Welcome! GSCMI Center Spring Conference


Good morning. Welcome it’s a beautiful day
it’s not 37 degrees below 0 and we don’t have snow so anything like
that in February in Indiana’s awesome. My name’s Steve Dunlop and
I’m the managing director for the Center, which means that I get to
work with Center, the students and the companies and
it just makes life great in that regard. A few opening remarks we’ll
go through a couple items and then I’ll turn it over and
really get to the meat of the program. Dr. Iyer will be one of the lead speakers,
we have one speaker who unfortunately had to leave because
of a medical emergency and had to fly back to Peru so
we’re kind of adapting time wise. We have some other great speakers,
I’m gonna let Dr. Iyer introduce those with more specific
details for that as we get through. But that’s a couple of the folks,
if you recognize them, please introduce yourself to them because
I think it’s a great opportunity for networking, within both the students,
the industry, and the different groups. Our team which is what makes it happen,
obviously as Dr. Iyer, Heidi’s walking around some place, she’s the one that
really puts all the pieces together for this conference, and we want to thank
her and appreciate her efforts. We have a case competition at 3 o’clock,
we would love for anyone that has an interest in being
a judge for the case competition to stay, non-Purdue related individuals
it’s got to be industry and we’ll be doing it in
this room at 3 o’clock. The way we do the case competition
is we have a preliminary, which these are some
the folks that came in for the preliminary and
then we narrow that down to the next tier. So, today we have these group of
universities the students are sitting around here, for the business
folks that are here, the industry, they would love to meet with you and
talk with you. They got the case yesterday,
and so they’ve diligently been working all night in some cases,
to try to prepare for the case and the analysis that they’re going to do,
and again, that’ll be at 3 o’clock. We want to thank our sponsors and those
companies that we have affiliations with. Without that we couldn’t do what we
try to do, it just would not work. So one of the things thats, before we go
into session one, one of the things that we’ve tried to do over the years is we
decided that we need to have a location, a venue where our corporate clients and
our students can go and kind of get their hands dirty
as it relates to new technology. We call it the Engagement Center it’s
in the building right next door to us. And so during breaks,
we’re going to have you, you can go over there we have 3D printing,
we have drones, HoloLens, Google Glass, a wealth of technology
that is gonna be applied to the future of manufacturing and
impact the supply chain as well. So we would strongly encourage you to
go over there spend a few minutes. At the morning break, we’re gonna have
two students standing out here and they’ll go over in groups to be able to
make sure that you get over there and don’t get lost, but it’s room 162
next door for that component. And I think you’ll learn
something I think it’ll be fun. Within that case then I’d
like to introduce Dr. Iyer who’s my boss, so
I need to be nice, no. He’s my boss, he’s also the department
head in School of Management and he’s presented a presentation for that. Later on in the day we’ll talk about what
the Center is doing in terms of highlights and the different types of activities.>>Steve.>>[APPLAUSE]
>>Good morning welcome I hope all of you had a
chance to get some coffee and scones etc. The topic for
today is ethical global supply chain. Steve mentioned a case competition, the case consists of two parts,
I developed the case so, it had part A was what all 16 teams
used as part of their submissions and part B was what was distributed yesterday,
so life is not that complicated. Yes and
I hope all the teams had fun with part B. The reason that we’re focused
on this topic is that we think that this is the logic of thinking
about the ethical issues or the ethical dimension of supply
chains has as a response a number of things that
are important that play a role, some of it might be technology,
some of it might be procedural, some of it might be some value systems
that have to be implemented, etc. And all of that becomes even more
difficult when you have many partners, all that you can do is to advise them,
require of them, etc, but you really have to delegate
responsibility for execution. So that makes for a very,
very interesting context. So Steve mentioned my role here at Purdue. GSCMI, which is the Global Supply
Chain Management Initiative started back in 2005. It’s run out of the same entity that
there’s a sister organization, a sister institute called the Dauch Center for the
Management of Manufacturing Enterprises. So DCMME has its conference in the Fall,
this by the way is Spring, okay. And because here at Purdue [LAUGH] we
