…to understand why New Right of Purchasing #19 is so important.
Hello again! Before I begin, let me take a step back in case you haven’t been following along.
Back in March, I decided to write a series of articles designed to update and replace the old, traditional “5 Rights of Purchasing.” Since the days when the original “5 Rights” became a household name, the scope of purchasing has expanded dramatically, so I developed the “25 New Rights of Purchasing” and wrote a series of articles, including this week’s “The 25 New Rights of Purchasing, Part IV.”
Right #19 from this week’s article is “Right Reputation” and, in the article, I wrote that “suppliers with bad reputations negatively affect public perception of your organization.” Whether you’re looking at recent events, like the fatal collapse of a Bangladesh garment factory that manufactured clothing destined for Walmart, or events in the distant past, like the federal case against the Arthur Andersen consulting firm for shredding evidence of an audit tied to the Enron accounting fraud scandal of 2001, it is clear that the public will judge organizations by the suppliers they choose when such suppliers became negative household names.
Thus, an increasing amount of responsibility is placed on procurement departments to (1) ensure that suppliers with bad reputations are avoided in the sourcing process, and (2) ensure that suppliers act properly so that no reputation-damaging events occur in the future. Supplier reputation needs to be considered when selecting and monitoring the performance of suppliers and, as such, Right #19 has an inexorable place among the 25 New Rights.