Procurement Ethics

I’ll admit that I’m a little behind on some of my readings, but I will say that after reading the recent article “Final Thoughts: Ethics and Procurement” from the Apr/May issues of Supply and Demand Chain Executive, I thought it was time for another (short) post on ethics. Although this isn’t Iasta’s first post, see “Online Reverse Auctions and the Ethics surrounding them” Part I and Part II by Agatha Degasperi.

According to the article, “as you are reading this, someone in your corporation is treading the ethical line because of expediency, undue pressure or just because they don’t know better” and that “it’s easy to make the ‘right call’ when the facts are clear and the choices are unambiguous” but that in reality “many situations are clouded with uncertainty, incomplete information, multiple points of view, contradictory responsibilities and pressure”.

It then goes on to say that “ethics are not bottom-up in the enterprise. They are determined by the actions from the top leadership on down. If bending the rules results in accolades because of increased short-term revenue or other perceived benefit, many in the business will rightly believe that ethics don’t matter, performance does — that is, of course, until the story appears on the front page of the paper, which is when the organizational navel-gazing commences.”

And, furthermore that “procurement is a hotbed of ethical challenges because the decisions and choices made in procurement affect the entire corporation.”

What it all comes down to is that a procurement team should have strong ethical leadership, starting at the CPO, to insure that it never waivers in its mission to be the most ethical part of the organization. Furthermore, a procurement team needs to have processes in place that ensure fair and objective decisions are made with respect to every buy. It needs to protect itself from rogue spending, reciprocal awards, conflicts of interest, and pressure from on-high to extract short term savings. It needs to follow best practices of full disclosure before, during, and after every major award, and force its suppliers to do the same. It needs to be the model organization.

Still quiet here.sas

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