Ask the Expert - Ethical Sourcing in Practice

The global economy and the associated advantages of sourcing from a global base of suppliers requires organisations to be prepared to address the ethical challenges that such approaches may present to their procurement and supply activity. Hence, the selection of the correct external suppliers is a vital contributor to overall organisational success. This session will develop the key processes that can be applied to the analysis of potential external suppliers and to ensure the development of ethically and socially responsible sourcing practices.

Ask the Expert Ethical Sourcing in Practice Q&A

Q 1 – Does the specification of the products/services contributes/ associated with procurement processes?

A – Specifying products and services is a procurement process. However, to be noted, drafting specifications usually falls under the responsibility of the requisitioner (a pharmacist for instance i.e. the entity that has the purchasing need). The requisitioner is part of the procurement process to draft specifications, approve the purchase’s budget etc.

The specification is then passed on to the procurement manager that purchases from suppliers. The Procurement manager may advise the requisitioner in drafting generic and appropriate specifications, but usually the requisitioner is responsible for the specifications in case of issues during delivery.

A large majority of organizations separate the requisition, procurement, and finance functions. It is good practice to separate the determining of the need (e.g. the requisition or equivalent, specification, budget, etc.), the undertaking of the procurement (e.g. sourcing and commitment), and the financial authorisation (e.g. authorising payment, invoicing).

Q 2 – Is post procurement appreciation by a supplier unacceptable? Unethical?

A – Yes and No.

Yes, if the “appreciation” is perceived to be too frequent and is received contrary to the laid down gifts and gratuities policy of your organization. For example some organizations may allow occasional casual lunches with the suppliers but when this becomes lavish or weekly, monthly, there is temptation of the procurement officials wanting to “pay back” or giving back the favour in terms of business assurance (Quid Pro quo). If this impairs your objectivity in decisions concerning the award of the business then it becomes unacceptable. This creates a perception of unethical behaviour. However, a meal included in a business meeting agenda, which precedes or immediately follows a business meeting may be acceptable. The value of the “appreciation” and “where” is it is being offered may also result to perception of unethical behaviour. Transparency is key. Let your colleagues and supervisor know about it.

Most organizations whether public or private have policies about how much is acceptable in terms of dollar value. Others only accept items of intrinsic value like diaries, pens, etc., for promotional purposes. Others do not accept gifts or gratuities at all regardless of value. We advise that you first consult with your organization policy or supplier code of conduct (if any) before accepting a gift or “appreciation”.

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