You are to assume the role of the chief operations officer at Style Fresh, a leader in the fashion industry. The CEO wants you to make a supply chain decision after analyzing risks involved with maintaining a relationship or finding a new supplier.
Style Fresh sells apparel for men, women and children online and in stores across the nation. Style Fresh made a commitment to its stakeholders in 2021 to focus on ethics, sustainability and transparency. The commitment strengthened the relationship with customers, as most shoppers are now influenced by a company’s social responsibility efforts.
The CEO was made aware of allegations concerning one of Style Fresh’s major suppliers. The supplier has been accused of unsafe working conditions yet keeps passing inspection. The allegations are not yet newsworthy since a formal investigation is being pursued after dozens of the factory employees filed petitions for an investigation. The CEO feels there are only two possible reactions to this information:
Option 1: Do nothing until the formal investigation is complete.
Option 2: Immediately drop the supplier and switch to a more transparent supplier. The switch would result in a 30%-40% increase in manufacturing costs which would result in higher prices for Style Fresh customers.
The CEO wants you to analyze the risks and long-term impact involved with each option and consider if there are any other options. The CEO also wants you to analyze the risks involved with communicating each option to stakeholders. Finally, the CEO wants you to make a final recommendation.
