Formed in 2005 by Wal-Mart, Global procurement organization owned the Global Certificate Program (GCP). Prior to its renaming, the program managed ethical conduct of the supply chain. It later changed its name to Ethical Standards Program and in 2006; it announced that it had conducted 13,600 factory audits in the previous year. The announcement by the then president of the company also stated that the audit was a collaboration of the supply chain and their suppliers. However, in 2006 an article was published saying that one of the supply chain’s supplier in china fabricated their reports. During the same period, the Washington, D.C. -based advocacy group representing the supply chain’s employees from Bangladesh, Indonesia, Swaziland, Nicaragua, and china filed a lawsuit. The lawsuit claimed that Wal-Mart knew and allowed their ethical conducts to be broken by some of their suppliers. Specifically the lawsuit noted that employee wages were less than minimal, no overtime compensation, no freedom of association, and lastly had abusive managers. Back in 1992, NBC stated that the supply chains overseas suppliers used child labor and sweatshops.
Question 1
All over the world, many arguments have come up concerning the treatment of laborers in any workplace. Governments have embarked on strict labor laws that highlight the codes and conduct by employers to their employees and vice versa. These laws are to be strictly followed by every employer as well employee, regardless of the company’s economic muscle strength. Therefore, critics of Wal-Mart are doing their job in displaying the social ills caused by these companies. It is an obligation to all companies or employers to follow the rules and regulation of any country in the world. These laws are termed as the labor laws, which mediate the relationship between the government, trade unions, workers, and their employers. Ethically, it is wrong to employ an underage. Secondly, monetary compensation should be made to employees for any extra hours worked above the universal standard working time. Lastly, employees ought to be treated with respect because the company seizes to exist without them. Therefore, the law and ethics obligate that all employers (Wal-Mart included) ensure that their businesses follow the rules of employment.
Question 2
In the wake of the class action lawsuit, Wal-Mart embarked on a number of precautionary measure in ensuring that their suppliers were following the countries labor laws as well as the company’s ethical standards. The company created a factory certificate program that enlisted the ethical standards for the supply, which were based on the supply chain’s core values laid out by Sam Walton the founder. However, the ethical foundation of the certificate program was limited to specific countries (china and Bangladesh) that NBC highlighted in their broadcast. Additionally, it had an audit plan that the company used to assess the eligibility and the conduct of their suppliers. The company further taught and explained the laws of the country of operation to their suppliers who did not understand what the labor laws required from them as employers. Additionally the supply chain in collaboration with their suppliers embarked on training their supply managers on how to handle ethical standards compliance issues. However, mere training and introduction of the certificate program on ethical standards is not enough to handle the issues at hand. The company is obligated to conduct impromptu audits to their suppliers, checking if all the ethical standards and the ethical certificate program are adhered to. Further, the supply chain from time to time needs to conduct a thorough assessment of their suppliers on how they handle their employer’s issues. The company may go to the extent of employing a spy who works for the suppliers thus reducing the doctored answers of employees to auditors. Additionally, the company should have strict codes of conduct on their suppliers to their employees that dictates that failure to comply means withdrawal of Wal-Mart as a business partner.
Question 3
Customers of the supply chain have the obligation of seeing Wal-Mart delivers what it promised. Consumer’s major concern lies in the treatment of the employees of these corporations and the need to end slavery. Exploitation of employees might be termed as modern day slavery because the worker is never compensated for extra working hours, paid less, and in most cases mistreated due to desperation. Thus, the obligation of the consumer is to highlight and demand action by the government on these companies.
Adidas summary
Named after the founder Adolf Dassler, the company in its docket, has 950 suppliers who make the Adidas products (shoes, clothing, and sports equipment). Most of these suppliers produce exclusively for Adidas thus giving the company an upper hand in dictating issues concerning labor practice (safety, health, and the environment). To Adidas, outsourcing supplies does not mean outsourcing the social responsibility of the company. Therefore, Adidas formed the standard of engagement (SoE) that deals with the safety and fairness in their work. After its formation, they realized that most of their Asian suppliers broke at least most labor practices. In one of the suppliers, Adidas auditors discovered that 200 of the 2000 employees in the company were underage children. According to SoE, the employment of persons below 15 years of age was prohibited. After the audit, Adidas noticed that the supplier terminated the children workers contracts, which prompted them to respond quickly. They stopped the termination on grounds that the kids would go to worse environs, brought in a Vietnamese education coordinator, and then drafted a basic notice to the children. The notice stated that the company in conjunction with Adidas would offer an educational class for workers below the age of 18. It further required them to discuss the issue with their guardians then report the agreement to the company. The educational program formed lead to the development of the global policy that handled such issues.
Question 1
In the case of the Chinese organization that hired underage, Adidas handled the issue in a more mature way other than canceling the business contract with their supplier. Whenever a supplier is not complying with the Adidas rules of engagement, Adidas should bring in a program that handles the issue, then make the supplier fund the program while it conducts frequent assessments of the program. By doing so, Adidas brings in the aspect of responsibility of the suppliers to their mistakes. In most cases, it would be humane for Adidas to intervene and get a common solution that favors the three parties (Adidas, supplier, and the employee). However, Adidas should come in when the issue is not recurrent.
Question 2
Adidas response to the child labor case was effective because the supplier was held responsible for his actions. Further, the funding of the program was left to the supplier, which faced scrutiny by Adidas with the constant assessment of the program. Finally, the decision was a win-win situation for the three, which meant the Adidas rules were followed, the supplier was not left to bankrupt, and the employees retained their jobs. The other alternative, which was not the best given that the suppliers exclusively produce Adidas products were to terminate the contract between the supplier and Adidas.
Question 3
There were plenty of lessons learned from this experience. First, at times, records are not equal to the practical or physical thing. Secondly, there are other channels of obtaining information about something other than checking on the records example, interviews.
