Ethical Aspects in Purchasing & Supply Management

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Purchasing and supply management deals with storage, buying and monitoring of goods and services. Like all areas of business, ethics in purchasing and supply management is critically important as it can affect a company's bottom line. Organizations that are aware of the needs of their external environments, including customers, suppliers, employees and communities, and those that perform in an ethical and socially responsible manner can exploit a public relations advantage that might increase company profits..

Use Power Appropriately

Power is a vital component of supply relationships. It is fundamental that purchasing and supply management professionals know ways to use the purchasing power of their companies in the most appropriate manner. Undue influence and abuse of power, as well as acting unprofessionally, will not result in long-term value for money. It is also imperative that purchasing and supply management professionals adhere to all applicable laws governing this area.

Do Not Indulge in Corruption

Purchasing and supply management professionals should abstain from any form of corrupt activity. If facing an ethical dilemma, supply management professionals have an obligation to alert senior management. In most countries, bribery is an offense. It is the responsibility of the purchasing and supply management professional to determine what is ethical and unethical behavior between suppliers and colleagues. Though the information flow between these two parties should be transparent, it is the role of the purchasing and supply management professional to educate colleagues about unethical relationships with suppliers.

Promote Social Responsibility and Sustainability

Supply and purchasing professionals should drive sustainability and social responsibility when dealing with suppliers and other individuals in daily business activities. Associations such as the Institute of Supply Management aim to encourage supply professionals to have supplier agreements that contain more sustainable language. ISM also attempts to make more supply professionals aware of sustainability and social responsibility issues by providing references, tools and best practices to develop proactive and socially responsible programs. For instance, the ISM provides information that helps companies avoid dealing with companies that use sweatshops, child labor and other unethical forms of business practice.

Act Ethically at all Times

Carry out all business practices in an ethical manner by making sure business policies conform to the highest ethical standards. For example, Philips' Supply Management Code of Ethics suggests refraining from using confidential information for unethical purposes and maintaining integrity of records --"including documenting obtained discounts in a proper form." Philips also supports communicating ethical expectations to those it does business with. Companies that follow unethical policies risk potential legal liability and a firestorm of bad publicity.


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