think Spring as something in the mind, so we think of Spring as something impending,
but for us February is Spring. So this is, what I wanted to do was to
pull together a few things we discuss in class and use that as a starting point
to set the stage for a number of things. And none of these will provide answers,
by the way. The one thing that I think we try to tell
our students is you come to a university to learn to ask questions and figure out a way to generate the answers
that make sense using first principles. So a lot of these would be just some
interesting questions, and we’re gonna count on the discussion today and
the speakers to help us get some answers. So the question really is, what do
we mean by an ethical supply chain? So basically the word supply chain means
we’re gonna think about an end to end view and I’m gonna add a couple of things
on this list, including recycle and recycling and reuse. Not just the flow of the product
as it makes its way through, but also the issue of what happens
to the product when you’re done. And that’s important because some
companies have gotten into trouble at that point even though they’ve managed
the rest of the supply chain. So what does ethical mean? Certain parts of ethical are no brainers. When you hear no child labor,
of course, that’s what I want. No slave labor, so this means anybody
who works, by the way the definition in Europe of a student intern from
the United States who goes to Europe and works on an unpaid project at a company
is classified as slave labor, okay. So one of the things we have to do if we
ever send a student intern to Europe, we have to have them registered at
a European university otherwise they’d be classified as slave labor. But there is a definition and this definition is sort of there is
a technical definition of what that means, it is people not having a choice and
being forced to accept conditions. Now, the next step is basically
acceptable work environment, when we think about the world
having an ethical supply chain. So is there an acceptable
work environment? Is there sufficient ventilation,
are there humane working conditions, fire exists,
structural safety, ergonomics, all of that is considered Part of
having an ethical supply chain. Are people being paid a living wage and
is there compliance with local laws? Now, as this list increases, these are all things that would be
great to have in every supply chain. But if you look at when
companies use the globe for all of their operations, very often there
is the question, how much control and information do you have at
every stage of your operation? What do you know about
all the different steps? And that’s really what
makes it interesting. So let’s sort of dig through
this a little deeper. So this you can think of as a starting
point, you always need a definition. So let’s think of this definition
of a supply chain and a few things. And what I’m gonna try to do is to give
you a few examples related to companies where some of these
issues have cropped up. And these are now cases
in business schools, but they’re also interesting things as
a way to think about the future. So here’s a supply chain. So think about an OEM, an original
equipment manufacturer at the end with Tier 1, Tier 2, Tier 3,
technically that should be another Tier 1. If you look at the usual definition,
everybody in the first step is Tier 1. But we’re going to assume
that the other Tier 1 is doing a larger sub assembly than this one. So imagine there are all these players. And the reason we have pulled them out
of the OEM is that it’s someone else. You have a contractual
relationship with them. Their employees don’t work for you. So the question here is, if something
happens in the production of the product, who is responsible, right? Is the OEM responsible for actions across
all supply chain participants, okay? So from the perspective of various
non-government organizations, yes, absolutely. You’re the OEM, it’s your name
on that product, your Tesla or your Apple or your Ford or whatever. You’re responsible for everything that happened anywhere in the
world that has shown up in your product. So here’s, here’s my perspective, yes. And one perspective is
because you own the brand. People wouldn’t have bought this
product without your name on it. You put your name on it,
you’re responsible for everything. Yes, because you choose the supply chain. Nobody asked you to choose this one. You could’ve picked a bunch of people down
the road from you who you could monitor, but you decided against it. So it’s your responsibility. Yes, because you are often the person
who makes the largest margin. Now, these are possible reasons for yes. In all of these yeses,
one of your answers might be no. I’m not responsible. I only paid the first person,
they gave it to me and I’m done. But in many cases that’s
not been the issue. And I’ll give you examples
where the actual flaw or the failure is somewhere
in the supply chain. But the person held responsible is
