Ethical Business Practices in Purchasing and Supply Management
Ethical Business Practices in Purchasing and Supply Management “The best and most successful organisations recognise that they will only prosper in the long term if they satisfy the aspirations of their stakeholders; including customers, suppliers, employees, local communities, investors, governments, public interest and environment groups. ” “To satisfy this intense scrutiny and the demands for greater accountability in society, businesses and other organisations are increasingly recognising the need to measure, track and report on their social and ethical performance.” Source: The Institute of Social and Ethical Accountability
Background The Chartered Institute of Purchasing & Supply (CIPS) has a Personal Ethical Code with which members undertake to comply. This Code sets out principles of: • integrity • professionalism • high standards • optimal use of resources and • compliance with legal and other obligations and offers guidance in relation to: • declaration of interest • confidentiality and accuracy of information • fair competition • business gifts and hospitality and • seeking advice The Code is the basis of best conduct in the purchasing and supply profession and is reproduced as Appendix 1 to this document.The CIPS position on Ethical Business Practices in Purchasing and Supply Management expands on the principles in the Code and addresses business to business ethical issues and social responsibility issues within supply chains.It also takes into account issues that have arisen throughout business regarding social responsibility,personal accountability,corporate governance and so on,which have in turn been addressed in reports produced in recent years; Turnbull,Nolan and Higgs to name but a few. Purchasing and supply management professionals are increasingly required to demonstrate that the supply chains they manage take ethical and social responsibility issues into consideration.The main reasons for ensuring that supply chains meet these criteria should be professionalism and moral and legal obligations,but other drivers include: • media or consumer pressure • the need to comply with a particular code of conduct or legal imperative • a requirement to include such issues in annual financial or social accounts • social audits • ethical investors • supply chains that include sources in a particular country or for a particular product which may be perceived to be high risk 'Ethics' in purchasing and supply management can relate to a wide range of issues from doubts about suppliers' business procedures and practices to corruption.The vocabulary AUG 07
associated with this field can,in itself,be confusing,and includes such terms as: • fairtrade • ethical trading • ethical sourcing • social accountability • social auditing • corporate social responsibility • corporate citizenship • codes of conduct • reputation assurance Audience, Objective and Scope The CIPS position on Ethical Business Practices in Purchasing and Supply Management is intended primarily for purchasing and supply management professionals, but it applies equally to anyone who has responsibility for managing the supply of goods or services from an external source.The purchasing and supply management professional has a responsibility to at least be aware, if not have a thorough understanding, of ethical issues in purchasing and supply management and to endeavour to address problem areas in a positive manner. The objective of this Knowledge Summary document is to identify the major ethical issues in purchasing and supply management and to offer some guidance.However,its coverage cannot be exhaustive.Purchasing and supply management professionals work in a wide range of environments,and different industries and sectors will interpret these issues in different ways.Purchasing and supply management professionals should identify the values that are specific to their own employing...
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