Ethics in Procurement Management
Ethics in procurement management is important, particularly because of your relationship with suppliers and vendors, typically to finish a job or a project. There can be many ethical issues in procurement management that arise, but one of them is always dealing with your vendors and suppliers fairly and honestly, and never giving one preference over the other or treating them in a biased fashion.
Avoiding bias can often be hard to do when you want to keep costs low and you’re running on a tight schedule. Read on to learn more about ethics in procurement management and how to handle specific situations that may come up.
Fundamentals of Ethics and the Pillars of Procurement
In general, there are six principles of ethics that hold true, no matter what field you work in, from sales and procurement to the healthcare field. These six principles include non-maleficence, justice, truth-telling, promise-keeping, beneficence, and autonomy. In healthcare specifically, justice is often split up into two types, for seven layers of ethics.
There are also five pillars of procurement, two of which ethics play an integral part in. These are:
- Accountability and reporting
- Value for money
- Open and effective competition
- Ethics and fair dealing
While it’s obvious that ethics in procurement management are prevalent in two of these five pillars, it is often important that those who work in procurement act ethically throughout. What are some issues that may come up that would be unethical?
Unethical Situations in Procurement
If you’re trying to work on great procurement supplier relationship management, you may want to pull out all the stops to ensure that the relationship stays positive. However, situations may develop that can be uncomfortable and even unethical. Some examples of what you shouldn’t do when it comes to ethics in procurement management include:
- Accepting gifts from a supplier. Even if it’s around the holidays, you shouldn’t accept gifts from a supplier. It should always be a completely professional relationship.
- Having a conflict of interest. If you or a close family member or friend has something to gain from using that particular supplier, then that is a conflict of interest.
- Sharing confidential information. Never share information with a supplier that they should not have access to.
- Treating suppliers differently. Your suppliers should always be treated the same.
To try to ensure that you avoid ethical problems, you should consider implementing some measures that avoid the above mistakes.
Working Toward Standards and Ethics in Procurement Management
As the procurement manager, you may be able to purchase and install procurement software that can help you organize tasks more efficiently so that the bidding process, as well as other procurement processes, are more streamlined, transparent, and fair.
Keeping tasks organized can protect against costly mistakes. Another action you can take is to have an official ethics policy at the company that all employees can understand and follow. Another idea is to have an official ethics training. While this may be a little costly, it’s well worth it to have everyone on the same page, including upper-level management.
Another item to consider is asking your suppliers to agree to your ethics policy as part of your supplier on-boarding process. You can use an eSourcing solution like EC Sourcing to automate and streamline that process.
Other actions that can help include a process with checks and balances in place so that no one gets wrongly accused, but yet everyone falls under the same process should there be a question about an error in judgment. Some companies also employ semi-annual or annual audits to ensure everything is running like a well-oiled machine when it comes to ethics in procurement management.
If you want to learn more about how procurement software can help you with ethics in procurement management or you’d like to book a demo, contact us at EC Sourcing Group at 973-936-9672.