the person with their name on the marquee, the person who owns the brand. So let’s look at some examples. So of course, this is an example
which is used in business schools a lot and
that is the Mattel Lead paint example. Those of you who remember, November 2006,
it actually started before the lead paint. So November 2006 Mattel
recalls Polly Pockets. Some of you may recall Polly Pockets,
some of you may not. Some of you may have played with it,
if you’re some of our students, for magnets that are a threat to children. But in July 2007, Okay, [LAUGH] a European retailer found high lead
content in paint used in Mattel’s toys. In August, Fisher Price started
recalling toys due to lead in paint. 18 million products recalled,
another 848,000 toys recalled. Now, of course, this was a problem
because kids, even though you tell them a gazillion times not to put the toys
in their mouth and lick them, that’s what they do. And so who’s responsible? The company that sold the toy. Well, so what did Mattel do? Now, if you if you recall that story, what
had happened is Mattel had subcontracted this task to a company in China. That subcontractor had subcontracted the
paint delivery to another manufacturer. It’s that manufacturer who had accepted
the higher amount of lead in the paint. So Mattel was unaware as to
who was selling the paint. They just set some standards for
the paint and they assumed compliance
with the expected standard. What did Mattel do? The first thing Mattel did was to
apologize to the Chinese customers and say it wasn’t your fault. It was our fault. We should have given
you better directions. So we accept responsibility. They committed to certifying all paint
suppliers and testing every location. They decided they’ll control
production processes, do inspections throughout
the supply chain. They would test toys before
they reach the customer. And so the interesting question
that comes out of this is, in today’s global supply chain,
it’s fragmented. There are many people playing a role. What should the OEM do? Should the OEM oversee production that’s
done anywhere in the world by anybody involved in the supply chain to ensure
compliance and safety for their customers? Now, this is an important question. And many examples are pointing to
the fact that OEMs do not have a choice. They do not have the option saying,
well, I didn’t know, okay? And there are many
countries who are saying, I didn’t know is not an acceptable answer. You should know. When you hire someone and they do
something for you, and what they do for you impacts your customers,
it’s your responsibility. So this is what happened with Mattel. Now, notice in Mattel’s case, they
basically say said, we are the OEM whose name is on the marquee, we’ll accept
responsibility for everything. Anybody who did something,
unless it’s fraud or egregious, in this particular case, in the Mattel
example, there was no fraud whatsoever. Whoever accepted it, accepted it and
followed the procedures of testing that were in place at the time,
but it went through the system. And that’s what Mattel did. Let’s take an example that you hear a lot,
and this is now taught in business schools a lot is there was a Rana Plaza
in Bangladesh that collapsed. And when the buildings collapsed,
one of the things that happened, of course, it killed 1,129 people. One of the things that the New York Times
and everybody else did is everybody ran in and say, hey,
who were they producing clothing for? And they saw Walmart. So they told Walmart hey,
why were you producing here? And the officials at Walmart said, we specifically banned
the supplier from our supply base. They took them off the list. We gave the contract to someone else and
they re-contracted it to the same people. So the people who were banned
were banned from bidding. So they said, okay, we will not bid, but we will get the contract from
somebody who was awarded the bid. So they said, well, didn’t you know if you awarded the bid to
someone where they were doing their work? How would we know, we awarded
them the bid, it’s their choice? Well, the general public opinion was,
well, that’s not acceptable. It’s not acceptable to say that, well,
I awarded bid and I walked away. You should know where it’s being done,
what the conditions are, etc. So what ended up happening? It actually ended up, and this is
something that’s been the subject of a lot of academic papers, there actually
were two solutions that emerged. There’s a European solution,
which is called, so the European and Canadian retailers got together and
founded a consortium. And that was called the ACCORD. The US manufacturers,
Walmart and retailers, Walmart, Target etc, formed a different
group called the ALLIANCE. You might say, well, why do I care? That actually is a big difference. So it turns out that
the ACCORD decided to pay for damages, pay for workers compensation,
literally pay directly. The ALLIANCE decided to provide loans,
