Procurement/Vendor Ethics — Can There Be Any Wiggle Room?

When I was negotiating huge office equipment contracts for an Ivy League University over three decades ago, procurement/vendor ethics were below or even off the radar. I recall having access to as many vendor sponsored elegant multi-martini luncheons as my physical constitution could endure. Lavish golf outings and chartered fishing trips where so common that I couldn't have managed the out-of-office time had I not had a skilled private secretary in those days before cell phones, laptops and even PCs. Did these "perks" influence my decision making? Of course I'd like to think not. But a conversation I had this past week with a few executive practitioners at ProcureCon has given me pause.

Now I'd never argue for a return to those "Mad Men-esque" days of decadence, but I also recall that while ethical practice wasn't codified, it was expected on a personal level. In fact, I was once offered a sailboat in return for a contract. I was duly horrified and had the salesperson fired -- but I digress. In speaking with a Fortune 500 retail exec at the conference, I learned that the pendulum has swung so far the other way that the very idea of leaving any ethical decision to a corporate employee has become as unthinkable as my sailboat bribe.

Not only does this retailer have a 24-hour employee hotline for those who are ethically unclear in a given situation, I was told that if an employee of a vendor moves next door to a buyer who interacts with the new neighbor's employer, the buyer is required to report the risk of conflict. The retailer's Ethics Division then evaluates if the buyer needs to be transferred to a non-involved sector. As my new acquaintance said with a smile, if one feels the need to call the hotline, most of us just decline -- even if it's just a bottle of spring water. He also mentioned that the U.S. Federal Government was studying his company's code for possible implementation.

Contemporary focus on ethics, conflict of interest and buying favor is unquestionably a good thing. But perhaps it needn't be 100% prescribed. I'm fine with moving 170 degrees away from my early experience as a buyer, but can't we allow for a low dollar threshold of decorum and refrain from obsessive paternalistic corporate control? After all, there are many more important transparent variables to measure and sustain within vendor relationships.

We did manage to agree that ever increasing scrutiny of ethical issues is probably hurting the golf industry -- eliciting nods around the bar with fond memories of when new drivers would unexpectedly arrive in the mail. And on a humorous note, a senior sales rep surreptitiously picked up the bar tab and it had to be re-issued so that our new acquaintance could pay for his own beer.

William Busch

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