Accounatbility in the Global Supply Chain

Q4. How can accountability be better managed in long, global supply chains? Accountability “Accountability traditionally meant writing favourable terms into a contract, monitoring vendor performance and then working with the supplier to uphold its obligations” (www. ey. com) While these terms are very important, leading organisations have found that in the supply chain, every sector needs to be addressed and accountability must be incorporated into every level, from supplier to customer. Negotiating a good contract is only a small part of accountability while the most important part is compliance.

Each supplier must comply with obligations in the contract they signed. In the case of Mattel, the paint supplier did not comply with the regulations set out in the contract of only using lead-free paint. Supplier selection is very important as it is a means to reduce costs and limit the number of vendors. Once these suppliers are selected, the way the company views and manages these relationships, as regards accountability, can be important to its success. There is much more to be gained by the supplier in cooperation rather than going beyond obligations of the contract.

Mattel Mattel have implemented a broad range of initiatives and policies aimed at encouraging responsible practices. A good example of this is their Global Manufacturing Principles (GMP) which was launched in 1997, to ensure safe and fair treatment of workers in there own manufacturing facilities and those of their vendors and licensees. In 2007 Mattel managed accountability by implementing a corporate responsibility team that is headed by the senior vice-president who reports directly to the CEO.

They have come together with stakeholders to find out what they want and the main focus seemed to be on quality and safety issues. When Mattel experienced product recalls they reached out to consumers and other stakeholders to inform them of the problems and help them identify the affected toys so that they could be returned. All retailers were contacted to help prevent affected products in the inventory from reaching store shelves. They also reached out to a large number of organisations like consumer groups, regulatory agencies, professional societies and student groups.

These interactions allowed them to share information quickly and address concerns proactively. Corporate Social Responsibility Mattel’s Corporate Responsibility mission is: “To act with integrity in all we do to bring the world safe toys that grown-ups trust and children love. We are committed to positively impacting our people, our products and our world by playing responsibly. ” (www. ey. com) At Mattel, they are continually striving to deliver on their promise of quality, safety and innovation and ensuring that their toys are manufactured responsibly and ethically.

In 2006 Mattel conducted online training and certification for all employees about there responsibilities under their Code of Conduct. This was mandatory for all employees. If employees observe conduct that is unethical, illegal or in violation of their policies, they are encouraged to report these observations to their superiors. If employees are uncomfortable addressing any issues Mattel also has an ‘EthicsLine’. This is a 24 hour hotline, free of charge, which employees can confidentially report breaches in conduct. These calls can also be made anonymously.

Ethics in Global Supply Chains Ethical decisions are critical to the long term success of Supply Chains. In Global Supply Chains there are issues such as labour laws, culture and traditional values. In China many of those ethical issues are overlooked. For instance, suppliers may falsify documents, not adhere to health and safety conditions or even child labour in some cases. In the case of Mattel, one of its sub-contractors, that painted the eyes on some of their dolls, outsourced the paint needed from a local supplier. Mattel’s product required the paint to be ‘lead free’.

The paint supplier had produced documents confirming that their paint was lead free, which after the investigation found that these documents had been falsified. Some of these problems in the supply chain often go unnoticed as the number of links between supply network members. Supplier Ethics Management is the “management of suppliers and supply relationships with strategies, programs, and metrics that better align supplier business conduct with purchaser standards, with the goal of reducing the purchaser’s overall risk of corporate integrity failure in the supply chain. (www. s-ox. com) As we can see Mattel does a pretty good job of of managing risk within its own business. However, it is some of these large multi national companies that often overlook managing corporate integrity risk in there supply networks. Companies have inserted clauses into their standard contracts with suppliers requiring them to comply with the rules and regulations applicable and materials used must exactly that which has been stated in the contract. Better Managing Global Supply Chains

Most companies lack the ability to quickly contact each outsourced supplier, vendor or licencee in their supply chain. Many companies have done alot of work in the area of managing global supply chains better. A web based Supplier Ethical Management (SEM) platform has been developed which allows companies to maintain contact information for most or all of its suppliers and communicate critical information to them on a regular basis. Using an SEM platform is probably the easiest and fastet way to get to grips with ethics and compliance risks in the supply chain.

SEM platforms are inexpensive to create, and are typically hosted, maintained and administered by third-party vendors who specialize in ethics & compliance risk management. Some of the functions of the SEM platform is to distribute a companies code of conduct and regular updates to its suppliers, recording that the supplier has recieved these requirements and also allows to the company and supplier to communicate to each other on critical topics realating to ethics and compliance. ttp://www. ey. com/Publication/vwLUAssets/Balancing_cost_reduction_and_performance_improvement/$FILE/AABS_Advisory_Global_supply_chain. pdf http://www. socialfunds. com/shared/reports/1257221473_Mattel_2009_Citizenship_Report. pdf http://www. s-ox. com/dsp_getFeaturesDetails. cfm? CID=2235 http://corporate. mattel. com/about-us/ethics. aspx Logistics Management and Strategy, Harrison and Van Hoek, 3rd edition, 2008