ROLLING DEFICIENT VEHICLES FROM ASSEMBLY LINEBUSINESS ETHICS GROUP PROJECT

GROUP PROJECT-BUSINESS ETHICS

“Rolling Deficient Vehicles from Assembly Line”

Issue-The Automobile industry is full of ethical dilemmas. Not only this industry but almost every industry has some of the scandals. This scandal comes as a corporate obligation for the industries to do what is ethical. Most of the times companies fall down on this in order to salvage their bottom line.

One ethical dilemma that faces Truck makers (M&HCV Segment) every day is safety versus cost. These safety features are embedded to the parts and process used for manufacturing these vehicles. The issue discussed here is the rolling or manufacturing (assembly) of Trucks or any vehicle of the Segment M&HCV in deficient condition first and then fit the parts at the time of dispatch to the end customers.

This is the very preliminary phase of the issue. The aggravated stage is, dispatching the deficient vehicles to Dealers and the fitment is done when the vehicle is ready for delivery to the customer. This is done mainly to gain short term benefits in terms of capturing the market share and making profits. Although the said industry is also driven by its strong value system, but the hierarchy at almost all levels do not consider the act of deficient rolling as major ethical concern. This is due to the top guy sitting at the top has his financial goals which is drilled down to the lowest level in hierarchy. But at the same time it is never thought about the target in ethics. Although many a times it is discussed that in ethics there is no any deviation but it is never measured in terms of adherence level. Although there are Risk oversight committee and internal audit teams who are looking for the adherence level to the ethical values, but the real issue remains same.

This act of deficiency rolling of vehicles is much prevalent in NPI (New Product Introduction) models. Company’s intention is true a good in term of taking short time to produce new models but the methodology adopted is not true to the ethical values set by the company itself. In +developing a new Truck, what will the balance between rolling a deficient vehicle and cost is? Certainly, there is a demand for high end Trucks in India and around the world. But there's also an increasing demand for safe Trucks.Another dilemma which forces the company to adopt the deficiency rolling of vehicles is outsourcing the production of certain components. Our company faced backlash in 2011 when we had a stock of over 2000 trucks waiting for the completion with respect to the parts shortage from the local vendor base. It can be considered as taking risk while outsourcing

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production of certain components for their Tricks, without solving or addressing the ethical dilemma related to the outsourcing activity.

The issue and related acts (ethical dilemma) can be summarized as:

Deficient rolling of vehicle for gaining short term profit. Deficient rolling of vehicle for gaining market share.

Rolling of vehicles due to shortage of parts from suppliers.

Rolling and keeping vehicles in stock after realizing that demand will peak up.

The rolling of deficient vehicle lead to noncompliance of safety standards. This is an issue for the end customers.

Ethics training to the persons working in assembly lines, executives and employees.

Group Experiences - One of the most important issues regarding the quality parameter is the first shot roll out vehicle from the vehicle, which is a must for proper roll out of the vehicle from the assembly Line. The greater the issue & problems in the Line the lesser are the vehicles which are rolled out from the Line. But the issue is the 100% roll out of the vehicle from the line. Most of the vehicles which are rolled out now in the company are rolled out with deficiency which is rectified outside the line. Reasons are many.

1. Not properly designed so that due to routing issues the fitments are not possible within the tack time.

2. Doesn’t have the material which is required for fitment at the time of roll out.3. Material is of not requisite quality, which needs refitment.4. Material becomes rusty after fitment.5. Material gets Damaged and need Rectification

Although vehicle are fitted with proper fitments but if the vehicle fitments are changed their will always be the scenario of undercutting , Metal to Metal contact, Plastic Metal contact which can happen during rectification, replacement etc. which may cause some kind of malfunctioning

This is unethical which should not be done as the customer who is buying the vehicle is considering that the vehicle has been rolled out correctly. Either it should be declared that it is not first shot ok or given some kind of concession regarding any rectification for the said period in the fitments which are rectified during the process.

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Analysis and Discussion-Till a few years ago, SAP LAB had a system whereby employees were given awards for integrity, a practice it has now stopped. The thinking behind the decision was that integrity was a given, so there was no need for special recognition. It was expected from every employee and the same also applied to ethics. That’s not all. SAP Labs is now coming up with products that actually help clients measure and reduce their carbon footprint, in the belief that sustainability has a positive rub-off on ensuring that the company is indeed following ethical practices.

