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Unethical Supply Chain Behaviors

There can be potential ethics violations at every phase of managing the supply chain. The different phases in supply chain management are each of the different major activities (source, plan, make, fulfill and sell/return).
by

Jennifer Edmonds, PhD

on 5 May 2014

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Transcript of Unethical Supply Chain Behaviors

PLAN
SOURCE
MAKE
FULFILL
SELL
think about the activities involved in PLANNING the Supply Chain...
http://blog.brookoflife.com/2009/08/is-outsourcing-unethical/
This blog engages a discussion of sending jobs overseas (to take advantage of low labor costs) at the height of rising unemployment rates in the US.
There is a lot of discussion on this topic, but very little agreement. I actually agree that outsourcing can be good for some companies...but when millions of jobs are lost and sent overseas, greed seems to be the motivating factor. When corporate greed is the motivator, and not increasing output value in some way, an ethical battle ensues.
Dr. Edmonds
MAKE is defined as production of goods or performance of a service.
Selling can also include RETURNS can also include activities pertaining to the processing of complaints (not just the ability to return merchandise)
.
managing and coordination relationships with suppliers
http://www.madofftrustee.com/
Aimee MacFarlane
Bernie Madoff Investment Fraud
http://www.cnnstudentnews.cnn.com/2001/WORLD/africa/01/18/diamonds.debeers/index.html
Da Beers the largest diamond producing company in the world, may have received diamonds that are called "Blood Diamonds." Blood diamonds are diamonds that come from rebel group controlled mines in Africa. The funds received help fiance the rebel army. The funds have created several wars in African countries. The workers of the mines are usually held captive by the rebels, and have been mutilated or even killed.
Da Beers did not receive a punishment for producing these diamonds, but now there are laws to help combat the use of blood diamonds. The Kimberly Process Certificate Scheme was made to help end the sale of blood diamonds. If anything Da Beers received a hit to its reputation.
danny judge
http://www.nytimes.com/2013/03/30/health/dental-patients-in-oklahoma-warned-of-disease-risk.html?_r=0
A local dentist (in Tulsa, OK) was recently reported to have numerous health and safety violations, including nonsterilized and rusty instruments.
He was forced to close his practice and over 7,000 of his former patients need to be tested for Hepatitis and HIV.
Dr. Edmonds
Hidden Return Policies!
Best buy has some not-so-obvious return policies on certain items that charge consumers a 15% restocking fee.
http://www.wfmd.com/pages/faithdebate.html?article=3844835
The problem here is not that Best Buy has done anything super unethical, but they are being real shady and not informing consumers on all of their policies. I believe that a company should make consumers aware of all policies, giving customers the advantage of being informed. Technically Best Buy does have their policies on the back of the receipts, but who reads the back of a receipt? The outrageous policies include a 15% restocking fee on certain items, and a policy that corporate must refund amounts over $200. The repercussions, according to this article, are that people are going to avoid purchasing big-ticket items at Best Buy for fear that Best Buy will rip them off if they are unsatisfied with the item. The company image will suffer because of this behavior; customers don't deal with shady businesses.
Jeremy Wiest
http://www.foxnews.com/politics/2014/04/01/victims-relatives-demand-answers-from-gm-over-death-trap-cars/
Evan Miller: GM Recall on Ignition Keys
This article is a perfect example of poor ethical behavior in the final step of the supply chain, selling and returning. In this case, GM had known of a problem with the ignition key to many of their cars which had caused the entire car to shut down including power steering, power brakes and airbags. Evidence shows that they were aware of the problem since 2005 but after finding out how expensive the repair was, they tried to cover it up with federal bailout money and continue selling cars. For 10 years they ignored the issue and continued to cover it up even though it would only cost 57 cents per car to be fixed.

