Telecoms slump puts purchasers' integrity to the test

30 June 2002
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01 July 2002 | Geraint John

The severe downturn in the telecommunications industry is testing buyers' ethical integrity to the limit, according to a leading purchaser in the sector.

Telecoms equipment suppliers are so desperate for cash that they are willing to offer huge price discounts in an effort to win business when their bid is rejected, said Ninian Wilson, deputy senior vice-president, global procurement, at Cable & Wireless.

This puts buyers in the awkward position of having to decide whether to stick to their original decision or renege and risk losing trust among the supplier community.

"The economic situation is creating some interesting ethical issues for our staff," Wilson told delegates at the CIPS eSourcing and Procurement Show in London last week. "Unsuccessful bidders are phoning up wanting to know the winning price and saying they will beat it by up to 50 per cent.

"It's tempting both for us in procurement and for the company. But I think if you do that once, it ruins your reputation in the medium to long term."

Wilson admitted that the telecoms slump was prompting purchasing staff to leave Cable & Wireless for less hard hit blue chips such as GlaxoSmithKline and Diageo. A two-year pay freeze added to the difficulty in retaining people.

However, he noted that a smaller proportion of jobs in the procurement team had been lost compared with other business functions at the company. The adverse climate gave purchasing a higher profile and made its contribution all the more essential, he said.

SMjul2002

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