Showing posts with label procurement ethics. Show all posts
Showing posts with label procurement ethics. Show all posts

Friday, April 18, 2014

3 Confessions of a Buying Maverick

Maverick Buyer

(The names has been changed to protect the innocent)

I have a confession to make: my name is Josh and I am a buying maverick.  However, I am in recovery now that I have taken procurement classes from the Next Level Purchasing Association.

So how did I come to acknowledge my problem?  In two words, “procurement education”.

Being in an environment where I am offered purchasing team training like SPSM Certification courses, “PurchTips” and express courses, has made it much clearer to me that I had erred in my ways.

I assumed I was saving my previous employers time and money, in the long run, I was causing greater problems for the organizations as a whole.

Under the Radar:
I worked for a gentleman for many years whose goal was for our department to do things “under the radar”.  He himself was somewhat of a maverick and instilled such qualities into our team.  Admittedly, it made us a stronger group utilizing the “us against the world” mentality which is so often seen in professional sports.  Purchasing wise, it wasn’t beneficial for our company.  We had no accountability and were able to purchase items that on occasion became huge assets to the business, but more often than not became paper weights in our offices.  Purchase Order reviews were done by the Human Resources department who “rubber stamped” just about everything because they didn’t know our business function and didn’t want to be bothered.  Talk about a lost opportunity for measuring ROI, cost savings and containment!

Enablers Along the Way:
In one of my previous positions, I was told by one of the owners of the company to, “skip the procurement manager on hardware purchases”. Since I reported directly to him, I took it as a great opportunity to make my life easier.  However, there was a caveat to this directive.  I had to use a particular “buyers group” for all hardware purchases.  As I quickly learned, this “buyers group” was no bargain, purchases of desktop PC’s alone were 25% higher than buying online straight from the manufacturer!  Even though I reported my findings back to my boss, I was told to keep purchasing hardware in this way.  You can draw your own conclusions from this story, however it did keep me away from the purchasing manager’s office.

There’s No Such Thing as a Free Lunch:
In my first senior level position, I was suddenly overwhelmed with all the attention I received from vendors, consulting organizations, etc.  Somebody always wanted to take me out to lunch to discuss their latest and greatest offering.  In the past, I’d never had a problem saying no to people. But let’s face it, regardless of how ethical one tries to be, such perks eventually wear you down and your judgment becomes a bit clouded.  Purchasing SaaS or technical support services is easier to do when someone is schmoozing you and talking up their product line constantly than when you have to dig really deep into the nuances of a product or service you truly know little about.  Hence, you make buying decisions based on the words of convenient acquaintances rather than sound judgment. 

4  Realizations of a Buying Maverick:
  •        Maverick buying is harmful to all levels of your organization.  Just say no.
  •             Maintaining a standard of ethics at all times in crucial to your employer.
  •              While your input is important, leave purchasing decisions to the purchasing department – that’s  their specialty!
  •            Businesses need to have an educated purchasing professional; no longer should purchasing be cast upon someone with no procurement experience.
H      Here are 6 critical tips to stop maverick buying within your organization.

Share with us your stories of maverick buying and how you have dealt which such detrimental situations.


To your career success,


Greg Uhrlen
Next Level Purchasing Association

Thursday, March 27, 2014

The Most Common, Stupid, and AVOIDABLE Excuse For Procurement Ethics Violations

Cheswick, Pennsylvania is a small town.  For most purposes, it's pretty much irrelevant. But, for this story, it is very relevant.

Why?

Because there are probably just over a bajillion small towns just like Cheswick in the USA.  And, right now, procurement ethics violations could be happening in each and every one of them right at this very nanosecond just like they were happening in Cheswick from about 2010 to 2013.

What was going on in Cheswick?

Well, apparently, a Cheswick councilman during that period owned a company that was a vendor of the town.  Now, that itself isn't necessarily an ethical violation.  But, according to an article in the Pittsburgh Post-Gazette, the former councilman, Brian Harvanek,  failed to file documents or abide by contract value limits that would have made his being a vendor permissible.

