Analyst Insight: An often-overlooked aspect of managing a successful supply chain is addressing corruption. Instances of corruption can lead to legal and reputational issues, as well as delays that are otherwise fully avoidable.
Part of developing and maintaining a sustainable supply chain is ensuring that a proper governance structure is in place, to mitigate the risk associated with corruption and bribery. Following are some steps a company can take to help its supply chain succeed.
Document policies with management buy-in. Company-wide guidelines should be put in place that help bring awareness to the importance of anti-corruption, anti-bribery, governance and other specific responsibilities of those involved. Processes should be implemented to highlight these guidelines:
Watch out for red flags. Awareness of events that might signal illegal or unethical conduct is the first line of defense against corruption. Having employees understand these red flags will help identify potential risk. The next step is making sure there are processes in place for further vetting. Some key red flags for anti-corruption are:
Implement proper controls and audits. These are a key part of a successful anti-corruption governance program. Implement controls by establishing a code of conduct for suppliers and third parties that will include signing a statement certifying they’re on board with your expectations regarding anti-bribery, anti-corruption, conflicts of interest, gifts, kickbacks and the like. This will also require them to state that they agree to maintain the highest ethical standards and comply with all applicable laws.
Audits will include regular reviews of transactions and processes to ensure that corporate policy and legal regulations are being followed. Controls should be put in place to help facilitate the process. Audits to establish include:
Anti-corruption controls will help your company keep its good name and good reputation. It’s key to realize that not only employees can put you at risk, but your partners, suppliers and other third parties can as well, and they usually have less oversight. A documented process, a thorough understanding of potential red flags, and an auditing program will go a long way toward mitigating risk and increasing the success of your supply chain.
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