ETHICAL DILEMMA In this lean operation world in an effort to

ETHICAL DILEMMA: In this lean operation world, in an effort to lower handling costs, speed, delivery, and reduce inventory, retailers are forcing their suppliers to do more and more in the way of preparing their merchandise for their cross-docking warehouses, shipment to specific stores, and shelf presentation. Your company, a small manufacturer of aquarium decorations, is in a tough position. First, Mega-Mart wanted you to develop bar-code technology, then special packaging, then small individual shipments bar coded for each store (this way when the merchandise hits the warehouse it is cross-docked immediately to the correct truck and store and is ready for shelf placement). And now Mega-Mart wants you to develop RFID-immediately. Mega-Mart has made it clear that suppliers that cannot keep up with the technology will be dropped.

Earlier, when you didn\'t have the expertise for bar codes, you had to borrow money and hire an outside firm to do the development, purchase the technology, and train your shipping clerk. Then, meeting the special packaging requirement drove you into a loss for several months, resulting in a loss for the last year. Now it appears that the RFID request is impossible. Your business, under the best of conditions, is marginally profitable, and the bank may not be willing to bail you out again. Over the years, Mega-Mart has slowly become your major customer and without them, you are probably out of business.

\"What are the ethical issues and what do you do? Explain your response thoroughly.

Solution

The ethial issue is that Mega-Mart knows the situation, and clearly is exploting his suppliers, of course we are not the only one and many of our competitors are facing the same issue.

The ethial dilemma is that Mega Mart is saving money by bleeding out his suppliers, as simple as that.

Mega Mart knows he is our biggest customer and without them we will run out of business.

In this situation is its important to negotiate with the Mega Mart and letting them know our position, we have been their supplier for a long time and we have done business according to what they want. If we were a bigger company like WalMart they wouldnt be bulling us the way they are doing.

We wil try to get more money from the bank but Mega Mart needs to meet us at the middle and understand this is not the correct way of saving money by hurting his suppliers.

Instead, we should develoe a communication system between us and mega mart one that will save him more money than using RFID. The system should be similiar like the one it has Walmart with PG&E, they save inventory cost because they move the goods only when needed. No dead inventory and fastest response.

Of course this will be an investmenet where Mega Mart needs to provide money as well but in the end we will save more money and will be more competitive.