10.2_1

Traditional Ethics

Negotiation Practices

Supplier Relations

Ethics and Standards of Conduct“How important is ethical conduct?”

Forces to ConsiderForces to Consider

Company Guidelines

Industry Factors

Associations

Personal Beliefs

EthicsEthics

Standards of ConductStandards of Conduct

ProfessionalismProfessionalism

“A strong foundation”

10.2_2

Procurement Ethics“Guidelines and programs”

Guidelines Favoritism Gifts, free services, discounts Trips, entertainment, travel Kickbacks Lunches Dinners Confidential information Conflicts of interest Laws and Regulations

Program Elements Personal obligation Perception is important Available information Top management support Institutionalized thinking

10.2_3

Professional Conduct Profile“Can you predict what will happen?”

Honest (60-70)% Open and Fair BiddingProfessional Business Merits

Best ValueService/Customer DrivenCommunication/AccessibleFeedbackOn Time ProposalsQuality ProductsPartnershipsLong Term/Good Investment

Impressionable (30-40)% Young/Entry LevelLearning ModeDeveloping Career PathsEducatedAmbitiousGudelines/PoliciesSuccess Driven

Dishonest (5-10)% Gifts, EntertainmentLunches, Tickets, DinnersSide DealsShort Term/High Risk

10.2_4

Corporate Ethics Headlines“Failure in the boardroom”

10.2_5

The Washington Response“Sarbanes-Oxley Act of 2002”

Establishes Public Accounting Oversight Board Audit Records and Work Papers Retention Independence of FASB Bans Providing Both audit Services and

Consulting Services to Same Client New Corporate Responsibilities Criminal Provisions for Obstruction of Justice or

Destruction or Records Disclosure Requirements Control of Securities-related Professionals

10.2_6

Ethics in the Negotiation Process“Deception, Tactics and People”

Negotiation Evolution– Power tactics– Side-by-side problem solving– Smart conversations

Negotiation Realities– The integrity trait– Win/lose and win/win– The “FTPWTWE” story

Questions– Where do I draw the line?– Is reputation important?

10.2_7

Ethics in the Negotiation Process“Deception, Tactics and People”

Deception Tactics (what about the truth?)– Misrepresentation of one’s position to another– Bluffing– Falsification– Deception– Selective disclosure or misrepresentation

People– Separate the people from the problem– No emotion, no revenge– Business decisions on the merits

10.2_8

Ethical Supply Chain Management ConductInstitute for Supply Management (ISM) Principles

– Loyalty to your organization– Justice to those with whom you deal– Faith in your profession

Standards of Conduct– Perceived impropriety– Responsibilities to the employer– Conflict of interest– Issues of influence– Confidential and proprietary information– Supplier relationship– Reciprocity– Applicable laws– Small, disadvantaged and minority-owned business– Professional competence– National and international conduct– Responsibilities to the profession

10.2_9

Ethical Supply Chain Management ConductInstitute for Supply Management (ISM)

Standards

1. Avoid the intent and appearance of unethical or compromising practice in relationships, actions and communications

2. Demonstrate loyalty to the employer by diligently following the lawful instructions of the employer, using reasonable care and granted authority

3. Avoid any personal business or professional activity that would create a conflict between personal interests and the interests of the employer

4. Avoid soliciting or accepting money, loans, credits or preferential discounts and the acceptance of gifts, entertainment, favors or services from present or potential suppliers that might influence, or appear to influence, supply management decisions

5. Handle confidential or proprietary information with due care and proper consideration of ethical and legal ramifications and governmental regulations

10.2_10

Ethical Supply Chain Management ConductInstitute for Supply Management (ISM)

Standards6. Promote positive supplier relationships through courtesy and

impartiality

7. Avoid improper reciprocal agreements

8. Know and obey the letter and spirits of laws applicable to supply management

9. Encourage support for small, disadvantaged and minority-owned businesses

10. Acquire and maintain professional competence

11. Conduct supply management activities in accordance with national and international laws, customs and practices, your organization’s policies and these ethical principles and standards of conduct

12. Enhance the stature of the supply management profession

10.2_11

Successful Company Programs“Company-Wide Involvement”

The Brookings Institute (May 2002)– Code of conduct– Executive leadership and ownership– On going training and communication– Reporting mechanism (a safe haven)– System for internal investigation and corrective action– Self-evaluation, auditing and internal control– Individual employee responsibility and accountability– Open company disclosure

10.2_12

Successful Company Programs“Supply Management Responsibility”

In-House Ethical Workshops

– Written ethical guidelines – Steering committee– Cross-functional brainstorming– ISM published standards and

guidelines– Top management support– On-going training– Institutionalized ethical culture

10.2_13

The Business Ethics Challenge“Restoring Trust and Professionalism”

Reflections– You are involved– Values are important– Control your own reputation– Take the high road– Treat people with respect– Always tell the truth– What about your supplier’s ethics?– Ethical conduct is professional conduct