Operations Management And Ethics

Www.CSUS.edu defines operations management as "the management of systems or processes that create goods and/or provide services" (www.csus.edu/indiv/f/freemand/Class%20Notes?Ch%201%key%20terms.htm). Some will argue that this is the most important part of the fundamental purpose of business, to make money. Operations management is the largest part of the foundation (other than the product or service) of a business. Without functional operations management in place, a company will have no true direction or control.

Within an operational management system, doing the "right thing" is key in establishing and maintaining business. Ethics is defined as "a system of moral principles, rules and standards of conduct" (www.bthurston.com/Real_Estate_Dictonary/page_644889.html). Many times management is faced with making tough ethical decisions. About three months ago my department was faced with making a major ethical decision about a large part of our operation.

Per our customer's request, we began a process of shipping damaged phones (that were sent in by the customer) back to the customers, if they are not insured or under warranty. A letter, listing the damage type and the replacement price of the phone model was also included. All of those phones are first received in to our inventory tracking system by a different department, before my department handles them.

After the first few days of our new process, a reoccurring problem was discovered. Some of the phone models that we were preparing to ship back did not match the phone model that our system shows the customer originally purchased. If customers received these phones, complaints would increase and potentially sales would decrease (through negative word-of-mouth advertising). The number of phones that fell into this category was only a small fraction of the total, but enough to affect a significant amount of customers. We were then faced with