MGM101H5 Lecture 10: Operations and Supply Chain Management
University of Toronto Mississauga
MGM LECTURE 10 – Operations and Supply Chain Management
Article: Indian textile firm and Walmart being sued for fake Egyptian cotton linen claims
Operation focuses on how we do things
Based on the readings, what are the conditions that led to this problem?
o There is a shortage of Egyptian cotton and as a result driven up the price of Egyptian
o Therefore, companies are having a hard tie to look for Egyptian cotton and they are
buying it at a high price
o Promoted it as Egyptian cotton, didn’t come out and say it was partly Egyptian cotton
and thus put themselves at risk
o Reduced their cost blending for fake/cheaper materials
o The role of external certification: the validity of that certification was not very strong
What could companies do to avoid this situation? What steps could they take to protect
themselves and their employees?
o Make the product yourselves (outsourcing)
o Do some random testing to have quality control in place (what you get is what you think
o Doing spot checks and sit down with employees
o Conduct audits
o Think about what suppliers you’re gonna buy from
o Educate yourself about the business and understand the industry you’re buying from
How much responsibility should a firm take for supplier’s activities?