The right road [June 2012 print edition]

Controversy surrounding the Canadian government’s sole source purchase of F-35 fighter jets leads to a highly critical Auditor General’s report on the procurement process’s shortcomings. Charges of poor working conditions at Taiwanese company Foxconn—Apple Inc’s main components supplier—result in Apple and its new CEO Tim Cook rethinking the tech giant’s sourcing practices. Recent headlines have shown no shortage of coverage related to ethical issues in procurement. And certainly, no organization wants to end up at the top of the day’s news due to an ethical breach or misstep in judgement. So what can procurement organizations do to ensure they’re travelling the ethical road?

Talking code
Ethics training is included for those who work towards their SCMP designation through the Purchasing Management Association of Canada (PMAC), says Cheryl Paradowski, its president and CEO. Within the designation there are eight modules and six workshops, including a three-day workshop called Ethical Behaviour and Social Responsibility. That workshop outlines some of the issues surrounding ethical behaviour and deals with several recent hot topics in procurement ethics like gift giving, discrimination, sustainability and corporate social responsibility (CSR), Paradowski says. Ethics is also a recurring theme featured during educational sessions at the organization’s national and regional conferences, as well as through its webinar series.

One recommendation the program makes, she notes, is that organizations develop their own code of ethics governing acceptable behaviour. PMAC has its own code of ethics, which is available on the organization’s website and Paradowski encourages companies to use the document as a module for their own codes or simply to adopt it outright. “And we certainly have heard that there are a number of companies that have done that,” she says.

Paradowski notes PMAC is currently updating its code to accommodate issues like CSR and sustainability that, a decade ago, received far less attention. Those issues have grown in prominence as supply chains have lengthened and procurement’s reach extended. “It hasn’t been updated, for example, along with our designation to be reflective of the full field of supply chain management as opposed to just purchasing,” she says.

Members who controvene the association’s code may also face real consequences, Paradowski says. When new members join, they agree to adhere to the code and anyone found in breach is subject to a complaint and discipline process that’s managed within each provincial PMAC institute. An ethics committee considers complaints against members and gathers information and evidence. PMAC has a list of sanctions based on the severity of the allegations, Paradowski says, which goes as far as revoking the member’s designation and restricting membership.

Codes of conduct for suppliers are also useful to ensure alignment between an organization’s values and those of the supplier, says Victoria Wakefield, purchasing manager, student housing and hospitality services at the University of British Columbia. Since organizations enter into financial agreements with suppliers, such codes help to keep transactions as open as possible, Wakefield said.

Before the Vancouver 2010 Winter Olympics, for example, the city drew up an ethical procurement policy that had an code of conduct embedded in it, notes Wakefield, who acted as the “ethical sustainable contract specialist” for the process of writing the policy. The code, which included core labour conventions of the International Labour Organization (ILO), strove to ensure safe and healthy workplaces for those making products for the games. The code also provided a system to report complaints of abuse, Wakefield says. Vancouver also chose to publicly post the names of the suppliers it was sourcing from. That step demonstrated the city recognized a supplier’s reputation could change rapidly, Wakefield says.