Integrity in Procurement: What does it mean?

by Obella Marie D. Ronsairo and Francis J. Custodio, MARCH 2021

Integrity is defined as a trait in a person who exhibits qualities such as honesty and having morally strong principles. Personal integrity is a strong sense of commitment towards morality, openness, and high standards of ethics that an individual stands by and acts as a role model for his/her colleagues. Every individual, and not just the overall entity, should have the high personal integrity to make sure the entire supply chain process is ethically right. Behavior like receiving favors such as gifts, monetary commissions, stakes, preferential treatments are considered to be outside the code of business ethics.

There are Seven Ways to Demonstrate Integrity in the Workplace.

  1. Convey the Importance of Integrity
  2. Adhere to Fair Compensation Methods
  3. Maintain Utmost Transparency
  4. Introduce Employee Engagement Program
  5. Healthy Communication Practices
  6. Set Goals
  7. Discourage the Concept of Favoritism

Without a fundamental change to its goals and purpose, can the typical procurement function contribute to business integrity?

One of the largest procurement associations has defined member responsibilities in the following way:

  1. Enhance and protect the standing of the profession by being ethical and having integrity in all business relationships
  2. Promote the eradication of unethical business practices such as infringing human rights, fraud, corruption

On the surface, these are noble aims – yet are they effective or relevant? To what extent are current procurement practices (and associated training) undermining the very values that lie at the heart of these responsibilities?

First, it is the integrity of the supply base that should be of greatest concern to the procurement function. Having responsibility for personal integrity is surely a given; it is assessing and validating a supplier’s integrity and honesty that matters in generating business results and protecting reputation. Far too often, this does not happen – and hence the concerns about human rights, fraud, and corruption.

Second, and more fundamentally, seeking to maximize discount and minimize price is quite simply not compatible with the defined responsibilities. It drives unethical behavior; it favors dishonest suppliers; it encourages short-cuts and bullying in the supply chain. We see evidence of this time and again, especially in low-margin or price-driven industries – for example, retail, construction, and the public sector. Stories such as the Taiwanese earthquake and buildings constructed with oil cans illustrate the human cost that comes with such practices.

Integrity translates to reliability. Procurement integrity prohibits certain activities by the personnel involved in the procurement process. It governs the procurement process and how company and contractor personnel conduct business with each other.

Procurement and supply chain management are critical activities for the success of the business and should indeed be major contributors to the delivery of ethics and value. But for this to have meaning, I suggest that practitioners must challenge the way they are trained and measured and re-think the role they play in developing and managing trading relationships.

The commitment to procurement integrity is everyone’s responsibility. It takes an entire workforce’s commitment to a culture of ethics and integrity. It must be woven into day-to-day activities, reinforced through education, and be regarded as the cornerstone of the organization’s business environment and culture.

Source:

https://blog.vantagecircle.com/instil-integrity-in-the-workplace/

https://commitmentmatters.com/2016/02/19/procurement-integrity-what-does-it-mean/#:~:text=First%2C%20it%20is%20the%20integrity,business%20results%20and%20protecting%20reputation

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About the writer:

Obella Marie D. Ronsairo. Loves to feature life and see the beauty of every side of the stories. Have been with the newsletter team for almost two years since becoming part of the MPTSouth family. Gained a lot of fun, experience and knowledge through this growing team and helped her to develop more of her skills in writing and creativity.

Francis J. Custodio. Is a Industrial Engineer who loves to think outside the box.  Also like the saying “Work Smart not Hard”. Always curious and that curiosity led him to join the Southlink Newsletter. Loves to know “what make things tick”.

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