That, my friends, is what you call a classic conflict of interest.

And, unfortunately, Harvanek's "excuse" for this conflict of interest was equally as classic.

The article states that Harvanek said that all of this stuff went down because of him being "ignorant of the ethics laws when he took office."

Almost every time that someone is investigated for a procurement ethics violation - either in the public sector or in the business world - they always say "but I didn't know that was an ethical violation."  While we would all like to think that procurement ethics are common sense, they clearly are not.

And that's sad.

It's sad because organizations have done implemented so much new employee training on other "grey areas."  Sexual harassment is a good example.  From what I understand, back in the day, male employees would often say things to female employees in the workplace that are simply unthinkable today.  Organizations have done a good job at clarifying the definition of sexual harrassment, codifying it, and training and communicating to their employees in a manner that certain behaviors don't happen nearly as often as they once did.


Why organizations don't do the same with procurement ethics is beyond me.  It's not like there aren't resources, expertise and procurement ethics training out there.

How many more of these Cheswick situations are going to happen in the USA before something changes?

Organizations could stop most of these Cheswicks from happening if they simply took away that most common, stupid, and avoidable excuse used by Harvanek and the countless others that made the same bad decisions.

To Your Career,
Charles Dominick, SPSM, SPSM2
President & Chief Procurement Officer - Next Level Purchasing Association
Author - The Procurement Game Plan
Struggling To Have A Rewarding Purchasing Career?
Earn Your SPSM® Certification Online At
www.NextLevelPurchasing.com


Tuesday, February 14, 2012

Animal-Friendly Purchasing Goes Viral

In a blog post from almost four years ago to the day, I asked the question "Is animal-friendly purchasing the future?"

Today, I think the answer is clearly "yes."

During the broadcast of Sunday's Grammy Awards, Chipotle Mexican Grill has produced a video that has since crossed the 5 million view mark on YouTube. The video - embedded at the end of this full blog post - is intended to draw attention to Chipotle's animal-friendly purchasing policy through which they have "sourced 100% of [their] pork from producers...whose pigs are raised outside or in deeply bedded pens, are never given antibiotics and are fed a vegetarian diet."

Then yesterday, McDonald's announced that "it will require its U.S. pork suppliers to provide plans by May to phase out crates that tightly confine pregnant sows," according to the Pittsburgh Post-Gazette. McDonald's actions could be blazing a trail for animal-friendly purchasing to grow dramatically. In the above-linked article, the president of Mercy For Animals, an animal rights group, said that McDonald's has "the power to move an entire industry, to set an example that other food providers often follow...We hope it's the beginning of the end of these cruel and abusive practices."

So, animal-friendly purchasing is definitely an increasingly hot topic. But don't think that it is only for food producers. We, as a profession, have a long way to go because you may not even realize where your opportunities lie for being animal-friendly. Does your organization buy furniture, cleaning products, or laptop bags? If so - and who doesn't? - then your organization has the opportunity to be more animal-friendly. See my 2007 article entitled "Purchasing, Social Responsibility & Animals" for more details.

You are part of the future.

Here's the video I mentioned earlier...




To Your Career,
Charles Dominick, SPSM, SPSM2
President & Chief Procurement Officer
Next Level Purchasing Association
Struggling To Have A Rewarding Purchasing Career?
Earn Your SPSM® Certification Online At
www.NextLevelPurchasing.com

Wednesday, January 25, 2012

The Purchasing Audit: A Quick Introduction

The goal of a purchasing audit is to determine whether policies and procedures have been followed within the purchasing department to ensure that no fraud occurred, that all decisions were made with the best interests of the organization in mind, and that suppliers were treated fairly. This assumes that the purchasing department already has policies and procedures that have built-in controls. Some of the questions that a typical purchasing audit will look to answer include:

  • Was proper documentation retained for all purchases for which it was required?
  • Was competitive bidding used in all situations where it was required?
  • Where competitive bidding was normally required but not used, were procedures for exempting a purchase from competitive bidding complied with?
  • Were all supplier selections made in accordance with the published selection criteria?
  • Were there any instances where a lower scoring or higher priced supplier was selected? If so, is the documented justification and approval acceptable?
  • Do any relationships exist between any successful bidders and the individuals who decided to award business to those bidders?

