Supplier Partnership Case Study

CASE BACKGROUND PUMA AG (PUMA) is a German-based company that produces high-end sportswear. According to PUMA's financial report, in the year 2007, PUMA earned a profit of $510,944,031 excluding taxes. Although the company's headquarters is in Germany , its main production sites are in China and other developing countries. While the company can afford to invest millions of dollars in advertising, behind the scenes, workers who manufacture its products still earn the bare minimum. In the last three years, China Labor Watch (CLW) has been monitoring the conditions of PUMA's suppliers in China. During an investigation on Taiway Sports Ltd., a supplier that “has enjoyed an “A” ranking for years now” according to PUMA's 2005/2006 Sustainability Report, CLW has found deplorable conditions. Conveniently, on March 19th, after CLW notified PUMA about Taiway's conditions, PUMA said in a statement issued on April 2nd that Taiway is now only a “B+” factory and stated that many of CLW's findings on Taiway were either unfounded or largely exaggerated. In order to substantiate the accuracy of the report and emphasize the workers' poor conditions, CLW contacted Der Spiegel, a German media group, and arranged for them interviews with Taiway workers. After the interviews, Der Spiegel published articles on April 1 th and the 21st describing the conditions at Taiway. On May 5th , PUMA publicly responded to CLW, claiming that CLW has not sufficiently taken into account PUMA's efforts in improving the factory and stated once again that most of conditions described on CLW's report were unfounded. Between May and June, over the course of one month, CLW completed a report on Surpassing Shoe Co. Ltd., another PUMA supplier located only a few miles away from Taiway, after interviewing some of its current and former workers. Gravely concerned about PUMA's repeated accusation, prior to the release of the Surpassing report, they invited reporters from WirtschaftsWoche - The German