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CHAPTER 17
BUSINESS AND ITS SUPPLIERS
INTRODUCTION
Corporations have complex relationships with their suppliers, other firms that provide
them with goods and services and in some cases manufacture their products. In today’s
interconnected world, many firms are embedded in complex, global supply chain
networks. Increasingly, managers are responsible for social, ethical, and environmental
PREVIEW CASES
Walmart’s Project Gigaton and
Monster Beverages and Human Trafficking and
Patagonia Commits to Social and Environmental Conservation in Argentina
CHAPTER OUTLINE
I. SUPPLIERS
Teaching Tip: Preview Cases
A short (3:05) made by Walmart to introduce Project Gigaton to its
suppliers is available at:
www.youtube.com/watch?v=s0VOUxbzmX4
or:
www.walmartsustainabilityhub.com/project-gigaton
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II. SOCIAL, ETHICAL, AND ENVIRONMENTAL ISSUES IN GLOBAL
SUPPLY CHAINS
A. Social Issues
B. Ethical Issues
C. Environmental Issues
D. Supply Chain Risk
III. PRIVATE REGULATION OF THE BUSINESS – SUPPLIER
RELATIONSHIP
A. Supply Chain Auditing
IV. SUPPLIER DEVELOPMENT AND CAPABILITY BUILDING
GETTING STARTED
KEY LEARNING OBJECTIVES
LO 17-1: Understand what suppliers are, the nature of suppliers’ interests and
power, and the scope of the global supply chain.
A supplier is an organization that provides goods or services to another organization.
Teaching Tip: Suppliers
A useful way to introduce this chapter is to select a product students
will be familiar with and display a supply chain map, showing the
complexity of the supply network for even seemingly simple products.
Teaching Tip: Supply Chain Auditing
Students may be prompted to go online to investigate publicly available
supply chain audits of companies that interest them. Examples of
Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the
prior written consent of McGraw-Hill Education.
LO 17-2: Examine the social, ethical, and environmental issues that arise in global
supply chains and how they can affect a company’s reputation and bottom line.
LO 17-3: Describe contemporary trends in the private regulation of supply chain
practices and analyze the reasons for the emergence of company and
industrywide codes of conduct.
Private regulation refers to nongovernmental institutions that establish rules in global
LO 17-4: Understand the various methods businesses and nonprofit organizations
use to audit global supply chains for compliance with codes of conduct and other
standards.
Lead firms and groups of firms use several methods to audit compliance with supply
LO 17-5: Analyze the reasons for and benefits of engaging collaboratively with
suppliers to build capability and create shared value and the conditions under
which such initiatives are likely to succeed.
KEY TERMS
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capability-building
child labor
crowd-sourced audit
human trafficking
integrated supplier scorecard
private regulation
supply chain
supply chain audit
supply chain code of conduct
supply chain map
INTERNET RESOURCES
www.greenbiz.com/topics/supply-chain GreenBiz supply chain topics
www.responsiblebusiness.org/ Responsible Business Alliance
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Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the
prior written consent of McGraw-Hill Education.
www.weforum.org World Economic Forum (reports on
supply chain responsibility)
DISCUSSION CASE
IKEA’S SUSTAINABLE COTTON SUPPLY CHAIN
Discussion Questions
1. Draw a supply chain map of IKEA’s cotton supply chain.
The chapter defines a supply chain map as “a visual representation of the multiple
links between a lead firm, its suppliers, and eventually its customers. It shows the
2. What social, ethical, and environmental risks were present in IKEA’s cotton
supply chain?
3. What characteristics of the cotton supply chain made enforcing its code of
conduct especially challenging for IKEA?
Teaching Tip: Ikea
A useful video (5:28) for introducing a discussion of this case is “IKEA
Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the
prior written consent of McGraw-Hill Education.
4. What were the advantages and disadvantages to IKEA of working
collaboratively with other companies and NGOs to improve sustainability in its
cotton supply chain?
5. What motivated actors throughout the complex cotton supply chain to comply
with IKEA’s sustainability goals?
6. What more, if anything, could IKEA do now to improve sustainability in the
cotton sector?