"Transparency is a critical element of sustainability, and when you are required to be transparent, you automatically become more ethical. Besides, it is not just about doing good but also making business sense" says VR Ferose, managing director. Globally, SAP is among the few that publishes a dedicated sustainability report annually.

Ethics form the foundation of how companies function but people are realizing that ethics alone aren't good enough. The new buzz word is being a principled business, and that involves being ethical, along with a healthy dose of sustainability thrown in.

Adi Godrej, chairman, Godrej Group says, "I am a firm believer that to be successful in the long run, all aspects of a business need to be looked at. These are ethical business practices, strategy, and sustainability and consumer centricity. I know businesses that have survived over the short term not being ethical, but for long term success, all four are crucial."

This is a view echoed by Farhad Forbes, director, Forbes Marshall: "Ethics are something that is a part of your normal culture and way of working, not something you can switch on and off. It is a part of our philosophy. You may lose out a bit in the short term, but in the long term perspective, it is the right thing to do."

Thanks to the financial and corporate governance scams that have dominated headlines over the last few years, companies have woken up to the fact that just having a code of business conducts and a set of values is simply not enough. A direct impact has been a sharp increase in the number of companies now creating Chief Ethics Officer Positions, something that was somewhat of an oddity till a few years ago.

The ethics officer has been around in the US since the early 90s, but that was more to take advantage of a regulatory loophole which would ensure preferential treatment for those charged with whitecollar crimes if the company had an ethics officer.

To be sure, their role has since evolved after scandals like Enron and Arthur Anderson, but some skepticism remains. Anil Singhvi, chairman, Ican Investment Advisors rubbishes the idea. "It's ridiculous to appoint a person to watch over the character of the employees. This is

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something that has to come from the actions and behavior of the promoters and owners, and percolate down to the employees. Sadly, they often don't set the right example today," he says.

Dell, among the companies that have an ethics officer says the idea is to use the company's purpose and values as decision filters to guide behavior. Anju Shenoy, director-ethics and compliance, Dell India says, "We are committed to making ethics personal by ensuring each team member understands what is expected of them and providing them with the tools and resources to be successful."

And this seems to be the foremost reason why, even though ethics are an intrinsic part of a company's culture, they need constant reinforcement. Krish Shankar, executive director - HR, BhartiAirtel says. "Values are important as they help guide employees in how to behave in different situations. If it is erratic, they won't know how to act. Ethics help set a consistent sense of where the company is going."

Sure enough, there is some sort of consensus on the fact that people do need to be reminded how to differentiate between right and wrong. "We are facing an ethics deficit and the role of ethics in the workplace has never been as relevant as it is right now." says Dev Bajpai, executive director-legal and company secretary, Hindustan Unilever. The company has a strict code of business principles which shape how employees behave, both at work and outside.

Incidentally, these principles apply to all stakeholders including suppliers and distributors and Bajpai says that there have been instances when relationships were severed as a result of a breach in the code. Given the tumultuous environment companies operate in, long term sustainability of the business is emerging as a top concern.

As is the realization that being a principled organization is one way to counter it. "This is at the core of our belief - if we are not ethical, we cannot be sustainable. To survive, you need the trust of stakeholders and without ethics, that trust cannot be there," says Rajeev DUBEY, president (group HR & after market) & member, group executive board, Mahindra & Mahindra.

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GROUP PROJECT-BUSINESS ETHICS

Conclusion–To remain truly competitive, honestly adhering to world class quality is ultimate requirement. It is ultimate need of organization to foster an ethical culture to build a pathway of success. Our organizations values must lie at the foundation of four pillar structure as shown below.

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1) Leadership

Leadership style stimulates ethical practice. Leadership must provide the direction and follow an ethical approach by creating distinctive ethical vision, stimulating ethical learning and inducing risk taking ability in ethical way. A very high level of commitment is needed from the leadership of the organization.

2) Compliance structure

This requires a functional compliance structure that includes management business ethics organization chart and the work flow of managing business ethical issues. These also include processes which would generate, manage and stimulate ethical practices.

2) Communication and Training

Business ethics communication and training are two important pillars for the successful implementation of ethical culture. People should be trained with cultural trait that nurture and sustain ethics and help to remove barriers in ethical decision making. Communication and training would be such that it would enhance agility, help in seeing situation ethically and managing ethical risk.

4) Measurement and effectiveness

A good monitoring system is needed so that ethical concern can be checked for desired output by leadership of the organization.

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All this can lead to good quality final product and customer satisfaction.

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