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Companies should provide their procurement teams with ethical codes of
practice that they can work by, the Institute of Business Ethics (IBE)
argues in a new paper on supply chain management.
The IBE endorses current efforts to ensure that suppliers comply with core non-financial standards, but argues that those efforts may be undone by procurement officers who lack clear ethical guidance.
‘There are two sides to this issue. Current literature always looks at the standards for suppliers. But the ethical conduct of procurement staff brings another important dimension to the supplier relationship,’ said Nicole Dando, project manager at IBE. The IBE says training and guidance for procurement staff should cover key ‘hotspots’ that can undermine ethical supply chain management efforts, such as the timely payment of bills, the registration of gifts and hospitality, and safeguards against conflicts of interest.
A responsible procurement code should include commitments not to use a company’s purchasing power unscrupulously, to keep information on a supplier confidential and never to solicit gifts or bribes.
Companies should also provide resources for procurement officers to report ethics-related problems and to seek help, the IBE advises. Management might consider integrating ethical practice into procurement staff appraisals.
A yardstick on what constitutes an ethical or unethical procurement practice, according to Dando, is whether the company would be comfortable reading about it in the press.
Ensuring external credibility, the IBE paper suggests, depends in part on a company’s ability to meet the expectations contained within its procurement policy. To this end, the IBE recommends procurement managers set up supplier engagement forums and send questionnaires to suppliers during tendering and contract renewal. It also says companies should avoid becoming dependent on a few suppliers.
The IBE plans further research on how many companies have an ethical code written specifically for procurement teams. Tesco and Marks & Spencer are among those that do.
The IBE endorses current efforts to ensure that suppliers comply with core non-financial standards, but argues that those efforts may be undone by procurement officers who lack clear ethical guidance.
‘There are two sides to this issue. Current literature always looks at the standards for suppliers. But the ethical conduct of procurement staff brings another important dimension to the supplier relationship,’ said Nicole Dando, project manager at IBE. The IBE says training and guidance for procurement staff should cover key ‘hotspots’ that can undermine ethical supply chain management efforts, such as the timely payment of bills, the registration of gifts and hospitality, and safeguards against conflicts of interest.
A responsible procurement code should include commitments not to use a company’s purchasing power unscrupulously, to keep information on a supplier confidential and never to solicit gifts or bribes.
Companies should also provide resources for procurement officers to report ethics-related problems and to seek help, the IBE advises. Management might consider integrating ethical practice into procurement staff appraisals.
A yardstick on what constitutes an ethical or unethical procurement practice, according to Dando, is whether the company would be comfortable reading about it in the press.
Ensuring external credibility, the IBE paper suggests, depends in part on a company’s ability to meet the expectations contained within its procurement policy. To this end, the IBE recommends procurement managers set up supplier engagement forums and send questionnaires to suppliers during tendering and contract renewal. It also says companies should avoid becoming dependent on a few suppliers.
The IBE plans further research on how many companies have an ethical code written specifically for procurement teams. Tesco and Marks & Spencer are among those that do.
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