okay. There’s a big difference between the two. In one case you basically say
I’m gonna pay all the costs, the second we say we will pay the costs
but you have to make a business decision that you’re gonna comply with all of
the rules in order to win the business. So the lawyers basically advised the US
corporations that think of it as a business transaction, don’t walk in and
say I’m gonna pay for everything, okay. So the difference between the two was in
the ACCORD you were guaranteed business. We paid for all of this. We will contract with you etc. In the ALLIANCE it was, these are the terms under which
we will do business with you. You have to make the decision to
comply with it, and if you need money, we’ll give you a low-interest loan. So, this, by the way,
has been a lot of point of contention. Which of these will survive,
etc, but these are, even though In the normal case if
everything goes right, they look the same. In the details,
they’re a little different. And the difference is, who is responsible? Under the ALLIANCE, the supplier
takes responsibility, takes the loan, and makes a business decision to
comply in order to win the business. Under the ACCORD,
they just paid for everything, because they decided that this is
a better way to run the system. So if there’s a question as to
whether who retains responsibility. So this is the ACCORD versus the ALLIANCE. Now, there are other things that came
with it, independent audit facilities, trade unions demanding a higher
minimum wages, etc, etc. So these are all the reality of
thinking about how you ensure that products made all over the world comply. So the interesting question here is,
so what’s the option? So one solution was don’t
source in Bangladesh, okay? We’re gonna go somewhere else. Well, it actually turns out that
there aren’t too many other options. And the reason is because one of
the things that’s changing in China dramatically is wages are going up,
the population is aging. The forecast is by in the year 2100,
which is a few years away, the year 2100, China’s population
will be about 550 million. Its current population
is close to 1.4 billion. And if you say, how did we go
from 1.4 billion to 550 million? Well China inactive the one child policy
the population is aging dramatically, and there aren’t enough people to replace it. So guess what is happening? China doesn’t have the capacity to
stop produce all these products that they were making. So they’re rapidly gonna get out of it so
lot of clothing manufacturing, toy manufacturing etc, is leaving
China and moving to other places. Because the younger generation
wants to work on different jobs. Where is it gonna go? Which country has big ports, etc. Bangladesh is one, Burma is next,
Vietnam, India, Cambodia. That’s where everything is going. But remember, Vietnam, Cambodia, Burma
are small countries compared to China. So you really don’t have an option. So when you say, where am I gonna source? You might say, well, I’m gonna bring manufacturing back to
the United States and pay 40% more. Or I’m gonna continue to have
manufacturing in other parts of the world and find some way to manage the risk. So this is an interesting question,
how do you manage the risk? In fact, a related question is, should companies be doing the job
that countries should be doing? So if you look at approving licenses, shouldn’t this be something that
the country should be doing? So these become questions saying,
who’s responsible? But from the point of view of the court
of public opinion it is, you, the company, are responsible. A few other examples of how some of these
things could be fairly complicated. So, this is
a Harvard Business Review case. And this is a case involving IKEA. So basically, IKEA got a phone call from a
German documentary producer saying, okay, we have evidence of you, one of your
suppliers in India using child labor. And this is just, in a couple of hours, we’re gonna broadcast this documentary,
okay. And they told them the name of this
company was called Rugmark Imports. So of course,
immediately IKEA suspended this supplier. So they dropped the supply immediately
said, well, now we’re clean. We don’t have the supply anymore. What was interesting is that they
did an analysis of the movie. And the movie producer hired child actors
to play the role of carpet manufacturers. It had nothing to do with the supplier,
and spliced in the tape of the supplier. It took a year and
a half to do this investigation. And they realized the supplier
had absolutely no problem. This was a documentary film
producer who needed a story. So now what they use is use
a third-party certifier who then goes to all the facilities and
approves supplier. Incidentally, IKEA came back,
restored the supplier, paid them for all damages, did all of that in
order to take care of this problem. So one of the related
questions to think about, is remember in statistics we talk
about type one, type two error. You can sometimes make a mistake because
