NAME: SUBRAT SHARMA
STUDENT ID: A00112892
SUBJECT: PURCHASING
ASSIGNMENT: 2
SUBMITTED TO: ANKUR SANDAL
ETHICS
Ethics is the set of moral principles which direct the conduct of an individual. Social
values, cultural traditions and religious beliefs form these morals. Ethics embody
assumptions on what's correct, what's wrong, what's good and what's bad with regard to
human conduct. They serve as a compass for directing how people should behave
towards one another, understanding and fulfilling their social obligations and living their
lives.
Although individuals hold ethical principles, they can also be expressed in the ideals,
processes, and policies that form the decisions made on behalf of their organizations by
decision makers. Ethics refers to all facets of behavior and is applicable to individual,
party, and organizational actions. There is professional ethics in addition to the human
ethics and corporate ethics. Professionals including executives, attorneys, and
accountants are people who possess advanced expertise and skills while supplying
clients or the public with services. The system of moral and ethical principles that
governs a business organization’s values, actions and decisions, and the individuals
within that organization, is known as business ethic. Some ethical standards are
enforced into law for companies; environmental standards, minimum wage and insider
dealing and bribery laws are also examples of the government setting minimum
requirements for corporate ethics. In the course of time what qualifies as business
ethics has changed in history. When management leads an organization, employees
follow in those footsteps in an ethical manner. With corporate ethics as a guiding
principle, workers make better choices in less time; this improves efficiency and overall
workplace morale. When employees complete work in a way that is based on honesty
and integrity that benefits the entire organization. Employees working for a company
that demands a high standard of business ethics in all facets of operations are more
likely to perform their job duties at a higher level and are more likely to remain loyal to
that organization as well.
ETHICS IN PURCHASING
'Ethics' in purchasing and supply management can relate to a wide range of issues from
supplier business procedures and practices to corruption. The common areas relate to
ethics and ethical behavior in companies include fair-trade, ethical trading, ethical
sourcing, social accountability, social auditing, corporate social responsibility, corporate
citizenship, codes of conduct and reputation assurance. To ensure that the procurement
process is as fair as possible, each company will hold its employees to a buying
standard that is put in place with processes, methods, and rules. Purchasing materials
and services, however, is a process involving the interaction between buying staff and
potential vendors, which leads to personal relationships and contacts. A business'
relationship with its suppliers is one that is developed over a period of time and based
on personal relations. However, it is the duty of the buying professional to their
employer to ascertain the best product or service at the best cost, in the most timely
fashion. Purchasing requirements are in effect to ensure the company’s interests are
central in any potential suppliers. It may seem odd that procurement, often viewed as an
unexciting part of an undertaking, may find itself embroiled in events and situations that
make headlines for the world. Ethics — or lack thereof — is often at the heart of the
debate. Procurement can be a hotbed of horror storeys and scandals from the deaths of
garment factory workers earning pittances to corruption and kickbacks in defense
contracts. There have been some big success story lines of companies in recent years
that have gone out of their way to make both their procurement and output ethical and
responsible. Not only did these companies boost their brands' reputation, they also
ensured that the workers in their supply chains were treated well. Starbucks is
committed to 100 per cent sustainable coffee, using a system called C.A.F.E. (Coffee
and Farmer Equity Practices) to optimize its sustainable supply. At the heart of
Starbucks' C.A.F.E. sourcing system, there are four ideas: quality, economic
transparency, social responsibility and environmental leadership. Starbucks aims to
purchase coffee at reasonable prices at all times and ensure that every step of the
planting, harvesting, processing and purchasing of coffee is always done ethically. The
coffee giant is now using third parties to check the ethical value of its sourcing.
Starbucks' standards are now recognized as the standard for ethical sourcing in the
industry. Starbucks works with more than 170,000 farmers and annually generates
trillions of dollars in revenues. For the coffee industry in North America, its ability to
remain both profitable and set the industry standard for sustainability was a shining
example.
Unethical practices may include:
1. Bribery: Payments made to individuals or their friends, family or partners in cash
or in kind to purchase their support for a supplier or contract negotiation. Bribes
may occur before, during, or after the award of a contract.
2. Coercion: Threats against or pressure on individuals with the same goal as
bribery – gaining support for a supplier or negotiating a contract. The difference
is that while bribery is intended to motivate people with what they can gain,
coercion is aimed at motivating people through fear of what they might suffer or
lose.
3. Extortion: Asking for a bribe or similar illicit payment. This may or may not be
accompanied by a menace.
4. Favoritism: Also known as nepotism, in which individuals give a supplier who is a
friend or part of the same family an undue preference or negotiating advantage.
5. Illegal sourcing: Suppliers offer goods or services that are misrepresented or
illegally or immorally produced, whether due to materials used or to the working
conditions under which production takes place (especially in the garment
industry). Further examples include stolen and black-market supplies.
6. Influence traffic: Exchange of a contract award (or award support) for another
individual or organization’s favor or preferential treatment by the other party.
REFERENCES:
1. Hortom,M. (February 2019). The Importance of Business Ethics retrieved from
[Link]
[Link]
2. O’Brien,B. (February 2018). 4 Companies who succeeded by focusing on ethical
sourcing and manufacturing retrieved from
[Link]
succeed-focusing-ethical-sourcing-manufacturing/