Purchasing Ethics: 7 Sensitive Situations

The procurement group can sometimes find itself in the uncomfortable situation of having recommended a supplier that has left internal customers unhappy. Even when cross-functional teams are sued to ensure buy-in to decisions, the end result can sometimes be a questioning of the ethics of the procurement group.

There are a few areas where procurement professionals can unintentionally add to this negative perception.

1. A procurement team member has accepted a gift from the winning supplier.  It could be something as small as a pen.
2. A procurement team member mixes business and pleasure with a supplier, such as discussing business over lunch.
3. A procurement tram member has a personal or financial relationship with a supplier or an employee of the supplier.
4. A procurement team member owns a supplier's stock.
5. A procurement team member provided certain information to one supplier that was not provided to other suppliers in a competitive bidding environment.
6. The procurement team did not provide transparency for a supplier selection, including failing to internally share selection criteria, proposal details, and the rationale for the decision.
7. The supplier selection criteria used was different than the criteria noted in the Request for Proposals.

Regardless of how low in value, procurement professionals should not accept gifts of any kind from suppliers. This is not because it automatically indicates impropriety, but because of how such an action might be construed. This includes free pens and lunches.

Personal or financial entanglements with suppliers do potentially pose an ethical dilemma. If the connection is substantial enough, the procurement team member may need to recuse him or herself from the decision. Care should be taken to ensure that there is no appearance of impropriety.

Lack of transparency to all suppliers in a competitive bidding environment is highly unethical, and great pains should be taken to avoid doing this,  even unintentionally. Meticulous records of all communications made with suppliers in a bidding precess must be kept.  Clarification made to one supplier in response to a query must be provided to all suppliers.

Lack of transparency to internal customers of the supplier selection process is a poor but all too common practice. It shows disrespect to the organization's employees, and it builds ill-will. The importance of effective horizontal communication cannot be over-emphasized.

Look out for the existence of any of circumstances in your organization and either eliminate them, make it clear that these practices are not violating ethical standards.

Adapted from: Purchasing Ethics: 7 Sensitive Situations http://bit.ly/c5HFhq