Reference no: EM131486488

"Consulting for Carnegie Foods. The Pet Food Division of Carnegie Foods operates the world’s second largest pet food cannery at Allentown, Pennsylvania. It ships to five regional distribution centers, which serve such customers as Wal-Mart (40% of its business), BJs, Target, Costco, and others. Despite inventory levels that are substantially higher than the industry average, the company has experienced difficulty maintaining the service levels its customers want. Wal-Mart, in particular, demands a high service level, and it usually gets what it wants due to its market dominance. Adroit Consulting has been engaged to advise the Pet Food Division on how to manage its supply chain to reduce inventory and improve service. One option that is being pushed internally is to install a two-tier system in which a holding warehouse is placed between the cannery and the distribution centers. Adroit must evaluate this proposal as part of its recommendations. In the meantime, Carnegie Foods has authorized its chief information officer (CIO) to acquire Advanced Planning and Scheduling (APS) software to manage its supply chain. Due to limited resources, the company will not implement APS and Adroit’s recommendations simultaneously, and Adroit must advise which to do first. The case raises at least two ethical issues:

Should Adroit advise Carnegie to use APS, perhaps at the cost of losing a customer? Supply chain systems like APS are well developed; it is very possible that once Carnegie implements APS, it will have no further need for Adroit’s supply chain recommendations.

Is it ethical to provide Wal-Mart better service than other clients simply because Wal-Mart has the clout to demand it—even though Wal-Mart is paying the same price as the others, or even less?"