Assignment No.2 - Tinagsa, Luisito JR., A

Name: Luisito A. Tinagsa, Jr.
____________ Date: September 25, 2020
Mini Case
On-time Delivery
Sanjay works for the maker of a high-end battery that is favored by many electronics
manufacturers. Two weeks ago one of their high volume- but also high maintenance – clients
placed a larger order with Sanjay for these batteries. Sanjay promised four-week delivery, as that
is what he was told by manufacturing. The client called today, saying he just wanted to confirm
the batteries would be delivered on time, as he would have to shut down his assembly line if they
were late. Sanjay knows, due to shortages elsewhere in the supply chain, that there is a 50/50
chance the batteries will now be late. He is sure the client would go ballistic if he knew, cancelling
the order, even though Sanjay still hopes the deadline will be met. He is thinking of just saying
“everything is on track” until he has more specific information that the shipment will be late.
(Case prepared by Kirk O. Hanson, Markkula Center for Applied Ethics, Santa Clara University,
USA)
Answer the question below:
On a Business Ethics perspective, Is that the right thing to do? If not, what should Sanjay
do? Discuss your point of view.
Answer:
Saying “everything is on track” would not be a good thing to do especially when there’s a 50%
success rate of providing the four-week delivery schedule on time. Saying also to the client that
the manufacturing process has been compromised due to the unfavorable circumstances that
affected the supply chain would not be a good way also, as this would actually create a bad
impression to the client that the company is incapable of delivering the goods or services.
Making the client believe that there is no problem at all is the last thing Sanjay would do. Instead,
Sanjay should inform the client of the progress of the manufacturing process and that they are
doing their best to meet the deadline, as promised. Considering the time period that has already
lapsed which is 2 weeks from the date of placing the large order, the manufacturing firm may have
already completed 50% of the total units that needed to be produced.
Undeniably, Sanjay and the firm he’s been working for have already incurred costs in producing
the ordered batteries - which is also hard for them to bear the losses, in the event that the client
would turn out to be cancelling the order, especially that the production runs require high level
maintenance. This means that the overhead costs would be hard to recover.
Most of the companies nowadays try to be more transparent and be open to communication to
their clients in order for them to get track and be more informed on the status of their order.
Through this, clients will understand the process their order is going through. That way, the first
thing they hear from you isn’t that there’s a problem. They know the order was received, and
prepared. Clients or customers nowadays appreciate honesty and transparency.
In the case of Sanjay, he may inform the client that they are halfway through the completion of
the order and that they are capable of delivering the 50% total ordered units as of the moment. In
this way, Sanjay would not make it look like there’s no progress in the manufacturing process,
and they would still have the time to look for means in order to comply with the remaining 50% of
the total order at the same time.
Sanjay and the rest of the management may also adapt means to cover the shortages of supply,
or if not, maximize their current supplies and prioritizing the orders that needed to be completed
first. For example, Sanjay and the manufacturing heads should identify what are the orders from
the clients that needed to be completed first - especially the larger order that is due within two
weeks. Then, prioritize the completion of those orders by funneling the raw materials to those
orders. In this way, they would be able to meet the orders in due time.
Another alternative is to look for additional materials from other suppliers. Assuming that they only
order materials from a supplier or two, it would be hard for them to cope up with the high demand
of raw materials if they would only stick around from their current suppliers. Through this, the
manufacturing process will still be able to operate and complete the orders.
In addition, in the event that there is no current sufficient supplies inside the production
department to funnel to the prioritized orders, and no other suppliers that can provide additional
materials needed to complete the batteries, they can outsource batteries from other
manufacturing firms and deliver the same to the client. All they have to do is to ensure quality of
the products outsourced that they would conform to quality standards. Although incremental costs
may be involved in this matter, this is nothing compared to the cancellation of order and bearing
all the losses of the factory maintenance, and ultimately, damaged company reputation.

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Name: Luisito A. Tinagsa, Jr.

____________ Date: September 25, 2020

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