1. The supplier monitoring programs at Nike and Wal-Mart are both very important to the ethical operating practice of both these organizations. Both of these companies implemented supplier monitoring programs during the early 1990’s, and since then these programs have been improved and expanded. Nike had a four point scheme for approaching monitoring of factories, basic inspections, in depth audits, MAV audits and independent external monitoring.
Wal-Mart on the other hand had a wider range of supplier factories, 9000 compared with 700 that Nike used, therefore a slightly different kind of monitoring scheme was needed.
Wal-Mart audited more factories in 2006 than any other company in the world. In conclusion Nike’s supplier monitoring program is stronger, because of the economies of scale Nike enjoys when sourcing its goods. Wal-Mart had such a large supplier base it is harder for them to find unethical practices.
2. The Fair Labor Association is a coalition of colleges and universities, nongovernmental organizations, and companies who have agreed to a code of conduct to conduct unannounced audits of foreign factories.
For a new company, joining this organization would be recommended, in order to have a system of supplier monitoring in place, however the organization should aim to have its own system in place, as these audits do not always show correct results due to audit fatigue and the fact that the audited factories are very good at hiding the documentation of real wages and providing other fake records at the times of the audits.
3. The issue of compliance with ethical standards is always a problem because of the extra associated costs that the factories have to bear.
Suppliers are always reticent to accept compliance changes and therefore try and falsify audit reports. Companies have to try and persuade suppliers that the rewards they will receive for compliance outweighs the costs they will incur by trying to avoid supplier monitoring compliance checks. Companies need to balance their own audit with an independent audit program in order to avoid issues with non compliance.