Trip Trap: Managing Certification in the Global Supply Chain
(5 pages of text)
A small Danish design company seeks to collaborate with its largest supplier in Thailand in order to improve health, safety and environmental conditions, as well as labour standards, as a core element of complying with the UN Global Compact principles. The company takes its corporate social responsibility (CSR) agenda seriously and has developed a new standard for CSR in its supplier factories that is implemented and audited by a non-governmental organization. New challenges emerge as attention shifts to the certification of production inputs such as wood. Although Western small- and medium-sized enterprises (SMEs) face pressures to audit their suppliers in developing countries, these SMEs often lack the financial and political resources to change behaviours in supplier factories. The firm’s quality manager must evaluate its sustainability approach. How much leverage can a small company expect to have with its suppliers? Furthermore, is the cost of auditing suppliers in a country such as Thailand too high?
This case can be used in undergraduate, graduate and executive courses in international business, sustainability/ CSR and supply chain management. It was written to help students develop skills in analyzing the potential strategic purposes of sustainability when applied to a global business context, with a particular emphasis on the challenges that Western SMEs face when they seek to ensure that their suppliers meet CSR demands. Students must identify key issues involved in managing sustainability in global supply chains, evaluate the decisions made by a small firm and propose actions for further strategic moves. The case raises general issues about how to ensure sustainability in global supply chains: How efficient are private regulatory initiatives? How much can be asked of private firms in terms of organizing CSR initiatives in countries with weak regulatory situations? These issues are relevant to a number of other strategic challenges pertaining to regulation (private and public), market access strategies, health, safety and the environment, international strategy and managing global supply chains.
Denmark; Thailand, Small, 2013-2014
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