you rely on a documentary film producer, or somebody, or an accusation, or an NGO. But it’s always useful to do your
own analysis because otherwise, you might be picking the wrong person,
there is such a thing. So the question then becomes how
much monitoring of suppliers do you need to have? So you have the confidence that
the system is operating as planned. So this is just sort of a note
of caution to think about. One of the things that is interesting
that’s happening now is with Apple. So Apple and Foxconn, of course some of
you, if you’ve picked up the most recent Business Week, you’ll be hearing
about Foxconn in Wisconsin, right? But that’s not the Foxconn
we’re talking about. Even though, good luck Wisconsin. So Foxconn, Foxconn, there was an article in The New York Times
talking about how Foxconn, Apple’s supplier in China
was treating its workers. So the story released several years ago
was there was a last minute change. Of course, those of you who remember
the story in the early days of the iPhone, legend has it that Steve Jobs
when he was alive, he took the latest version of the phone, put in
his pocket, went home along with his keys. And then when he picked up his phone,
his phone, the surface of the phone
was scratched by the keys. He came back and
said this phone is not shipping. Okay, we need to have phone glass. The glass of the phone should be such that
even if you put it with your keys it will not scratch. So they replaced the glass, and they
replaced with, of course now there gorilla glass and other glass that’s there,
that just, its scratch is distant. But the interesting thing was, that a whole bunch of phones
that was supposed to ship. So the New York Time story said that all
the displays were shipped in at midnight, and they said, here is basically
the description of the New York Times. Instead a foreman roused 8,000
workers in the company’s dorms. Each employee was given a biscuit and
a cup of tea. Guided to a workstation within half an
hour started a 12 hour shift fitting glass screens within 96 hours they were
producing 10,000 iPhones a day. Okay, so story was wow Such agility. And the public read it and says, wow,
such inhumane treatment of people. Now, following that there was an article
which said that there were 18 workers who jumped out of the tops of the
company’s buildings and committed suicide. And there was a quote from the Foxconn
executive saying, don’t worry, now we have nets to catch them, okay? So the general impression of that was
this is a totally inhumane company. That was the court of public opinion. And so
Apple basically said this is a big risk. Because if you look at this company and
think of it as inhumane, well, that won’t do. So what has changed? A lot, a lot, so this is Apple now. Apple now does audits of
every one of its suppliers. There’s a list of all of its suppliers. If you go to the website, they list every
supplier across the world involving in anything on your iPhone or
iPad, any product. If you click on that supplier, they’ve
made public the audit of that supplier, what things they passed,
what things they didn’t pass, etc. And they said,
if you find any problem with anything, let us know, we’ll just put it up there. There’s a code of conduct. In fact, I had brief discussion
regarding looking at materials, one of the issues with respect to
electronics is the source of cobalt. And if you say, why cobalt,
there’s a problem with cobalt. A lot of cobalt is mined in the Congo. And there’s a Conflict Materials Trade Act
that requires companies to keep track of where things come from. So this is from Apple’s website. I just downloaded it two days ago. 100% mapping of everything from materials
sourcing, trading, refining, smelting. Everything you need to know about
every ingredient in your phone is available online. So the question is, why should Apple do
this and why should companies do this? And why is monitoring every step
in the supply chain so important? Well, that’s part of doing business now. And making everything public
is part of doing business and part of building the confidence
of all the customers, saying, we’re aware of who’s
supplying everything for us. We’re keeping track of it. We’re paying for surprise audits and
we’ll make things public. So this is today’s supply chain. This is sort of required. And one of the things to think about is
that the people who are worrying about this, one of our faculty was a treasurer
fora large fortune 100 company. And if you look at the treasury in
companies where people think about risk, well, right now it’s no longer
the supply chain manager. It’s the CFO who’s
worried about this risk. Because guess what,
when this becomes public, it has a material impact right away. And so you better be aware of it. So this is just part and
parcel of doing business. One of the very interesting things,
and I think if you get a chance, please take a look at this website. This is a guy called Ma Jun. And this was just my guess, if you had