Typical frequencies for purchasing department audits range from every one to every three years.


To Your Career,
Charles Dominick, SPSM, SPSM2
President & Chief Procurement Officer
Next Level Purchasing Association
Struggling To Have A Rewarding Purchasing Career?
Earn Your SPSM® Certification Online At
www.NextLevelPurchasing.com

Thursday, August 04, 2011

Another Apple Supplier Debacle: Supplier Exec Gets Paid To Reveal iPad Secrets


Listen, I know I post a lot about procurement-related problems involving Apple. But don't get the wrong idea - it's not that Apple's procurement is bad, it's just that when you're the hottest company out there, a lot of people are gunning for you and the challenges are perhaps greater than they are elsewhere.

Apple's procurement team does a fantastic job of supporting the company's innovation and speed-to-market. Actually, you'd probably be hard-pressed to find a procurement team that performs better in those respects.

With that out of the way, let's talk about the latest procurement problem du jour at Apple. Esteemed SPSM and former NLPA Dedicated Member of the Month, Paul Salisbury, tipped me off to a fascinating story involving Apple and its continuing struggle to protect its uber-valuable intellectual property.

The above-linked article describes how an executive of an Apple supplier shared confidential information (including plans for the iPad before its launch) with a research firm for whom he "consulted" (read: accepted bribes from under the veil of "consulting"). Apparently, the problem with payoffs in exchange for insider information is big. The article says that the US federal government is investigating "'expert networks' that solicit employees offering insider information and provide that nonpublic information to Wall Street money managers to facilitate insider trading. A number of arrests have been made over the firm's collection of insider information on Apple, Dell, AMD, and other tech companies."

Now, I'm sure that Apple had a confidentiality agreement in place with this supplier. But, obviously, it wasn't enough.

If you're a procurement professional for an innovative tech company, what are you doing beyond the traditional confidentiality agreement to ensure that your company's intellectual property and trade secrets are being protected? If your answer is "nothing else," I'd suggest you investigate some other options sooner rather than later.

There's money being paid out there for information. And it seems like there is always going to be someone with shady ethics out there eager to accept it.

To Your Career,
Charles Dominick, SPSM, SPSM2
President & Chief Procurement Officer
Next Level Purchasing, Inc.
Struggling To Have A Rewarding Purchasing Career?
Earn Your SPSM® Certification Online At
www.NextLevelPurchasing.com

Thursday, July 21, 2011

Announcing "15 Rules For Ethical Supplier Interaction" - A New Online Course From Next Level Purchasing!

Though procurement departments are largely responsible for selecting and managing a company’s suppliers, other employees of a company frequently interact with those same suppliers and most of them don’t know anything about procurement ethics. This leaves those companies vulnerable to the large number of ethical traps that can get even the most honest of business people into bad situations. A new online Express Course, “15 Rules For Ethical Supplier Interaction,” from Next Level Purchasing will comprehensively teach all employees, not just the procurement department, to identify and avoid ethical supplier interaction traps- even the most subtle and tricky ones.

“There are CEO’s out there who haven’t given much thought to the interactions people in their company have with suppliers and how ethical those interactions are, but they should,” said Charles Dominick, SPSM, SPSM2 President and founder of Next Level Purchasing. “We’ve all seen some very big-name companies fall victim to embarrassing, and often costly, ethics scandals. Our Express Course ‘15 Rules for Ethical Supplier Interaction’ is an easy way to prevent that ethical vulnerability. This Express Course can help leaders put the classic ‘ounce of prevention is worth a pound of cure’ adage into action."

