Business Ethics

1
Business Ethics

• How corporations conduct business with respect to
  the social contract they hold both within the
  company and with external stake holders. This
  includes how a company treats its own employees,
  or work place ethics, proper governance, the
  anticorruption measures it institutes, and
  corporate social responsibility.

2
Supply Chain Information Sharing

• A supply chain is a network of organizations and
  facilities that transforms raw materials into
  products delivered to customers (Chapter 8, 239).
• Supply chain information sharing is the exchange
  of queries amongst parties with in the supply
  chain.

3
Ethics of Supply Chain Information Sharing

• Situation A

Retailer is running low on inventory. Therefore
supplier increases price by 15 Due to
transportation cost increase.
4

• Is the price increase legal?
• Yes. The supplier is not braking any laws in
  order to increase the price. It is just the
  utilization of an economical advantage.
• Is it ethical to do so, and also to blame it on
  transportation increase?
• No. The use of false information is ethically
  inappropriate on a business transaction,
  regardless of the parties involved. Although it
  is a common practice behind the closed doors of
  one of the parties involve on the exchange.

5

• What are some of the long term consequences?
• The supplier may lose the client on the long run.
• The retailer may want to start bidding in order
  to get more competitive prices.
• The supplier may not sell it inventory, due to
  high pricing.
• A competitor may see this as an opportunity to
  step in with competitive prices.

6
Situation B

• Retailer is running low on inventory.
  Therefore supplier increases price by 15 Due
  to transportation cost increase. At the same
  time competitor is building inventory on
  retailers desired items and does not increase
  prices. Therefore the competition ends up with
  the final sale.

7

• Is it legal to analyze the data to estimate you
  competitors inventory levels?
• Yes. This is common practice on todays world.
  It is just appropriate research, in order to stay
  in business.
• It is Ethical, and would you recommend this kind
  of analysis?
• It is ethical because the data use for such
  studies is accessible to the public.
• We would recommend to exploit any possible means
  within the legal boundaries. In order to stay
  ahead of the competition.

8
Situation C

• Retailer and supplier have agreed on exchange of
  query, but only on the orders that they have with
  each other. A flaw in the system allows the
  supplier to observe the queries of all
  competitors.

9

• Should you take the responsibility of informing
  about the flaw in the system?
• Depends on how ethical the supplier is. In an
  ideal world yes. This would make you look as a
  responsible and honest entity.

10

• What are the consequences if the problem is not
  revealed?
• There should not be any consequences, as long
  as the information is no utilized by the
  supplier.
• The retailer may find out about the flaw, and
  remove the supplier from the supply chain.
• The supplier may enter into a legal dispute.
  Because the retailer can think that the supplier
  violated the nondisclosure agreements.

11
Situation D

• Same scenario as situation C, but now one of the
  suppliers developers writes a program to exploit
  the flaw in the system. Therefore access to the
  retailers inventory, sales and order data is
  available to the supplier.

12

• Should you take the responsibility of informing
  about the flaw in the system?
• Depends on how ethical the supplier is. In an
  ideal world yes. This would make you look as a
  responsible and honest entity.
• (Same answer as in Situation C)

13

• What are the consequences if the problem is not
  revealed?
• In this case the supplier may be confronted with
  the same consequences as in Situation C. But
  also it may
• Legal actions. (Fines, Jail, Loss of Licenses)
• Going out of business, due to malpractice.
• Loss of costumers, due to poor credibility.
• Loss of any competitive advantage in their field.

14

• Is it illegal or ethical to benefit from this
  mistake?
• ILLEGAL.

15
How can we avoid the misuse of ones own system?

• The utilization of proprietary designs.
• Follow the E-Commerce statutes.
• Good interaction between SRM (supplier
  relationship management) and CRM (customer
  relationship management).

16

• Utilization of standardized programs (with
  different security levels).
• Reveal just the necessary and no more (Create
  stronger limits when dealing with a member of
  other company).
• Legal documentation (nondisclosure agreements)