Ethics and Standards of Conduct

1
Ethics and Standards of ConductHow important is
ethical conduct?
Forces to Consider
Company Guidelines Industry Factors Associations P
ersonal Beliefs
Traditional Ethics Negotiation Practices Supplier
Relations
Ethics Standards of Conduct Professionalism
A strong foundation
2
Procurement EthicsGuidelines 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

3
Professional Conduct ProfileCan you predict
what will happen?

• Honest (60-70) Open and Fair Bidding
• Professional Business Merits
• Best Value
• Service/Customer Driven
• Communication/Accessible
• Feedback
• On Time Proposals
• Quality Products
• Partnerships
• Long Term/Good Investment
• Impressionable (30-40) Young/Entry Level
• Learning Mode
• Developing Career Paths
• Educated
• Ambitious
• Gudelines/Policies
• Success Driven

4
Corporate Ethics HeadlinesFailure in the
boardroom
TYCO
ENRON
QUEST
ANDERSON WORLDWIDE
ADELPHIA
GLOBAL CROSSINGS
MARTHA STEWART
Xerox
WORLDCOM
TYSON FOODS
PRICEWATERHOUSE COOPERS
5
The Washington ResponseSarbanes-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

6
Ethics in the Negotiation ProcessDeception,
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?

7
Ethics in the Negotiation ProcessDeception,
Tactics and People

• Deception Tactics (what about the truth?)
• Misrepresentation of ones 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

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

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
Ethical Supply Chain Management ConductInstitute
for Supply Management (ISM)

• Standards
• 6. 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 organizations
  policies and these ethical principles and
  standards of conduct
• 12. Enhance the stature of the supply management
  profession

11
Successful Company ProgramsCompany-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

12
Successful Company ProgramsSupply 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

13
The Business Ethics ChallengeRestoring 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 suppliers ethics?
• Ethical conduct is professional conduct