Ethical supply chain management is becoming an increasingly important issue. With the media posing questions around ethical practices, and campaigns being run by charities and other bodies, it is essential for project managers to appreciate the importance of navigating ethical principles when it comes to project procurement. Read on as we take a look at some common facets of ethical principles in project procurement.
Transparency, confidentiality and fairness
Every supplier that you use should be treated fairly at every stage of the procurement process. This means that you should be open in your dealings with everyone involved. When you do this, everyone, and especially your suppliers, will understand all elements of the procurement process. Confidentiality must also be respected, safeguarding sensitive information and sharing it only on a need-to-know basis. Transparency should be inclusive of your procedures, timescales, requirements, and any criteria that you use for selection amongst others.
Use of power
Buyers should actively discourage the unfair use of both buying power and influence. When it comes to supply relationships, power is a key element. When there is an exertion of undue influence or abuse of power, this is not just unprofessional, but it may also contravene industry regulations. This inappropriate use of power is also highly unlikely to help you achieve strategic relationships in the long term.
Declaring an interest
It is imperative that all personal interests are declared. A buyer should always encourage their colleagues to declare any personal interests that could have an effect, or could be seen to effect, any judgement or impartiality in a situation. If not declared, this conflict of interest compromises the integrity of the procurement process. Examples of this include, being employed by a key supplier or owning a significant shareholding in a supplier or having a family member or friend in this position.
Social responsibility
There are a number of worker welfare issues that any socially responsible buying organisation needs to address. These include freedom of association, forced labour, child labour, health and safety, working hours that are excessive, and discrimination of all types.
Forced labour
It is important that all suppliers ensure they are not using forced, bonded or involuntary prison labour. Forced labour is defined as work which is carried out under the threat of penalty. The most common examples of this are bonded labour and the use of prisoners to undertake the labour. It is also important for buyers to ensure that the employees of their suppliers are free to choose whether they want to work for the supplier or not. And are also free to leave should they wish to do so.
Employment relationship
All employees should have a legal contract of work setting out the conditions under which they are working, the hours and any other items of note. Suppliers should establish recognised employment relationships with all of their employees, and these should be in accordance with both national law and good practice within the country where they are based. Employees should be given an easy-to-read employment contract that offers them clarity when it comes to their remuneration. Suppliers must not hinder the legal or contractual rights of their employees to this information.
Health and safety
Regardless of the type of business that an employee works in it is important that their working conditions are safe and hygienic. In most countries there are laws and regulations that cover occupational health and safety. These require that employees are provided with a safe working environment by their employer.
In those countries where the laws are not enforced there are many factories and work sites where the standards of health and safety are low. In this instance it is important for buyers to work with suppliers to introduce appropriate health and safety procedures and policies. These should be demonstrable at work. It is also important for suppliers to assign responsibility for both health and safety to a representative of the senior management of the company.
Wages and working hours
Low wages have the effect of raising problems in any country on an ethical, economic and social scale. This is of particular importance in those countries where the goods that are produced are low-value, and in those instances where such goods are made competitive in the global marketplace because of low rates of pay. Wages and benefits must at least meet industry benchmarks or the national legal standards of those countries. Working hours should also follow any national laws or industry standards.
Ethical principles are becoming increasingly important in the global marketplace, and rightly so. It is, therefore, important that anyone working in project procurement is fully conversant with these principles.
