Saturday, April 28, 2012

Supply Management – Ethical Standards

Supply Management – Ethical Standards

Supply Management – Ethical Standards

"Ethics are guidelines or rules of conduct by which we aim to live.”


Burt, Dobler and Starling have taken operational definition of ethics as “the guidelines or rules of conduct by which we aim to live.” Velasquez has explained that ethics involves evaluation of moral standards and acceptance of some them as reasonable and accepting some of them worthy of adhering to due to reasons advocated. If society has no morals it is not a society. Society builds around an accepted set of ways of life. What we term morals are ways of life that create a significant benefit to the society and significant loss to the society. Ethics are those moral standards specially chosen by an organization, or a professional association or even an individual to adhere to.
The ethics that supply managers need to adhere to can be understood from the ethical standards codified by Institute for Supply Management, USA (
The three principles advocated by ISM are:
  • Integrity in Your Decisions and Actions
  • Value for Your Employer
  • Loyalty to Your Profession
From the three principles ISM derived standards of conduct for supply managers.
1. Perceived Impropriety.  Prevent the intent and appearance of unethical or compromising conduct in relationships, actions and communications.
Fairness is an important moral principle or benchmark. Supplier should not feel that a supply professional is exhibiting unfair conduct in selection of vendors  and allocation of orders.

2. Conflicts of Interest.  Ensure that any personal, business or other activity does not conflict with the lawful interests of your employer.
Every supply manager has the right to engage in various private activities outside their employment. But they should avoid situations that give rise to conflicts of interest, wherein they may harm their organization. Whenever a conflict of interest situation is identified and still, it is necessary to participate in that activity, the supply professional should notify his superior for guidance or resolution.

3. Issues of Influence.  Avoid behaviors or actions that may negatively influence, or appear to influence, supply management decisions.

4. Responsibilities to Your Employer.  Uphold fiduciary and other responsibilities using reasonable care and granted authority to deliver value to your employer.
Every supply manager in an organization is an agent of his employer. In a corporation he is an agent of his superior in a direct relationship, an agent of his organizations management in an extended relationship and an agent of shareholders in a very broad relationship. It is the duty of every supply manager to ensure that actions taken by him benefit the best interests of the employer and personal gain considerations should not take priority.

5. Supplier and Customer Relationships.  Promote positive supplier and customer relationships.
Courtesy and respect have to be shown in the relationships.

6. Sustainability and Social Responsibility.  Champion social responsibility and sustainability practices in supply management.
Supply managers have to be committed to protection environment and the sustainability concept.

7. Confidential and Proprietary Information.  Protect confidential and proprietary information.
Supply managers are given information of confidential nature by both the employer and various firms. Such information should be shared with others only on a need-to-know basis.

8. Reciprocity.  Avoid improper reciprocal agreements.
Reciprocity occurs when a customer is also a supplier. But supply decisions have to be taken impartially.

9. Applicable Laws, Regulations and Trade Agreements.  Know and obey the letter and spirit of laws, regulations and trade agreements applicable to supply management.

10. Professional Competence.  Develop skills, expand knowledge and conduct business that demonstrates competence and promotes the supply management profession.
As a knowledge worker, supply professionals must be committed to keep their knowledge comprehensive, up-to-date and develop their skills. Handbook of Management Knowledge Revision is a compilation of knols that is expected to be of us to management professionals to keep their knowledge comprehensive and up-to-date.
For Further Detailed Reading you can download a 15 page pdf document from ISM website.
Various companies have declared their ethical standards for the guidance of their supply professionals as well as their supply chain partners. Some of such ethical guidelines are:



Burt, David N., Dobler, Donald W.,  and Starling, Stephen L., World Class Supply Management: The Key to Supply Chain Management, McGraw Hill, USA, 2003

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