asked me, which country in the world would somebody take all the data regarding every
effluent discharge, public document, etc., and make it public,
you’d be hard pressed to say it’s China. And yet, that’s the place where you can
get more information about every company than any other place in the world. And if you get a chance,
please go to this website. So this is an entity called IPE,
this is an NGO. He won the Rockefeller prize for example. And what he has is something
called the Blue Map. He collects every piece of
information submitted by every company everywhere in China. And he has an enterprise
online monitoring. And he has the details of what a company
did to fix a problem with an effluent. So his logic is,
we’re gonna record bad things that happen. And when you tell us that
you’ve taken actions to fix it, we’re gonna include it in there. Because our goal is not to shame somebody. But once that document is out there,
we wanna get things to improve. So here’s sort of the logic that they use. And in his logic,
which is sort of very interesting, there’s a wonderful video on the Internet
if you type his name and you search. And he basically started off, when he was
doing this, he was doing it by himself. Yeah, he has one room,
he is collecting all this information, and nobody paid attention. So he decided here’s what he was gonna do. He was gonna collect all
the suppliers that IBM was using, and all the suppliers Apple was using it
all the suppliers that HP was using. And he added up all the pollution
they were creating. He said, I’ll just make it public. I’ll just say, IBM, you created, [COUGH]
excuse me, this much pollution in China. HP, you created this
much pollution in China. That got the company’s attention. And they said, well,
we’re gonna do something about it. He said, just tell me what you’re gonna
do to fix it, and I’ll make it public. So it said, IBM has taken these actions to
improve pollution control in China etc. And so his logic is to use
the transparency of monitoring in order to get companies to do the right
thing, which is to put in the scrubbers, treat the effluents,
do all of the steps to make things right. From my perspective, I’ve been telling
our students in every class I teach, just start a company that does
exactly that in the United States and in Europe and everywhere else. And you will have done a great service. I don’t know, nobody has taken
me up on it somehow, we’ll see. So one of the things that’s interesting, there are many regulations
that are driving compliance. The Conflict Materials Trade Act
was included the Dodd-Frank bill. And that requires companies,
electronics companies, and it holds their CEO responsible for knowing
where conflict materials come from. By the way, conflict materials is
a US definition of a conflict. So the US identifies the good guys and
the bad guys. And if you are sourcing from
people who are the bad guys, or being funded by this mining,
then you’ve created a conflict material. Conflict material shows up and diamonds, there’s a notion of blood
diamonds from Rwanda etc. But this is important, and companies have been spending quite
a bit of time keeping track of it. Here is the rule associated with it. But you may not know that there’s
an equivalent California Transparency in Supply Chains Act. And the Transparency in Supply Chains Act
can get a lot of people in trouble. A few years ago, Costco was in trouble for
buying fish from an Australian distributor who had sourced
from an Indonesian trawler. Who had in the trawler people who
are living in slave-like conditions. So guess who was responsible? Costco, so there’s Costco is
responsibility to ensure that the trawlers that the Indonesian fishermen were
operating had people treated humanely and given sufficient time to
live in humane conditions. This is the law. So if you’re operating in California,
this is required. So some of the questions are,
what can you do? I mean, what can you do to ensure
that things are treated ethically? The first is monitoring. Virtually every company,
if you look at Walmart or anybody else, there’s an expectation that you will
pay for random audits, etc., and you will have this information. And those audits are to be
random surprise audits and etc., otherwise an audit
really it doesn’t make sense. The second is transparency. The Apple example, share the information,
anybody who has any questions sees it. So if you’re Greenpeace or anybody else
and you stop a ship, make it public. And those that we’ll put on our website,
we’ll figure out a way to fix it. [COUGH] Responsibility. So here’s where, I mean I know we’ll
have several speakers talk about this. Here’s where there is an expectation
that the OEM will drive the agenda, will enable people to use the technology, will provide procedures that people
can use to detect and be proactive. Now, some of these things
are vitally important. And the vitally important part is values,
