Few companies set out deliberately to commit unethical practices, says Grackin. But the quest for competitive advantage can have a serious impact on the way products are made, and how workers are treated. In today's economic climate, "mostly we're talking about a lack of vigilance in the business process," she says.
The problem of unethical behavior is common to global supply chains, in good times and bad. Companies don't always understand the impact of their actions, and if consumers are unaware of how products get to market, there won't be a price to pay for cutting corners.
The situation is changing, however, as companies do a better job of auditing their global operations and working environments. They might be motivated in part by the desire to act ethically, but there are more immediate reasons for their change, says Grackin. Consumers today are becoming better educated about overseas working conditions, and the unfair treatment of workers can seriously harm sales and brand identity. The public's growing awareness of environmental issues also puts pressure on companies to build more sustainable supply chains.
The law is yet another powerful motivator. Trading blocs such as the European Union and North American Free Trade Agreement have generated a lively dialog about issues such as poor working conditions and the use of child labor in factories. Industry groups have formed to address the issue, as governments clamp down on violations of fair labor standards. And when one company is caught, others scramble to reevaluate their own policies and practices.
Ethical behavior is good business, Grackin says. Companies that mistreat their employees often experience huge losses from internal fraud and theft by a demoralized workforce. "The less time a corporation spends taking care of those employees, the more likely they are to have those kinds of problems," she says.
The supply chain is a prime location for taking action. It encompasses many if not most of the processes that are subject to unethical behavior. Grackin believes supply-chain professionals, who are relatively well compensated for their efforts today, have a particular responsibility to promote ethical practices. "We have a moral obligation to give back," she says.
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