U.S. companies with global operations all espouse adherence to a corporate code of ethics. The code usually is posted on their website, and employees are annually audited to confirm their commitment to the principles outlined. This is certainly a step in the right direction and reflects the notion that business is being done with the utmost integrity. Alas, such heroism borders on the brink of disaster once the corporation steps beyond the employee pool and dips its toes into the dark waters of global contractors and sub-contractors by outsourcing their production.

Supply Chain Control

It is difficult to know what every individual at every plant is doing on a daily basis. The expectation is everyone is following the rules in exchange for a paycheck, and in most instances, that would be the case. But as business has been globalized, and companies have worldwide plants manufacturing goods 24/7, ethical deviation rears its ugly head. This is not to say that certain countries are less ethical than others, but the message becomes diluted as it makes its way from the sterile corporate headquarters to a plant far away and then down the rabbit hole to contractors and sub-contractors. Suddenly, "do no harm" becomes "do no harm within a certain price range or as long as no one finds out."

Public Relations Impact

A company needs to know all parts of its supply chain are adhering to strict guidelines. Unfortunately, it becomes more difficult to monitor out-of-sight manufacturing locations, especially when there are sub-layers of people doing the work. Boeing contracted with 50 top-tier suppliers for the production of the 787 Dreamliner, handing them control to manage the subcontractors they chose. The unfortunate result was it took some digging to locate the culprit when battery and electrical panels failed -- especially because contracted work was done in several countries. But it was Boeing that was held responsible and the Boeing name which hit the front page of the paper.

Loss of Control via Outsourcing


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The outsourcing of production overseas also has ethical implications when standards are lowered in an effort to save money or to provide work to friends and relatives. In 2007, a large U.S. toy manufacturer was embroiled in a major recall when it was discovered its overseas manufacturing site had subcontracted the painting of toys to another contractor who sourced paint from a non-authorized third party supplier to save money. The problem was the toys were discovered to be coated in lead paint. So ideologically, you can aspire to ethical standards, but it entails constant auditing of everyone in the supply chain, in the U.S. and abroad.

Ethics Are a Full-Time Job

Ethical standards were new to the U.S. at one time. The nation has its own history of questionable business practices, but consumer and stockholder pressure slowly changed the culture within the U.S., which is still evolving. Unfortunately, in other parts of the world where cultural differences, pricing, bribery and keeping an economy afloat outweigh ethical operational standards, not only is there a need for 24/7 production, but also for 24/7 vigilance. Continual auditing of everyone who touches the product along the manufacturing process is necessary to ensure ethical manufacturing standards are upheld.