Nowadays, several articles consider the importance of tracking products’ origin as an ethical issue. Consumers, suppliers, governments, and companies are demanding information concerning the final product delivered all over the world. Perceptive organizations are treating the supply chain management by asking the question about the origin of where the product comes from.
The purpose of this paper is to discuss cases of Apple and Wal-Mart, which are a great example of companies that did an enormous progress on managing its supply chain by providing consumers the correct information about their product. I will be discussing the difference between Apple and Wal-Mart strategies’ of providing product transparency and managing claims ethically.
It is true that most of the IPhone owners don’t think about the origin of their devices. Furthermore, Apple plans to move a big part of its Chinese worker to other part of China where wages are still lower. Other electronic companies try to figure out how to reduce cost as well. Apple generates more profit than the most important competitors like Dell and LG. because it has 60% profit margins in addition to the high price of its products. These facts may cause another ethical issue of moving Chinese worker from an area where working conditions are great to a zone where wages are lower in order to keep a comparative advantage and make more profit which is an unethical behavior violating the human right laws (New York Times Journal, 2010).
In my opinion, the change in supply chain of the iPhone 4 in China has a direct relation to the Apple global market strategy. Apple was designed in the United States and supported by high-tech components manufactured and shipped from others countries, assembled in China and shipped back to the United States. In my point of view, this strategy was disturbed by several unethical practices made by Apple’s manager. As I cited before, many adjustment have been made in order to keep costs lower. One of these adjustments was to use child labor, Chinese assembly line as well as hiding information about the origin of their products components.
However, the biggest part of value and profit is generated at the beginning and the end of supply chain process. According to the article and other public sources, Apple orders two of its major iPhone components from Singapore which are: the video processing and base-band communication. The most important source of Apple components comes from Taiwan where they manufacture six major part of the new iPhone 4. Some of these parts itemized as: Digital Camera, Connectors, Bluetooth Chipest, and Printed Circuit Boards. Only two components are made in the United States which are: Touch Screen Controllers and the Wi-Fi Technology. The previous information provided in this paper could help us to understand why Apple makes a $600 iPhone as a final price to sell (New York Times Journal, 2010).
In contrast, retailers such as Tesco and Wal-Mart have used an advanced service in order to let their customers know where their offered products come from. Using innovative ways to let stakeholders (consumers, suppliers, providers, retailers…) appreciate company’s transparency, as well as to let retailers making ethical claims about their product. The major reason of Wal-Mart’s success is its ability to manage every single “store” differently from others using high information technology. It creates databases in which consumers can track and know more about product origin purchased from Wal-Mart. Respect-code.org is an example of multiple Website where we can track the origin of our purchased product (Steve, 2010).
I am in the position of supporting the idea behind what Wal-Mart is doing, providing online-verification codes to consumers as an ethical behavior which should be taking into application by every single multinational company operating abroad.
In addition, the article discussed the importance of strengthening the supply chain for B to B (Business to Business) perception, as far as it is necessary for B to C (business to Consumer). In fact, companies are dealing with different partners which are also manufacturing or distributing one or different product for the same company. In this perspective, it is required enough to let everyone knows about the origin of the product provided in order to reinforce relationship between stakeholders (Steve, 2010).
Under a business ethic approach, it is preferable to do not ask the question about if a specific practice is an ethical behavior or not. I think that ethical behaviors are thought by imposing a company into different experience levels to improve its ethical credibility and perception among stakeholders.
Companies like Apple and Wal-Mart have built reputation from ethical practices. For this particular reason, they should develop the marketing and corporate governance sides which are necessary to ensure a better movement of “correct” information between stakeholders on one hand, and in the other hand to make sure that the company let everyone know where products come from before they discover it which is considered as an ethical dilemma (Steve, 2010).
Written By: Redouane Boufous