The “15 Rules For Ethical Supplier Interaction” course is the newest Express Course available from www.NextLevelPurchasing.com. Express Courses are 1-lesson in length and can be completed in about 30-60 minutes. The enrollment fee for “15 Rules For Ethical Supplier Interaction” is $14.99 US.

To learn more about what is covered in this course, please visit http://www.NextLevelPurchasing.com/online-ethics-course.php.

To enroll in "15 Rules For Ethical Supplier Interaction" or any of Next Level Purchasing's other online courses, please visit http://www.NextLevelPurchasing.com/registration.php.


Monday, June 27, 2011

Procurement Ethics Checklist

I hope that you have enjoyed the article "A 13-Point Procurement Ethics Checklist."

When it comes to certain topics that I write about, I know that some of them are bound to incite disagreement. This article is one of those topics.

I know that even some of my best educated, most ethically-respected colleagues will disagree with a point or two on this list. For example, some may think that it is fine to solicit donations from suppliers.

But here's the thing with me: if an activity is questionable ethically, I have the tendency to recommend avoiding that activity as a rule. Yes, even if it can be proven to be above-board.

So, there is no doubt that someone, somewhere will argue that at least one of the checklist items is "wrong." That's fine. But, I look at it this way: if you adopt the checklist items as your personal rules, it can only help you to stay out of trouble.

What's so bad about that?

To Your Career,
Charles Dominick, SPSM, SPSM2
President & Chief Procurement Officer
Next Level Purchasing, Inc.
Struggling To Have A Rewarding Purchasing Career?
Earn Your SPSM® Certification Online At
Next Level Purchasing . com

Monday, April 25, 2011

Why Suppliers Don't Give You The Best Proposals Possible (And What You Can Do About It)


Do you know what suppliers fear the most about writing proposals for you? Do you know what they assume will happen if they give you a proposal that describes how they can help you minimize cost and maximize value?

I believe that I do.

They worry that they will invest time and resources into crafting a perfect proposal and you will take their ideas, hand them off to their competitors, and give the business to the supplier willing to charge the absolute lowest price regardless of whether or not they came up with the cost-saving/value-creating ideas or if they can even execute those ideas. And the supplier that did come up with those ideas will not get the business, thereby wasting their investment in creating a buyer-benefitting proposal and possibly compromising their own competitive advantage and getting absolutely nothing in return.

You may say "I would never give a supplier's ideas to a competitor. That would be unethical!"

But how is the supplier to know that?

Don't expect them to assume that. They won't.

It can be helpful to put a blurb in your RFP saying something like "[Company Name] will make its supplier selection by identifying the proposal with the optimal balance of measurable value creation, cost reduction, and risk minimization. Therefore, [Company Name] encourages you to propose ideas that will contribute to these goals. You can rest assured that [Company Name] will not share your responses with other suppliers."

Just that little bit of reassurance can be the difference between getting proposals that serve as a roadmap for the highest potential positive profit impact and getting proposals that give you the minimum amount of information possible.

To Your Career,
Charles Dominick, SPSM, SPSM2
President & Chief Procurement Officer
Next Level Purchasing, Inc.
Struggling To Have A Rewarding Purchasing Career?
Earn Your SPSM® Certification Online At
Next Level Purchasing . com

Monday, April 11, 2011

If Procurement Doesn't Teach Ethics To IT People, Who Will?


This post could apply to any department in any organization. I'm going to pick on IT because IT people at all levels have vendor interaction.

Let's say an IT person is offered an item of nominal value from a vendor - a logoed laptop bag, for example. Or is invited to lunch. Or is invited to a cultural event.

I would guess that most would accept the offers.

But should they?

Well, let's explore this for a second...

