Prepared by: John Cary F. de Guzman
• What is business ethics?
• What is Production?
• What is ethics of Production?
• Materials Management defined: Its functions and objectives.
• What is the prevailing ethical issues of materials management?
• Overview of Production Management
• Ethics of Production Management
To have an overview of business ethics
To have an overview of production
Learn about the ethics of production
Define production, materials management and production management; learn it’s functions and objectives.
Identify and relate the prevailing ethical issue on Production, Materials Management and Production Management.
Asses and criticize ethical and moral issues, and offer possible resolutions.
WHAT IS ETHICS?
Ethics are, at their essence, moral judgements about what is right and what is wrong. In a business sense, these ethics are decided upon and formed by each company and underpin the decisions that anyone in the business makes.
The decision to behave ethically as one individual to another is easy for any decent moral human being, but it is easy to forget the impact a large, faceless business can have on the world. Business Ethics is all about bearing in mind the full weight of any corporate decision.
“Ethics represent the eternal and prevalent and moral standards, personal values, corporate code of conduct and are generally part of the cultural tradition of a
country.”
- P. Gopalakrishnan
Businesses not following any kind of ethical code or carrying out their social responsibility leads to wider consequences. The natural world can be affected by lack of Business Ethics in ways such as:
Businesses which does not show due care for where it disposes its waste products.
Failure to take a long term view when buying up land for development.
Neglecting obligations towards minimizing its carbon footprint and driving progress towards green renewable energy, is damaging the world in which every human being lives, and damaging the future prospects of all companies.
BENEFITS OF ETHICAL BUSINESS PRACTICE:
Working as an ethical business has many benefits, not least of which is the ability to attract and keep investors, employees and customers. Knowing that the company they deal with has stated their morals and made a promise to work in an ethical and responsible manner
It allows investors peace of mind that their money is being used in a way that aligns with their own moral standing.
When working for a company with strong Business Ethics, employees are comfortable in the knowledge that they are not by their own action or inaction allowing unethical practices to continue.
Customers are at ease buying products or services from a company they know to source their materials and labour in an ethical and responsible way.
Production is a process of combining
various material inputs and immaterial
inputs (plans, know-how) in order to make
something for consumption (the output). It
is the act of creating output such as a good
or service which has value and contributes
to the utility of individuals.
Ethics in production is a subset of business
ethics that is meant to ensure that the
production function or activities are not
damaging to the consumer nor the society.
Like other ethics there is a certain code of conduct or standards to be followed;
however ensuring that the ethics complied
with is often difficult.
One of the most important characteristic of the business today is that there is a great degree of interdependence between various business functions.
Production cannot happen without marketing and sales and vice versa. In order to survive in the competitive sphere, organizations try to reduce the costs involved in production processes.
This cost efficiency is sometimes achieved at the
cost of quality. Poor processes and technology is
used to keep the cost down, this is especially true
for small players who cannot afford economies of
scale.
All the production functions are governed by production ethics but there are certain that are severely harmful or deleterious which needs to be monitored continuously. The following are worth mentioning:
Technological advancements like genetically modified food, radiations from mobile phones, medical equipment and etc.
Defective services and products or products that are innately deleterious like alcohol, tobacco, fast motor vehicles, warfare, chemical manufacturing and etc.
Animal testing and their rights, or use of economically or socially deprived people for testing or experimentation is another area of concern in production.
Transactions between the organization and the environment that lead to pollution, global warming, increase in water toxicity and diminishing natural resources.
Loss of customer
Loss of confidence
High rate of rejection
Stock-out, if unethical code of conduct
Problems in certification
Maintenance of standard procedure with supplier
Consistency in training process
Helps in auditing
Helps in increased brand value & trust of customer
“Material management is the integrated functioning of the various sections of an organization dealing with the supply of materials and allied activities in order to achieve maximum co-ordination.”
- N.K. Nair
Production and Material Control
Purchasing
Non-Production Stores
Transportation
Materials Handling
Receiving
Materials management contributes to survival
and profits of an enterprise by providing
adequate supply of materials at the lowest
possible costs.
An effective materials management plan can improve aesthetics.
Removing unsafe and unsightly conditions
Placing core services out of sight
creates a more pedestrian-friendly environment that will improve the visual and physical sense of place for those who live and work there.
A more holistic approach to managing vehicle use and emissions.
Managing solid waste
Proper disposal of hazardous waste
Recycling and utility services
Credible accounting of quantity
Cost and specifications of materials purchased and/or used,
Allocation of material to its actual intended purpose
Timely, efficient & effective management of resources
Delivery of product/service at par with what the customer expects to receive.
Maintaining good relations with suppliers and customers through honest transactions
Production management, also called operations management, includes planning and control of industrial processes to ensure that they move smoothly at the required level.
Techniques of production management are employed in service as well as in manufacturing industries.
In manufacturing operations, production management includes responsibility for product and process design, planning and control issues involving capacity and quality, and organization and supervision of the workforce.
FUNCTIONS OF PRODUCTION MANAGEMENT
Specification and procurement of input resources namely management, material, land, labour, equipment and capital.
Product design and development to determine the production process for transforming the input factors into output of goods and services.
Supervision and control of transformation process for efficient production of goods and services.
There are numerous ethical issues in production management if it is not implemented and executed properly. The following are worth mentioning:
Working conditions
Labour rates and child labour
Environment unfriendly practices (including production of goods and disposal of wastes)
Utilization of natural resources.
With different parties involved in these processes there is always a question of who is being fair and otherwise. Tensions arise mainly due to the perceived understanding of ‘fair play’ between various parties.
Because of these processes being closely related, it is where most issues and concerns tend to cluster.
Dilemmas Resolution
Material Acquisition
•Credible accounting of quantity
•Cost and specifications of materials purchased and/or used,
•Allocation of material to its actual intended purpose
•Timely, efficient & effective management of resources
•Systematic accounting of quantity of materials.
• Implement a critical cost control
procedure to ensure material utilization is not abused.
• Systematic allocation of resources
Manufacturing/ Production
•Working conditions and environment
• labour malpractice
•environment unfriendly practices (including production of goods and disposal of wastes)
• utilization of natural resources
•Exploitation of company resources
• Poor process and technology leading to reduced quality of products.
• It is important to consider the working conditions of the workers and their rights. To do this, a company should comply to labor codes established by DOLE, so to avoid labor concerns.
• Systematic handling of resources is needed (raw materials, stocks, wastes). Compliance to the law regarding Natural resources and its preservation.
• Maintenance and credible supplier of technologies/machines for production.
Retail
•Unfair trade practices stemmed from neglecting intellectual property rights
•Alternative buying ( people tend to buy counterfeit products, disregarding the quality and making cost the basis of buying)
•Lack of sales or profit due to patronage of counterfeit products.
• Exercising fair trade, supporting anti piracy campaigns,
and strengthening originality and authenticity in company products.
• Fortify marketing strategies, and expand marketing campaigns using social media.
• Establish new target market and create a SWOT analysis of the competitors.
