Why Ethical Procurement Matters Podcast

I talk to Chukwudi R. Uche, a Procurement and Supply Management Expert, who tells us more about why ethical procurement is important and the benefits it can bring to your organisation.

Listen to the podcast or if you would prefer to review the transcript below.

Mo
Welcome to Health Procurement Africa and the knowledge hub. Our mission is to explain how procurement and supply can be harnessed to help millions of Africans have access to the best care and treatment available. Our insight and advice can help your business thrive by connecting with people, products and services you need on your procurement journey. Today, I'm delighted to be joined by Chukwudi, who is an expert in procurement and supply and will be sharing his insights and experiences with us. We're talking about why ethical procurement matters with the aim of finding out what makes procurement ethical, and whether you can always put ethics first while being focused on your company's bottom line. Now, we hear a lot about ethics and business these days, companies are under pressure to do well, but also to do the right thing. I want to achieve both. How can procurement help me achieve these goals?

Chukwudi
Generally procurement and supply is about ensuring transparency and accountability in business. One thing that is very important is that there is need to have a set of rules that should apply to everyone. And making sure that things are done in accordance with set rules and standards. And also ensuring that the right conducts and practices are in place. And when I'm talking about conducts now, right practices, it relates to the ethical issue we're talking about.

Mo
And how far should this ethics approach go in the area of supply and procurement?

Chukwudi
Ethics and procurement and supply I can say is broad and it covers a wide range of issues. And when you look at it from the supplier, for instance, you can look at issues around making sure that they operate in accordance with procedures that will help mitigate against their corrupt practices and issues around organizations adhering to fair trade, ethical trading, ethical sourcing, corporate social responsibilities, code of conduct accountability is very important. And from my experience, because this is very important to us, we always make sure that we include documents we call our "ethical code of conduct" that the suppliers should abide to. So that's the assignment for us, to make sure that the areas that are very important to us are not played with by such suppliers.

Mo
So in essence, you're saying that at the procurement and supply level, my employees are supposed to be more than just employees?

Chukwudi
Absolutely. Because there are a couple of things that could play out, for instance, a procurement staff could find himself or herself in situations where conflict of interest is an issue.

Mo
What do you mean by conflict of interest?

Chukwudi
Very good question. Now, when you look at the way a procurement process is, there could be a conflict of interest when the process is influenced for a person that benefits the procurement stuff. And this way you look at it across the professional decision that could be made, you discover that it's a very, very critical matter that has to be dealt with, so that the decision will be fair and not compromised in such a way that the one procuring will have personal benefits to get out of the process.

Mo
So what you're talking about is like sometimes an employee awarding a contract to a supplier who doesn't necessarily meet all the agreed criteria in return for personal reward?

Chukwudi
Absolutely.That is one. He could be awarding a contract to a relative because of personal interest, he could also be awarding a contract to a friend or friends because of also personal reward and that is why it's something that needs to be declared when there is a risk of it in the process.

Mo
But how will that affect my company, if it is the employee that has a conflict of interest and not so much me?

Chukwudi
Now, issues around reputation are very important, because, like what came up before now. Imagine a situation where the supplier did not meet the agreed criteria and a contract is awarded to such a supplier, by the time the supplier in the process of delivery on that service supplies a product of poor quality for instance, and it becomes in the open, a thing like that can lead to reputation issue in as much as it has come from a staff. So, from the staff, it becomes an issue that can hit an organization and seriously affect them negatively.

Mo
Now, it's a big responsibility and I can see why people working in procurement need the full support of the organizations to achieve this.

Chukwudi
Absolutely. And that is why it is very important for organizations to understand the benefits of ethical procurements and also for committing their support to people working in procurement. You know, for instance, when you look at what such an understanding could do, management will get interested in what is happening and by that ensure that some of this... like I talked about making sure that document on that code of ethics is included for sign off by suppliers. So, such understanding will ensure that those things are done in an organization, this is one area that the right information needs to be made available starting from the procuring entities, because there could be a lot of waste. When we were talking before now, we looked at issues around conflict of interest. Now, a procurement staff awarding a contract, because of personal benefits will affect a whole lot of other people like in this case patients when you have products, so meaning that having the right information on that is very important. Now, having policies also is very critical to make sure that things like this are captured and with the right compliance mitigated against. So, it's very important that the right information, as I said before, having policies in place on this and we are necessary that also trainings are conducted for people to understand the importance of this and how to apply them in the course of their work.

Mo
What are the main benefits of this?

Chukwudi
Ethical procurement is very important, like for instance, it's a very good differentiation opportunity for any organization all over the world, we get into a time that people are informing their opinions, because of what we are talking about like people saying that "Oh, I want to deal with this organization because they are ethical in their practices". So meaning that irrespective of the price that could be higher, which another way around is a risk that needs to be considered in terms of ethical procurement, people still go ahead to work with such organization because they see it as a thing differentiating the organization when it comes to practices. So it has that benefit that over time, it can lead to a lot of profits for an organization, because of that, and I could give you an example. For instance, if I know of an organization, maybe their prices are very good, but they use under age labour, because I don't like under age labour, and I don't want to patronize them another may have a cost that is higher than theirs by assumption, but because of their practices, which I love, which I believe in, I go ahead and patronize them. So this is just to help you see that it has benefits for any organization.

Mo
Indeed, now, are there other risks that we need to be aware of when procuring supplies ethically?

Chukwudi
Absolutely, the major one is to know that the cost could be higher when it comes to ethical procurement, and meaning that that has to be put in mind when it comes to getting and procuring goods and services. And in the process of solicitation and evaluation, there is also need to make sure that scoring is put in place to make sure that suppliers who adhere to such are given opportunity to compete and have a favorable outcome.

Mo
So despite higher cost, you will always advocate an ethical approach to procurement?

Chukwudi
Absolutely, let me tell you, as an individual, I've had a lot of interest researching around this area, and it's one thing that is very, very critical, because when you look at procurement is not good to just look at price, but to look at the total cost. And when we look at total costs, there are things that are tangible that you can quantify, there are things that you cannot quantify. And this is where ethical procurement comes in. Because some of the costs there are you cannot quantify, but over time, you will see that it helps. And I will give you an example. I know of a firm that over time we are given a lot of good prices because they they have been producing health products moving all over the world. But people didn't know that they had some practices that were not good, like not not paying taxes. And when that became an issue, they got blacklisted. Now because of that, it became a big issue, even in the market. And that is why it's very important to deal with issues like that, because of the long term effects that could come out of them.

Mo
And how does Health Procurement Africa help companies be ethical in procurement and supply?

Chukwudi
I can tell you one challenge in this aspect is the right information that is needed. Now, drawing from experience and knowledge when it comes to procurement and supply, and using it to provide the right information, we have to drive best practices when it comes to the procuring entities that will enable them be able to procure health products of good quality that will really affect the lives of patients that are going to take that. So what this means is this: whether it's the procuring entity or the suppliers, once these ethical practices are instituted, we will have availability of suppliers over time to ensure that there is no disruption. We will also have procuring entities that are efficient in what they do. And when this is combined, it will lead to ensuring availability of health products for patients,

Mo
Chukwudi, thank you very much for joining us today.

Chukwudi
Thank you Mo for your time.

Mo
Words of wisdom on why ethical procurement matters from the charming Mr. Chukwudi. Thanks for sharing your experience with us. listeners. Share this with your colleagues Let us grow our knowledge about ethical procurement together. We'll be back soon with more unique insights from our growing community here on Health Procurement Africa.

Transcribed by https://otter.ai