Procurement professionals: costs out! Corruption in? - What are our responsibilities?

Tod Cooper

Tod Cooper

Joanne Toon

Tod Cooper is the New Zealand Chair for The Chartered Institute of Procurement and Supply (CIPS). CIPS will be a regular contributor to Transparency Times. This article is co-authored by Tod and Wellington Vice Chair Joanne Toon. It discusses the broad range of issues a procurement professional needs to consider in operating in an ethical manner.

As a procurement professional, regardless of your key performance indicators (KPI’s), are you often measured almost exclusively on your contribution to constrain costs?  How much does your CEO think about the ethical, social or environmental impacts when they are reviewing their year-end profit and loss (P&L) results? Based on our experience, the results of this question are likely to be disturbing to those of us knowledgeable about the cost of bribing, fraud and corruption!

In the demand for better financial results, could we inadvertently be contributing to corruption and modern slavery? Have we considered the downstream effects on our suppliers P&Ls and flow on consequences on theirs?  Think of the butterfly effect theory.

Do we consider the wider cost to society of our actions (or inactions)? Denying pay-rises for the overnight cleaner or security guard and the impact on them with the current affordable housing crisis; driving suppliers to use of cheap and harmful chemicals, or avoiding disposal processes with detrimental environment impacts, a construction company to circumvent safety and building code practices with deadly consequences.

Sadly, there is no shortage of articles, both within New Zealand and internationally, around the impact that issues in the supply chain have, including slavery and employment concerns, unethical sourcing and treatment of suppliers, and environmental impacts.

Ask yourself this: Should it be the central government’s role alone to dictate the standards that we procure under? Should it not be down to individuals (public and private) to also drive this change in behaviour?

A UK friend of one of the authors wrote an article about the Sainsbury's (UK supermarket) decision to drop Fairtrade for its own in-house standards, and the potential resulting impact on the communities at the far end of the supply chain.

As procurement specialists, we are often in a better position than the individual consumer in the shops to influence change throughout the supply chain. As an organisation, this influence is amplified if we have a significant spend with our supplier. We can increase this influence as a profession if we put forward a concerted effort, across both public and private sectors, to make sustainability a given – our chance to make a difference to both this and future generations.

So, we encourage those involved in procurement, whether customers, contractors or procurement professionals, to have the tough conversations, regardless of where we sit in the procurement profession. The ISO Sustainable Procurement standards were released a couple of months ago. Use these as a good starting point.

We will pen some spin off articles from this over the coming months, and we welcome your thoughts and feedback.  Please send these to tod.cooper@tinz.org.nz .

Jo and Tod

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