no compromises, no tradeoffs. Now, some of these things are particularly
important when you think about recently, VW and all of those kinds of issues. And you basically think,
how do these things happen. If you ever get a chance, there’s this wonderful book
called Moral Mazes, M-A-Z-E-S. And it’s a book about challenges
that engineers face when they’re asked to do something that they
realize makes no sense whatsoever and it borders on the unethical. But the problem is somebody
is pressurizing them so much they sign off on it. And the question is that signing
off is a values question, okay. Certification of the supply base, very often you may have an opportunity
to get a price reduction. You may have the opportunity to get a gold
star because you drove down costs 10, 15%. But you don’t ask too many questions as
to how the 10 to 15% savings came from. That’s the problem. And some of the students will
recognize that from the case. In many cases, one of the things
that companies do is see to it that there’s senior executive oversight. Now, we often hear from companies,
he’s in charge of safety. And it almost seems like if
you’re in charge of safety, somebody just signed a death warrant. You’re gonna get ignored. You’re in the basement and nobody cares. Okay, well if you treat ethical
issues the way you treat safety, then that’s ground for a lot of trouble. And so the question really is, how will all these considerations
affect the supply chain? So when we were picking a topic for for today’s conference, the reason that we
were focused on managing ethical global supply chains is that if you see this
list, then it touches many things. It touches how revenues will
be generated for the firm. It touches how costs will be influenced,
who gets to play a role? It also touches design,
it touches compliance, it touches HR, a lot of activities. In other words, you can cut corners and
make profits, but it catches up to you. And when it catches up to you,
the cost associated with it is far more significant
than any benefits you got. Just as a reference, part of my role as
department head is we’re in the hiring mode and so we had a candidate and
finance yesterday, in my office. And I said, what do you work on? He said, I study bribes,
corruption, etc., and what impact this has on firm share price. So we got to talking. What is a bribe, what is it? And one of the things he told me, we we’re
just chatting with some people, in fact, this morning I was looking
up the definition. He said that different countries chose
different ways to describe unethical practices. So in the US environment,
there is the notion of grease payment, which is legal, and
bribes, which are illegal. So grease payments are payments you
make to make things go faster but do not involve a discretionary decision,
okay? And that’s accepted practice,
$20 this is faster, a $100, this goes faster, etc,supposedly. And there is a category which says,
facilitation payments, and you can list it as facilitation payments,
okay? The UK decided that facilitation
payments are illegal. And the newest version of the UK Act,
is that if you have an office in the UK and
any other office you have did something. Then when the CEO lands in Heathrow,
that person can be taken directly to jail. Okay, in other words,
you’re responsible for any unethical behavior in any branch anywhere in
the world if you have a UK office. So of course, my interpretation
is goodbye UK office, [LAUGH] but they may do that with Brexit anyway. But the one thing to note is that I
think what’s particularly interesting is the interpretation of the ethical
operation of the supply chain varies by location and varies by
the interpretation of their laws. So one thing you can do is basically say, I’m gonna just have zero tolerance and
here’s how we’re gonna operate. And that would be ideal,
I hope people do that. But it may be that individual players
in individual locations will end up having flexibility to operate
the way they operate in that location. In any case, the purpose of this conference is to
flesh out some of these questions. We’re gonna have a large number
of speakers who will provide their insight into the challenges
associated with implementation. But I’m hoping that we use this
opportunity to have a wonderful dialogue regarding, sorry, one second, I’m trying
to get my notes for my next step. Yes, we have a wonderful
dialogue regarding how ethical global supply
chains will operate. And these include discussions all
the way from how senior executives can play a role in having an impact to the use
of technology, to many other solutions. So with that, I will stop my presentation
and I’m hoping we’ll have time. The way we are organize right now for
this is that we’ll have a next speaker, I’ll introduce Shelly Austin
in a few minutes. And then after two talks we’re
gonna have a question and answer session where we’ll get a chance
to get you some answers, thank you.>>[APPLAUSE]

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