Results from this defect had caused 13 people to loose their lives in car accidents. The defect has also exposed a gap in the federal law, which allowed them to cover up the issue with bailout money. After 10 years a recall has finally been announced for 2.6 million cars with these ignition keys and they are starting to be repaired. No one has been fired for this issue, including the manager who was aware of the issue since 2005.
By: Sara Hagenbach
http://www.greenpeace.org/international/en/news/Blogs/makingwaves/success-barbie-and-mattel-drop-deforestation/blog/37176/
Mattel’s famous product line, Barbie, was found to have been using a supplier in their supply chain for packaging that is notorious for deforestation of rain forests. This is unethical because Barbie was supporting the deforestation of rainforests in Indonesia which is home to the endangered species, the Sumatran tiger. Companies are often frowned upon when they are hurting the natural habitats of the planet.
http://www.foxbusiness.com/industries/2013/05/14/wal-mart-to-tighten-inspection-standards-at-bangladesh-factories-provide-full/
Grady Noonan
This lead to a public twitter feud between Barbie and Ken, pictures being leaked of Barbie with a chainsaw, and over 500,000 e-mail complaints that were sent to Barbie regarding the unethical behavior. Many “greener” consumers stopped purchasing Barbie products because of the destruction of rainforests. Eventually, Barbie had to create new “green” policies forbidding deforestation in their supply chains.
This is an example of poor ethical behavior in the supply chain since Walmart has failed to inspect manufacturing plants, and make sure the facility is in good condition. As well as making sure the employees are being treated right.
A garment factory owned byWalmart in Bangladesh
collapsed and as a result more than 1,200 people were killed.Walmart does not allow the use of unauthorized
subcontractors on there facilities, and upper management still allowed this. As a result of this incident Mohammed Sohel Rana was arrested. Since he was apart of the upper management and knew about the the crack in the infrastructure of the garment factory.
By: Joel Stitt
http://www.theverge.com/2013/11/7/5078402/workers-in-apples-supply-chain-forced-into-indentured-servitude
Zachary Stetson
The pressure to produce the Iphone 5 caused many workers to be forced into debt or indentured servitude. They recruit from the poorest cities by hiring brokers to charge high interest rates, forcing these people to work for them to pay off their debts.
Apple has continually been using unjust labor standards to make its products. Apple has been publicly blasted for using unfair labor standard, but because they are producing overseas, most people don't see first hand the struggles that these people go through. Most people only care about getting their Apple product.
Kerr-McGee Unethical Actions
http://en.wikipedia.org/wiki/Kerr-McGee
Kerr-McGee was involved in what was considered unethical behavior when they went through with exploring for hydrocarbon resources in the disputed territory of Western Sahara in 2001. The Norwegian government characterized Kerr-McGee's contract in Western Sahara as having "particularly serious violations of fundamental ethical norms". The reason the actions were unethical is basically because the land itself is highly controversial.

Consequences of the actions included many investment backers of the company selling their stake and international criticism. They ended up not renewing the contract with Morocco in 2006.

Another unethical behavior was negligently/purposefully plutonium contamination while working at Kerr-McGee's plant. Numerous safetey violations as well.

Consequences of the actions included court preceedings which resulted in a verdict of $505,000 in damages and $10,000,000 in punitive damages.
Ali Roberts
Failure to recall!
• Skull Fractures Prompt Baby Seat Recall
• Pot pies linked to salmonella are recalled
• Lead found in toys and backpacks in stores
• 550,000 More Chinese Toys Recalled for Lead
• Largest crib recall in history
• Wal-Mart Finds Traces Of Melamine in Dog Treats
• Wal-Mart quietly pulls dog treats, performs tests amid customer complaints
• Mattel Recalls 19 Million Toys Sent From China
• FDA Investigates Import Seafood Claims
• Wal-Mart Burns Another Customer
• Botulism contamination recall: Wal-Mart chili added to list
source: http://walmartwatch.com/wp-content/blogs.dir/2/files/pdf/danger_for_sale.pdf
Did not protect customers from hazards
Poor inspection checks
Repercussions:
Lawsuits
Decreased trust
from consumers
Apple Reveal Supplies after Audit Reveals Ethic Violations

According to today’s press release, Apple conducted 229 audits of its partners last year, representing an 80 percent increase over 2010. From 2007 to 2010, the company conducted a total of 288 audits.

In conducting the audits, Apple looked at all levels of its supply chain, including final assembly and component suppliers. A number of violations — including breaches in pay, benefits, and environmental practices — were unearthed at plants in China, are are figured prominently throughout the 500-page report.

Other violations detailed in the audit including dumping wastewater onto a neighboring farm, using machines without safeguards, testing workers for pregnancy, and doctoring pay records.