Sure, most of us in the procurement field feel that accepting a gift of such high value from a vendor is not ethically proper. Maybe we've had procurement training that covered ethical matters. Or there's a policy. Or we've just heard conversations in the procurement department about what's inappropriate and what's not.

But do you think IT professionals hear about ethics as much as procurement professionals do?

Based on my experience interfacing with IT professionals, I would say "no way!" Most have some degree of ethical understanding, but probably don't concern themselves with the finer points of ethics.

Some have the attitude that, as long as accepting a gift from a vendor was not the reason a buying decision was made, everything is fine - no ethical line was crossed. And, in the spirit of things, that argument may sound logical.

But there are some things that this mindset doesn't take into consideration:
  • The fact that we never really can control what influences us subconsciously
  • The fact that accepting gifts may create the perception that someone is being "bought" by a vendor
  • The fact that accepting gifts increases vendors' overhead costs which, in some form, get factored into higher pricing to eventually be paid by the buying organization
  • The fact that accepting gifts contributes to a culture where everyone thinks it's OK to accept gifts and the proliferation of such behavior will likely lead to some decisions being made with total disregard to ethics at some point
But IT professionals don't learn that stuff in college. How, then, will they learn the finer points of ethics. Who is supposed to teach them?

In my opinion, it is the procurement department's job to bring up the importance of ethics training to top management. And top management, in consultation with the procurement department, should take the lead in implementing enterprise-wide ethics policies and training.

That way, it's a company initiative requiring compliance, not a procurement initiative. Ethics is a business matter, not just a procurement matter.

However, if top management doesn't come through, a procurement department shouldn't sit idly. The procurement department should step up and take the lead.

It will be more challenging without top management driving the initiative, but allowing a vendor gift free-for-all should not be considered an option in any environment. Even in IT.

To Your Career,
Charles Dominick, SPSM, SPSM2
President & Chief Procurement Officer
Next Level Purchasing, Inc.
Struggling To Have A Rewarding Purchasing Career?
Earn Your SPSM® Certification Online At
Next Level Purchasing . com

Friday, April 01, 2011

Are Suppliers Undeterred By Ethics Policies?


Earlier this week, a friend of mine who works in a non-procurement department of a mid-sized company shared that he received tickets to a cultural event courtesy of one of his employer's vendors.

I joked that I really needed to speak with his company's head of procurement about implementing an ethics policy. My friend explained how his company supported his attendance - the event was a part of a multi-customer meeting with business value and his company did have an ethics policy and that policy permitted attendance. He also revealed that the invitation to the game included an ethics disclaimer.

An ethics disclaimer?

Yeah, some fine print that said about how no impropriety was meant and that the invitee is welcome to pay the vendor for the ticket if s/he wanted to.

Hmmmm...interesting!

I asked my friend to send the disclaimer to me to share with you. Its text appears below with names removed to protect the...innocent?

Attention: Government, Public Sector, Public Education/Healthcare Attendees

ETHICS DISCLOSURE

[VENDOR NAME] is pleased to provide attendance to the event above at no cost to government employees and officials when appropriate under applicable laws and agency policies. [VENDOR NAME] is committed to the highest standards of ethical conduct and does not intend to offer an inappropriate gift or create even the appearance of impropriety. The cost of the refreshments and/or logo items provided will be available without charge to attendees of this event. If your organization or local laws require waiver of or payment for items of value, [VENDOR NAME] is pleased to accept payment for any costs to facilitate compliance with gift and ethics requirements. Please refer back to the original invitation for the specific cost details for this event for additional information or assistance to comply with applicable laws and agency policies.

Is it just me or is the need to include a disclaimer almost like an admission that the vendor realizes it is pushing the ethical boundaries? What's your take on this?


To Your Career,
Charles Dominick, SPSM, SPSM2
President & Chief Procurement Officer
Next Level Purchasing, Inc.
Struggling To Have A Rewarding Purchasing Career?
Earn Your SPSM® Certification Online At
Next Level Purchasing . com

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