CTE 4829 Exam 2 Study Guide Chapter 4 Developing Sustainable Supply chains The challenge of Sustainability of corporate supply chains Sustainability a corporate responsibility strategy that integrates economic political environmental and cultural dimensions to promote cooperation and solidarity among people and generations Pressure for corporate attention for sustainability Consumer activist organization have been primary sources of pressure on corporations to assume more social and environmental responsibility Social environmental corporate responsibility involves a wide range of obligations to individuals groups or general populations for their well being including fair treatment of human beings related resources and the law Social Responsibility Reports of unjust labor practices in scenarios of labor intensive production Exploration with regard to pay scales below a living wage sexual harassment extended work house and child labor Environmental responsibility Issues include climate change protecting nature and biodiversity and resource and waste management Formation of joint action groups Apparel or textile firms coming together with common goals Trade associations collaborating with divisions of government Parts of supply chains collaborating to improve the totality of their processes Code of conduct a statement of principles and standards by which business decisions are made Worldwide Responsible Accredited production WRAP more widely used social and environmental compliance certification program for the apparel industry 5 step process of WRAP certification 1 Application 2 Self assessment 3 Monitoring 4 Evaluation 5 Certification Fair trade seeks greater equity in international trade WTO 2009 Standards of fair trade address Opportunities for economically disadvantaged producers Transparency and accountability Trading practices Payment of fair prices Child and forced labor Gender equity and freedom association Working conditions The environment Measures of sustainability for fair trade Human Rights Fair wages with gender equality No child labor Healthy working conditions Respect cultural identity Recognize trade unions Business Relationships Fair prices that cover the cost of production Financial and technical support for growth Long term relationships Social premiums to improve conditions Democratic cooperative workplaces Consumer education The Larger environment Environmental protection Environmental sustainability Concepts and sources of business ethics Businesses have to their investments Make profits to invest in the company s growth and reward stockholders for Maintain a payroll that compensates owners and employees for their efforts Ethics a system or code of morals of a particular person group or profession Morals the degree of conformity with generally accepted or prescribed standards of goodness or rightness Ethical decision makers need the following three qualities Competence Tough mindedness Self confidence Sources of Moral development Family Religion Education Electronic media Music Poverty Gender Age Ethic Racial origin Human Rights Because of the multiple political religious and cultural perspectives no single code of human rights exists and many people are deprived of life liberty and security Labor Exploitation Factors that contribute to vulnerability and labor exploitation include U N s Human Development Index an indicator of well being incorporating measures of GDP life expectancy at birth and adult literacy Human Right organizations Human rights abuses have led to the creation of organizations that defend human rights o Labor and trade unions o Social and environmental activists Labor union an association of workers with the purpose of bargaining with employers on behalf of workers about terms and conditions of employment Collectively workers can threaten to strike to get the attention of employers and force them to negotiate Three levels of organization o Local o National or international o Federation Textile and apparel labor trade unions Organizational phase 1880 1920 The growth phase 1920 1960 Mergers begin 1960 1980 Attention turned to immigrants 1980 1995 Environmental activism phase current Chapter 5 Global Sourcing In the early 1960s President Kennedy approved importing up to 5 of apparel sold in US today US imports more than 95 of apparel and 99 of shoes sold in US Role of Global Sourcing Sourcing determining the most cost efficient vendor s of services materials production or finished goods or a combination of these at a specified quality and service level for delivery within an identified time frame One entity desires some material product or service the customer while the other provides it the vendor Sourcing Options for Apparel Informed decisions must be made regarding whether to Develop and produce materials and garments in house Purchase finished garments Contract a vendor to develop and produce the garments Two basic factory direct models used for contracting production of finished garments CMT Full package CMT sourcing Original sourcing company customer bears all the costs does development sources the fabric delivers the fabric to the vendor and pays duties and transportation costs Production contractor vendor provides the expertise and equipment for the actual production of the garments Full Package Sourcing In full package sourcing the vendor must contribute to and finance most of the manufacturing process including product development and sourcing Efficient full package production requires Higher levels of management expertise Latest technology Fully developed infrastructure Financial resources to assume the majority of manufacturing expenses Private Brand Importer Many retailers have expanded their merchandising activities to include development of their own products Private brand reflects the ownership of an exclusive label by a brand manager or retailer If the retailer contracts production of these products offshore it becomes a private brand importer Branded Importer Today many traditional manufacturers practice the process of outsourcing much of their production to offshore facilities that they either own wholly or operate as joint ventures Additional Sourcing Venues Methods of sourcing include Trade shows and trade fairs Hiring of sourcing agents Joint ventures Licensing agreements Factors impacting sourcing decisions Determining which sourcing option is best for a business is influenced by numerous factors and dependent on