The report found that 67 suppliers had docked worker pay as a disciplinary measure, and asked that they be compensated.
After over 200 audits , Apple found that in several levels of its supple chain, there were ethical vioaltions from production to out pit. Over 60 pf its suppliers had violations against employee compensation and benefits and environmental practices. These violations caused Apple to release to the public a list of their suppliers.
Ashley
Mehall
http://wallstcheatsheet.com/breaking-news/apple-reveals-suppliers-after-audits-reveal-ethics-violations.html/
http://www.ibtimes.com/boeing-discovers-hairline-cracks-wings-40-787-dreamliners-number-deliveries-aimed-unchanged-1560245
The article above shows an example of poor supply chain management at the import level of production. Boeing imports its wings from a japanese company and failed to test and inspect them properly. This fails to be ethically sound throughout all aspects of international business.
The repercussions included a delayed manufacturing and output for the year. Also, a small damage goes to Boeing's reputation as the leader in aerospace and commercial airliners, which is more detrimental then a low output of planes for the year.
Source
Brandon Carey
By Ryan Joyce
Although, China and Japan have had a large feud between their companies for years, it seems now the Japanese company is being criticized for defective products. Nikon, the famous Japanese company, has been speculated to have poor quality and even worse customer service. There is a large struggle wondering whether or not the products are defective or if this is anti-japanese proporganda, but either way the Japanese company is refusing to evaluate the situation. This can bring about alarming results and can be unethical and a bigger problem in the future.
Inconvenient Return Policy American Apparel
American apparel isn't extremely unethical as a business, however their return and refund policy lack some information that may be helpful for the buyers to know. First off there are two ways to get refund on a product. If you had purchased it at the store, you must bring it back to the store to return it. Second, if you brought it online, you cannot bring it to the store, you must fill out a form to send back to the return address. You must obtain an authorization number from customer service before sending anything. Swimwear,bodysuits and unitards cannot be returned, unless defected.

By: James Messina
Any questions that you may have can be answered by customer service from Monday to Friday till 6pm. If you needed them on the weekends, No customer service is available evening or weekends.
Anthony Peterson
http://www.myexchangereturns.com/american-apparel-returns/
Nike has never had the best public image with regards to outsourcing. As they closed their two factories in Honduras, Vision Tex and Hugger, Nike failed to pay the $2.2 million severance to the 18,000 workers laid off. Nike believes they have no responsibility to workers at its "sub-contracted factories it outsources to". Nike used the cheap labor of these workers and refuses to help them with a $1300 severance each after they are laid off. This comes after Nike "chairs a committee within an anti-sweatshop organization called the Multi-Fiber Agreement Forum, whose guidelines require participating companies to make sure garment workers receive legally-mandated severance pay". Although they have these guidelines in practice, Nike does not follow them. Nike creates these committees to disguise their unfair practices from the public. The unethical behavior by Nike in its outsourcing is inexcusable and something new is unveiled every year

After campaigning by outraged citizens in the US, the University of Wisconsin-Madison terminated their $1 million contract with Nike. Cornell University also dropped their contract with Nike. The company will continue to lose contracts as the word of their foul play gets out. Nike's unethical behavior in outsourcing may save money in the short-term but the long-term effects could cost them more.
http://www.huffingtonpost.com/rod-palmquist/student-campaign-takes-on_b_643375.html
This return policy is unethical because it shouldn't matter if you purchase a product online or in store. It is the same company with the same products, its inconvenient to buy something online then have to send it back instead of going to the store and getting exactly what you want.
http://www.mirror.co.uk/news/weird-news/petrol-sniffing-spiders-force-mazda-recall-3403481
Mazda is a Japanese automaker based in Hiroshima Predecture, Japan.
- In 2007 Mazda produced almost 1.3 Million vehicles for global sales.
- In 2011, Mazda was the fifteenth biggest automaker by production worldwide.
-
TOYOTA RECALLS
Toyota had to issue three recalls that were all related to their accelerator pedal sticking in their vehicles in 2009-10. Issued recalls for the floor mats, accelerator pedal, and anti-lock brake software.
As a result, Toyota recalled over 9 million vehicles worldwide and took a hit on sales. The company had many lawsuits and eventually reached a settlement with the plaintiffs.

Violation of Ethical Supply Chain
Petrol-sniffing spiders have prompted Mazda to recall 42,000 cars over fears they could clog up fuel tanks, causing fires.

