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5 Components of Ethical Procurement

PurchTips - Edition # 211

By Charles Dominick, SPSM


What Are You Doing To Keep Procurement Ethical?

It would be great the front pages of newspapers featured the procurement profession for the fine work that is done within it. Sadly, most news coverage of procurement comes when something unethical has happened.

You don't want your organization to be covered for a procurement ethics lapse. So, how do you ensure that your organization's procurement ethics are upheld? It starts with having these five components in place:

  1. An ethics policy. An ethics dispute should never be the result of a difference of opinion between the procurement department and a company employee. Every organization should have a written policy making it clear what top management considers ethical and what it considers unethical. If you don't have an ethics policy, don't wait for an ethics dispute to arise to realize that you need one!
  2. Ethics training. The great part about having an ethics policy is that the rules are in tangible, indisputable form. The unfortunate part is that no one reads ethics policies! Supplement an ethics policy with procurement ethics training for anyone who is involved with the purchase of products or services and/or who meets with suppliers.
  3. An ethics ombudsman. Some organizations appoint an ethics ombudsman - a person in the organization with whom an employee can confidentially communicate any real or perceived ethical violations. Because it is difficult to confront internal customers who may be more "politically powerful," having an ethics ombudsman can make procurement employees more comfortable in revealing behaviors of questionable ethics.
  4. A process with checks and balances. Every major procurement should require management review to confirm that all guidelines were followed and that no ethical violations have occurred or will occur.
  5. Audits. Periodically, audits should be performed to verify that all procurement activities were conducted ethically and in accordance with procedures. Audits also serve as a deterrent to future unethical behavior.

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