Executive Briefings

The Ethical Dilemmas That Procurement Officers Face

In response to the heightened regulatory environment, many organizations have initiated reviews of their conflict-of-interest policies and ethical codes of behavior in supply management. The need to promote ethical behavior is present in many business areas, but supply management appears to have a number of very unique elements, due to the high degree of interaction between supply management executives and external suppliers, as well as the amount of money spent.
While there are several forms of unethical behavior in supply management (including personal buying and accepting supplier favors), the most commonly cited is conflict of interest. In general, when an individual is hired by an organization as an employee, officer or member of the board of directors, he or she enters into a fiduciary relationship with the organization. Legally, the fiduciary duties of employees, officers and directors require them to place the interests of the organization above their own personal interests, to fully disclose potential conflicts of interest and to abstain from activities that pose, or appear to pose, a conflict of interest. The obligations imposed on employees attributable to their fiduciary relationship with their employer are not specific, and vary depending on the facts of the situation.
Source Inside Supply Management, http://www.ism.ws

In response to the heightened regulatory environment, many organizations have initiated reviews of their conflict-of-interest policies and ethical codes of behavior in supply management. The need to promote ethical behavior is present in many business areas, but supply management appears to have a number of very unique elements, due to the high degree of interaction between supply management executives and external suppliers, as well as the amount of money spent.
While there are several forms of unethical behavior in supply management (including personal buying and accepting supplier favors), the most commonly cited is conflict of interest. In general, when an individual is hired by an organization as an employee, officer or member of the board of directors, he or she enters into a fiduciary relationship with the organization. Legally, the fiduciary duties of employees, officers and directors require them to place the interests of the organization above their own personal interests, to fully disclose potential conflicts of interest and to abstain from activities that pose, or appear to pose, a conflict of interest. The obligations imposed on employees attributable to their fiduciary relationship with their employer are not specific, and vary depending on the facts of the situation.
Source Inside Supply Management, http://www.ism.ws