By: Bobby Schappell
http://en.wikipedia.org/wiki/2009%E2%80%9311_Toyota_vehicle_recalls
The yellow sac spider is attracted to the smell of petrol and the manufacturer fears it could weave its web inside engines, causing a blockage and build-up of pressure.
This can lead to the fuel tank cracking and petrol leaking
causing fires in the 2010-12 models
Poor Ethical Behavior
- This is poor ethical behavior in the
supply chain because the same
occurrence happened in the 09-
10 models causing 52,000 recalls
Total of 94,000 recalls in
4 years!
Consequences of Ethical Behavior
- Consumers will stop buying
Mazda due to the risk of fire. Not
to mention the SPIDERS!
Michael Turner
Halliburton is one of the worlds largest oil companies in the world supplying oil to over 80 countries world wide. The company has participated in numerous unethical business over the past 20 years. Halliburton has traded with countries and organizations that U.S government has restricted trade through. They have also over-billed the U.S army on food and oil supplies during the 2003 War in Iraq. The biggest upset in practices has come from oil spills that were a result from careless and unsafe practices.
From these actions, the company is in constant battles from lawsuits and damage to the companies reputation. Also, the company is under constant surveillance from the National guard due to the companies careless actions and constant oil spills.
Mark Vancosky
Mark b
http://gawker.com/5921406/is-target-really-one-of-the-worlds-most-ethical-companies

Target put a bunch of workers out of job without compensation or a guarantee for security at another store. They informed workers it would be closed for six months due to renovation but didn't help them out after that. Actions such as these will give Target a bad reputation and people will not want to work their. Furthermore they will lose customers due to the bad unethical practices they perform.
Halliburton Oil Company
http://alizul2.blogspot.com/2013/11/10-most-unethical-business-practices-in.html
http://bit.ly/1m5bsoj
In order to make room for their
mining operation, 300 homes
were torched. Landowners
were given no time to gather
possessions and reportedly
physically attacked by armed
guards if they attempted to
protest. Barrick Corporation is
also accused of manipulating
land titles in Australia and
Chile, and of dumping toxic
waste with high levels of
arsenic in the Tanzania.
Repercussions
lawsuits
Decrease in demand
Barrick Gold Corporation
By: Vivek Patel
Source
Coca-Cola illegally installed high powered pumps in India to extract millions of liters of pure water. It takes 9 liters of clean water to produce 1 liter of coke. Coca-Cola's practices in India caused many protests, and was said to be the reason of various droughts throughout the country, forcing many Indian residents to rely on water supplies being trucked in by the government. Reports have described Indian women having to travel five kilometers to obtain drinking water while Coca-cola's products come out of the plant by truck load. Coca-Cola was forced by the Indian government to shut down one of its $25 million plants, but denies any ethical wrongdoing.
This type of unethical supply chain behavior has caused many riots and has cost Coca-Cola some serious money (including the shut-down of a $25 million dollar plant). Though water drilling in India seems like an inexpensive and easy solution, it will only cost Coca-cola money and customers in the long run.
http://environment.about.com/od/waterpollution/a/groundwater_ind.htm
By: Alexis Gildea
Apple Confronts weak links in Supply Chains.
-In 2011, a cover story leaked concerning
12 suicides at a sweatshop which provided
Apple with some of their Electronics.
-Apple was sent a petition.
Over 200k signatures.
Bad Publicity led to:
Apple pledging to allow Fair Labor Association to audit all international plants.
http://www.texasenterprise.utexas.edu/article/apple-confronts-weak-links-its-supply-chain
-Chris DeMuro

Nestle
By: Jordan Mroczka
Nestle has been under investigation for numerous cases of unethical behavior. The specific case I read about involves high mortality rates in infants in developing countries who used Nestle’s infant formula. Nestle had provided mothers with infant formula long enough for the mother to stop lactating, therefore they had to purchase the formula. The major problem was that do to the economic conditions, many mothers could not afford the formula and used a lesser quality of the formula, which was likely the cause for the high mortality rates. When the news of Nestle’s actions reached America, their sales took a dramatic hit. Many American’s did not want to support a company that would take advantage of countries in such desperate need of aid.

www.brighthub.com/office/entrepreneurs/articles/115557.aspx
Full transcript