What the News of the World closure tells us about supplier management

The announcement of the News of the World (the UK's biggest selling newspaper) closure following the phone hacking scandal came as a huge shock. Many commiserations to anyone who will lose their job.

But of course we immediately thought about this from a procurement and supply chain perspective. And here are our initial thoughts on the matter, based on the starting point that the private detective, Glenn Mulcaire, who was hacking into the phones of celebrities, politicians and bereaved relatives (allegedly) was, in effect, a contractor or supplier to the newspaper.

1. The size of your spend with a supplier (contractor) is almost totally independent of the risk that arrangement brings to your organisation. The amount the NOTW paid Mulcaire was trivial in the greater scheme of things, but that was irrelevant in terms of the outcome.

2. Scandals like this may mean organisations will be expected to have a better grip on who is working for them (individual contractors and suppliers), what they are doing, who is approving their work and payments... etc. That is likely to increase the need for better tools to support this - P2P with compliance monitoring, VMS platforms for contingent labour etc.

3. Organisations must understand that you can't outsource risk or bad behaviour. The excuse that "it wasn't 'us, it was our sub-contractor" doesn't wash any more, whether it is private dicks or developing-world garment suppliers using "slave labour".

4. The ethical landscape is shifting and the focus will only increase - see the Bribery Act (and our recent piece from Daniel Ball here) as an example.

5. A bad choice of supplier, inappropriate behaviour by a contractor, unethical activity in your supply chain - at the extreme, they can actually bring down the entire organisation.

OK, we're pushing things a little , but there are some serious messages here. I wonder how many other organisations have some dirty little secrets hidden away in the AP schedules, or in that list of suppliers who received "ad hoc cash payments"?

It may be a good time to have a bit of a poke around in your own data...

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