How can you keep your business procurement ethical
Why are ethics important for procurement professionals?
Ethics refers to the common principles associated with moral duty and behaviours. In procurement, procurement ethics refers to the recognised social principles that involve fairness and seeks to eliminate malpractice throughout the organisation. It’s important to recognise that being ethical isn’t just within the business community but consumers can also make ethical choices in their buying decisions. Procurement ethics is about treating suppliers fairly and avoiding preferential treatment. More so, procurement is often overseeing large spends of money, so it is expected to behave ethically in how it spends that money.
There are three general rules of procurement ethical behaviour:
- Buyers must act in the interests of their organisation and not personal gain
- Buyers must act ethically towards suppliers by treating them with respect
- Buyers must uphold ethical standard which are often formalised in a code of conduct
What measures can you take to keep procurement ethical?
It’s important to establish consistent behaviour across your organisation. This creates an atmosphere that will actively support the reporting of unethical behaviour. There are some measures that you can implement to keep your procurement ethical which are highlighted below.
- Ethics policy: Every organisation should have an ethical policy, making clear what the organisation seems as ethical and unethical. This ensures there is no dispute.
- Ethics training: Training your employees to be aware of ethical practices is important. It helps employees understand what could interfere in their day-to-day jobs, as well as them taking a test to show they have understood.
- Audits: Frequent audits can help deter unethical behaviour.
- Zero tolerance: Any breaches of basic standards such as corruption, fraud, bribery, and modern slavery should be addressed immediately. Take the time to investigate the issue to prevent it from occurring again in the supply chain. These breaches are illegal and causes enormous reputational damage.
- Benchmarking: Introduce a benchmarking measure which outlines ethical performance against competitors. This gives a drive to improve their ethical behaviours.
- Reward good ethical practice: Reward your suppliers when they are implementing good ethical practice. You can give them ‘preferred supplier’ status or a similar status which will direct orders towards better-performing suppliers.
What are examples of unethical behaviours?
There has been a huge interest in ethical supply chain issues recently. People are questioning company records and business practices and society now has developed high expectations of corporate social responsibility and ethical manufacturing practices. Here are just a few examples of unethical behaviours.
- Releasing pollutants into the water supply
- Accepting supplier favours and gifts
- Conflict of interest
- Confidentiality of information
- Fair and unbiased treatment
Recent scandals have impacted global organisations brands and reputations. Investigations into some retailers’ supply chains found human rights abuse. Organisations are responsible for the conditions their goods are produced in, so they must take responsibility to understand how they operate and uphold high standards.
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