Exploring the factors determining ethical supply chain management in the fast-moving consumer goods industry

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Chivhungwa, Tafadzwa
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Vaal University of Technology
The application of business ethics in Supply Chain Management (SCM) activities in the business environment has attracted much-needed attention from research academics and practitioners alike in recent years. SCM activities within organisational processes are subject to various ethical principles when facilitating contractual procedures between supply chain partners. In a broader context, ethical SCM has mostly been applied to the public industry. Less attention has been directed, however, towards private businesses that seek to employ ethical compliance towards SCM processes. In view of the growing importance of ethical conduct in the private industry, the purpose of this study is to explore the factors that determine ethical SCM in the Fast-Moving Consumer Goods Industry (FMCG) in Gauteng Province. In this study, a quantitative research approach was employed to examine and test the factors that have an influence on ethical SCM in the FMCG industry within South Africa. A cross-sectional survey design was utilised to collect and test the empirical data collected from 221 purposively selected professional employees and managers in the FMCG industry in Gauteng Province. The collected data were analysed through the use of the Statistical Packages for Social Sciences (SPPS version 26.0) software and analysed using a combination of descriptive and inferential statistics. Specifically, the techniques used to analyse data include frequencies, percentages, mean scores, Exploratory Factor Analysis (EFA), t-tests, ANOVA, Pearson correlations and regression analysis. Using the EFA technique, six legal components of ethical SCM were identified. These are moral standards, transparency, professional competence, corporate governance, accountability and fairness. Three components, namely supplier assessment and monitoring, relationship commitment and supplier collaboration, were extracted in the EFA procedure. A further three personal ethics components were extracted, namely intrinsic values, honesty and integrity and skills. Descriptive statistics reveal that most managers and professional employees within the FMCG industry believe that they follow the legal aspects of SCM ethics. They also indicated that their firms are effective in managing their suppliers. The managers and professional employees in the FMCG industry also perceived that they espouse a high standard of personal ethics in their SCM activities. The results of the t-tests revealed that female respondents are more likely to adhere to personal ethics than their male counterparts. Results of the ANOVA tests revealed significant statistical differences on the race and occupational area categories of the FMCG employees that participated in this study. Under the race category, Whites and those of the Mixed race have different attitudes towards supplier collaboration when compared to other racial groups. Managers and professional employees from the procurement department have different attitudes on legal aspects when compared to those in other departments such as transport, warehouse, contract management and customer services employees. Pearson correlations revealed that connections between the constructs were either weak or moderate. Regression analysis revealed that among all legal components and personal ethics factors, only fairness significantly and positively predicted supplier management. The study recommends that the FMCG industry should recruit and develop managers and professional employees with a recruitment process that is more structural and process-driven as this promotes a unique brand of leaders that dictate sound and effective leadership processes. To maintain effectiveness amongst managers and professional employees, training remains a catalyst in increasing knowledge, skills and overall competency within the FMCG industry.
M. Tech. (Department of Logistics Management, Faculty of Management Sciences), Vaal University of Technology.
Business ethics, Supply chain management, Consumer Good Industry, Ethical principles