Ethics in the Supply Chain Management

Published: 2019-11-07 09:00:00
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Very few companies indulge in unethical practices freely, but it has been noted that the desire for competitive advantage influences significantly the way commodities are made and delivered. Regardless, the situation is revolutionizing within the supply chain management, and customer awareness has a lot to do with the change. Apart from consumers becoming more educated, the companies are indulging in ethical measures because they are indulged in rigorous auditing, especially of their global operations. Following the enforcement of the foreign corrupt practices act (FCPA), the Securities and Exchange Commission (SEC) has charged several organizations on ethical grounds. In such an instance, the SEC has charged Nu Skin Enterprises with violation of the internal controls and books-and-records provisions covered in the FCPA. Nu Skin Enterprises agreed to pay a total of $765,688 for the charges filed by SEC.

The charges arose when Nu Skin Enterprises made a payment out of the books for its Chinese subsidiary known as Nu Skin (China) Daily-Use & Health Products Co. Ltd in a bid to influence a high-ranking member of the Chinese Communist Party. The powerful Chinese was supposed to favor them in an ongoing provincial agency investigation. In 2013, it was pointed out that the Chinese branch was being investigated for not complying with the laws that control the direct selling of commodities in China. The Administration of Industry and Commerce (AIC) had collected a lot of information that supported the violations that the Chinese subsidiary had committed. The AIC wanted to impose fine totaling to an RMB 2.8 million which is similar to $431,088. Also, the investigations by the SEC brought to light the fact that certain employees from the Nu Skin Enterprises approached the official personally to make him the offer that if he intervenes in the case with AIC, the company will donate a lot of money to his charity organization.

Nu Skin Enterprises believed that the actions it took were essential to settle the situation peacefully without hurting anyone. This is because a few days following the donation, Nu Skin China received a notification from the AIC regarding their final decision and the company was not charged or fined. The accusations that the firm faces were all because SEC found that it had gone against sections 13(b)(2)(A) and (B) of the Security Exchange Act that was signed in 1934 (Neef, 2004). These provisions of the Act point out that Nu Skin had gone against the internal controls set to prevent such acts. Following the charges, the company neither denied nor admitted but it still agreed to sign a cease-and-desist order as well as pay $438,088 coupled with an interest of $34,600 and $300,000 for the civil money penalty.

There are four primary entities in the supply chain management, and they include producers, suppliers, retailers, and consumers. Ethics on the other hand that manages the code of conduct within the supply chain management include professionalism, personal integrity, transparency, accountability, and compliance (Neef, 2004). Disregarding ethics would imply that the trust in the supply chain is disrupted. Among the activities in the supply chain is the customer relationship management where the company would lose the client loyalty. Nu Skin violated laws and illegally sold commodities in China. The charges that the corporation faced would cause the consumers to question the integrity and quality of the products.

Reference

Neef, D. (2004). The supply chain imperative. New York: AMACOM.

sheldon

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