Sustainability; outsourcing; monitoring measures To reduce costs and focus on core competencies, many entities are increasingly outsourci

            Sustainability; outsourcing; monitoring measures

To reduce costs and focus on core competencies, many entities are increasingly outsourcing manufacturing activities to vendors in countries having low labour costs such as China, India, Thailand, Indonesia and Mexico. Certain activists claim that this practice is socially irresponsible. They claim that numerous factory problems in low-cost countries include excessive work hours, poverty wages, toxic gas releases and harassment of union organisers. The problems were exacerbated after the collapse of a garment factory in Bangladesh resulting in 1137 deaths and 2500 injuries. As a result, 41 people, including the building’s owner, were charged with murder or culpable homicide. Such conditions have prompted individuals and organisations to reconsider their purchasing habits and policies. However, some people argued that boycotts against certain companies cause more harm than good; workers who were already poor often lost their jobs, and unionisation efforts and other improvements were hindered.64 They suggest it is difficult for companies to adequately monitor working conditions at outsource locations. Workers were often afraid to talk to inspectors, and they sometimes provided inaccurate information. For example, they sometimes erroneously said that they were not paid overtime because they did not understand how their pay was calculated. In the Bangladesh case, it was found that the owner and managers of the garment factory had forced the workers to enterthe building on the day of the accident despite major cracks appearing on the building a day earlier.

Required

(a)     Describe whether and how sustainability management practices (that is, business practices related to human rights, labour standards and the environment) affect your decisions as a consumer.

(b)     Is it possible for you to know the conditions under which the products you purchase are produced? Why?

(c)     Is it possible for managers of companies that retail the final products to know with certainty that their outsource partners comply with agreed-upon working conditions? Why?

(d)     Would the inclusion of compliance monitoring costs in its purchasing decision process help?

(e)     Identify and explain four measures that a company could use to monitor worker conditions in outsource factories. For each measure, describe how the company might collect reliable data.

(f)      How should entities weigh corporate social responsibility and profits when deciding whether or how to outsource manufacturing? Describe the values you use in drawing your conclusions.

(LO5)