SUPPLY CHAIN MANAGEMENT BA 244

Reminders

• Next Article: Group 5 • PPP Talk: Wednesday, 15 Feb

•  LinkedIn Group: Presentation Grades for Mattel and Article 2 Presentation Grades for Denver Airport and Article 3

Article 4 • Aligning supply chain strategy with corporate environmental strategy: A contingency approach

ETHICS IN SUPPLY CHAIN MANAGEMENT Does Legal always mean Ethical?

ETHICS IN SCM • Use of Information

• Fair Dealing

• Conflict of Interest

ETHICS ON USE OF INFORMATION • Provide fair, truthful, and accurate information

• Do not inflate volume to get lower prices

• Do not inflate sales to achieve targets

• Others?

ETHICS ON USE OF INFORMATION • Confidentiality of Information

•  Information should not be disclosed without proper authority

• Unless there is a legal duty to disclose it e.g. money laundering or terrorist activity

• How to address?

ETHICS ON FAIR DEALING • Deception or unfairness in below situations may be perceived as unethical and potentially damaging to ongoing trading relationships:

• A supplier makes an error in quotation or invoice • There is a potential to pay late • Tender is done even if the contract has already been awarded • Some vendors are favored over others in a tender situation e.g. providing

them more info, allowing post-tender negotiation to certain vendors only

CONFLICTS OF INTEREST •  When the best interests of the firm conflicts with the personal interests of the

individual. e.g. award contract on personal gain vs. best value

•  Offering or accepting gifts which may – or may be perceived to – influence the recipient’s decision making

•  Buyer gains from promoting a particular supplier because he has a financial interest in the supplying firm as shareholder, or as someone with a close relationship to the supplier’s management

•  How to address?

GIFT GIVING •  Giving of gifts is among the

common courtesies of business dealings

•  Professionals should decide when such practices amount to an attempt to induce favorable treatment

•  Major difficulty in the difference in perceptions between buyer and seller, which may also be a cultural issue

•  As a general principle, any conflict of interest should be disclosed, so that proceedings are transparent and open to control

GIFT GIVING Bribery and Corruption

•  When buyer and seller collude to ensure that the seller wins a contract, the buyer in return receiving a reward

FRAUD •  Range of activities considered fraudulent

•  Missing stationery •  Personal telephone calls •  Theft of mobile phones and computers •  Accepting kickbacks

AUDIT • Is a comprehensive, systematic, independent, and periodic examination of a company’s environment, objectives, and tactics, to identify problems and opportunities and facilitate the development of appropriate action plans (Scheuing, Purchasing Management)

AUDIT CHECK OR EXAMINATION

• To monitor and enforce compliance with policies • To ensure that the organization is using best practices • To monitor and measure the extent to which resources are being used efficiently

• To support the prevention and detection of fraud, error, mismanagement of funds

AUDIT • How often does your company conduct audits?

• Government • Banking • Real Estate • Academe

End