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.
