child labour in Asia as well as immigration and working rights issues in the United Kingdom. In this simple chain, the role of the Primark buyers is to help in the support of ethical practices at work. During the selection of new supplier factories, this clothing business must use a selection process so as to determine whether the working conditions of employees are appropriate or if there are areas which require an improvement. So far Primark Company has benefited from the decisions made by the management. They are not ignorant, but still just as many companies, their main objective is to become a profitable and sustainable company.
Any clothing manufacturing company should be constantly on the lookout for challenges of ethical operation. There is an essential need for organisations to develop ethical practices as well as principles that are going to be supported and adopted by every individual in the business. They should also work with the many international companies whose main objectives are to promote ethical practices while protecting the rights of employees within an organization (Floyd, Xu, Atkins & Caldwell 2013, p 758). An organization may take the first step by basing its code of conduct on an international body such as the International Labour Organization (ILO) code (Fransen 2013, p. 214). The ILO agency is from the United States, and it works by bringing together government representatives as well as employees and other workers so as to create working policies and programmes which promote ethical production without necessarily suppressing the rights of employees. In general, it promotes working opportunities such as working in freedom, security, equity and dignity. The workforce needs to be broken down into sections so as to facilitate the monitoring of products as well as making it easier for follow ups.
Importance of Taking an Ethical Approach in the Production Process
Any business which is constantly seeking ways to develop may still perform better if they act in a responsible way. This may be better described as Corporate Social Responsibility (Piercy & Lane 2009, p. 335). Any company has the duty to promote the safety of employees in the supply chain. They need to bring together the three groups of people in the supply chain so as to help address any issues which may be waiting to explode. A company operates responsibly not by promoting its sales, but also working hand in hand with its suppliers and also conducting ethical audits. This helps to improve confidence in the specific brand and also to reduce risks to the business (Floyd, Xu, Atkins & Caldwell 2013,p 760). My building its reputation, a business gets the opportunity to attract more customers which will eventually promote sales without it having to use more cash on advertisements. Stakeholders are usually pleased to be associated with a company whose reputation is good (Wesley II & Ndofor 2013, p. 450). A good reputation will never come if the business is associated with ethical issues from the supplier side of the supply chain. If an incident occurs as a result of negligence or poor decision making in the supplier side, the retailer will be among the first to suffer. Customers will be lost and revenue decreased in the process.
A good business practice features sustainability over a long term and not just the short term. This is because sustainability results when a business is in a position to make profits for all shareholders, offer good and ethical work opportunities for all staff, pay taxes to the various countries in which it operates and lastly, gives consumers exactly what they want and so much more (Wesley II & Ndofor 2013, p. 451). The latter may be achieved by ensuring that they offer products which are a good representation of good value for money but at an affordable price.
Costs of Ethical Behaviour
A company which operates in an ethical way eventually attracts additional costs when compared to other retailers or production companies who act in unethical ways. Primark, for example, is a company which always takes care of additional costs such as audits and also working with ethical partners. However, rather than viewing this costs as a cut down on the revenue, the company believes that these steps enable it to act in a sustainable and perfectly managed way (Wesley II & Ndofor 2013, p. 452). Their steps benefit the supplier and in turn it benefits Primark, since all its suppliers work in the expected standards.
Conclusion
The retailers are responsible for the suppliers since if they tolerate the unethical behaviour, the company will not make an effort to change. All suppliers want to be associated with retailers who pay them well for their products; therefore they can make any changes just to ensure they are well suited to be associated with a target retailer. Therefore the retailer needs to bring together the buyers and the suppliers so that they can come up with ways to make it better for everyone involved in the supply chain.
References
Jones, B, Temperley, J, & Lima, A 2009, ‘Corporate reputation in the era of Web 2.0: the case of Primark’, Journal Of Marketing Management, 25, 9/10, pp. 927-939, Business Source Complete, EBSCOhost, viewed 2 January 2014.
Piercy, N, & Lane, N 2009, ‘Corporate social responsibility: impacts on strategic marketing and customer value’, Marketing Review, 9, 4, pp. 335-360, Business Source Complete, EBSCOhost, viewed 2 January 2014.
Burnes, B 2009, ‘Reflections: Ethics and Organizational Change – Time for a Return to Lewinian Values’, Journal Of Change Management, 9, 4, pp. 359-381, Business Source Complete, EBSCOhost, viewed 2 January 2014.
Floyd, L, Xu, F, Atkins, R, & Caldwell, C 2013, ‘Ethical Outcomes and Business Ethics: Toward Improving Business Ethics Education’, Journal Of Business Ethics, 117, 4, pp. 753-776, Business Source Complete, EBSCOhost, viewed 2 January 2014.
Fransen, L 2013, ‘The Embeddedness of Responsible Business Practice: Exploring the Interaction Between National-Institutional Environments and Corporate Social Responsibility’, Journal Of Business Ethics, 115, 2, pp. 213-227, Business Source Complete, EBSCOhost, viewed 2 January 2014.
Conaway, R, & Fernandez, T 2000, ‘Ethical Preferences Among Business Leaders: Implications for Business Schools’, Business Communication Quarterly, 63, 1, pp. 23-38, Business Source Complete, EBSCOhost, viewed 2 January 2014.
Sanchez-Runde, C, Nardon, L, & Steers, R 2013, ‘The Cultural Roots of Ethical Conflicts in Global Business’, Journal Of Business Ethics, 116, 4, pp. 689-701, Business Source Complete, EBSCOhost, viewed 2 January 2014
Wesley II, C, & Ndofor, H 2013, ‘The Great Escape: The Unaddressed Ethical Issue of Investor Responsibility for Corporate Malfeasance’, Business Ethics Quarterly, 23, 3, pp. 443-475, Business Source Complete, EBSCOhost, viewed 2 January 2014.
Use the order calculator below and get started! Contact our live support team for any assistance or inquiry.
[order_calculator]