Purchasing Ethics

Purchasing Ethics

Scenario 1

What does the Institute of Supply Management (formerly the NAPM) code of ethics say about accepting supplier favors and gifts?

The Institute of Supply Management (ISM) dictates all forms of anti-corruption conduct; therefore, accepting gifts or favors from suppliers is unethical and corrupt (Monczka et al., 2016).

What options or courses of action do Bryan & Nina have?

Bryan and Nina’s courses of action would be to repack the clock and send it back to the supplier who sent it, or they could choose to keep the clock because it was sent to their home.

Which is the best course of action and why?

The best course of action would be sending the clock back to the supplier who sent it because accepting it would be a form of corruption that goes against the ISM principles of anti-corruption.

Scenario 2

The buyer at Sealgood Instruments, Troy Smyrna, is practicing a certain type of unethical behavior. What is the term for this behavior? Why is it considered unethical?

Troy Smyrna’s behavior is referred to as Reciprocity, which goes against the ISM principle of purchasing ethics and business conduct by behaving unethically and promoting commercial bribery that contributes to corruption (Monczka et al., 2016).

Describe multiple alternatives for Lisa.

Lisa has the alternative to either accept Troy’s condition or report the unethical behavior to Sealgood Instruments’ management.

Which is the most ethically sound and why?

Reporting Troy to the management is the most ethical option because his behavior risks ruining the company’s reputation.

Scenario 3

What does the Institute of Supply Management (formerly the NAPM) code of ethics say about financial conflicts of interest?

ISM dictates that awarding business to a family relative is an unethical practice that is also an illegal act.

Analyze this scenario using these four variables of environment

Ethical behavior in the organizational environment dictates that professionals in supply management should promote ethical business conduct. In contrast, it dictates that the organization’s actions should consider their effects on the immediate community in the cultural environment. Decisions influence the personal environment by ensuring the ethical behavior of the individuals while they affect the industry environment by ensuring their effects do not harm the environment through the green movement (Monczka et al., 2016).

What should Sharon do in this situation?

Sharon should report the unethical behavior to management, and she should stick with her first choice by not agreeing to be influenced by her superior.

References

Monczka, Robert M et al. (2016). Purchasing & Supply Chain Management. 6th ed., Cengage Learning.

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Purchasing Ethics

Scenario 1

Purchasing Ethics

Bryan Janz was just arriving back from lunch when his office phone rang.  It was his wife, Nina, calling from home.  Nina told Bryan that FedEx had just delivered a package addressed to her.  The package contained a beautiful clock now sitting over the fireplace.  In fact, Nina said, “the clock looks absolutely beautiful on our living room fireplace”.  Thinking the clock was from a family member, Bryan asked who sent the present.  She said she did not recognize the name—the clock was from Mr.  James McEnroe.  Bryan immediately told Nina that she had to repack the clock because it was from a supplier who has been trying to win business from Bryan’s company.  They definitely could not accept the clock.  Nina was very upset, and responded that the clock was perfect for the room and, besides, the clock came to their home, not to Bryan’s office.  Because of Nina’s attachment to the clock, Bryan was unsure about what to do.

Assignment Questions

1. What does the Institute of Supply Management (formerly the NAPM) code of ethics say about accepting supplier favors and gifts?
2. What options or courses of action do Bryan & Nina have?
3. Which is the best course of action and why?

Scenario 2

Lisa Jennings thought that at long last, her company, Assurance Technologies, was about to win a major contract from Sealgood Instruments.  Sealgood, a maker of precision measuring instruments, was sourcing a large contract for component subassemblies.  The contract that Assurance Technologies was bidding was worth at least $2.5 million annually, a significant amount given Assurance’s annual sales of $30 million.  Her team had spent hundreds of hours preparing the quotation and felt they could meet Sealgood’s requirements in quality, cost, delivery, part standardization, and simplification.  In fact, Lisa had never been more confident about a quote meeting the demanding requirements of a potential customer.

Troy Smyrna, the buyer at Sealgood Instruments responsible for awarding this contract, called Lisa and asked to meet with her at his office to discuss the specifics of the contract.  When she arrived, Lisa soon realized that the conversation was not going exactly as she had expected.  Troy informed Lisa that Assurance Technologies had indeed prepared a solid quotation for the contract.  However, when he visited Assurance’s facility earlier on a prequalifying visit, he was disturbed to see a significant amount of a competitor’s product being used by Assurance.  Troy explained his uneasiness with releasing part plans and designs to a company that clearly had involvement with a competitor.  When Lisa asked what Assurance could do to minimize his uneasiness, Troy replied that he would be more comfortable if Assurance no longer used the competitor’s equipment and used Sealgood’s equipment instead.  Lisa responded that this would mean replacing several hundred thousand dollars worth of equipment.  Unfazed, Troy simply asked her whether or not she wanted the business.  Lisa responded that she needed some time to think and that she would get back to Troy in a day or so.

Assignment Questions

1. The buyer at Sealgood Instruments, Troy Smyrna, is practicing a certain type of unethical behavior. What is the term for this behavior? Why is it considered unethical?
2. Describe multiple alternatives for Lisa.
3. Which is the most ethically sound and why?

Scenario 3

Sharon Gillespie, a new buyer at Visionex, Inc., was reviewing quotations for a tooling contract submitted by four suppliers.  She was evaluating the quotes based on price, target quality levels, and delivery lead time promises.  As she was working, her manager, Dave Cox, entered her office.  He asked how everything was progressing and if she needed any help.  She mentioned she was reviewing quotations from suppliers for a tooling contract.  Dave asked who the interested suppliers were and if she had made a decision.  Sharon indicated that one supplier, Apex, appeared to fit exactly the requirements Visionex had specified in the proposal.  Dave told her to keep up the good work.

Later that day Dave again visited Sharon’s office.  He stated that he had done some research on the suppliers and felt that another supplier, Micron, appeared to have the best track record with Visionex.  He pointed out that Sharon’s first choice was a new supplier to Visionex and there was some risk involved with that choice.  Ben indicated that it would please him greatly if she selected Micron for the contract.

The next day Sharon was having lunch with another buyer, Mark Smith.  She mentioned the conversation with Dave and said she honestly felt that Apex was the best choice.  When LUC asked Sharon who Dave preferred, she answered Micron.  At that point Mark rolled his eyes and shook his head.  Sharon asked what the body language was all about.  Mark replied, “Look, I know you’re new but you should know this.  I heard last week that Dave’s brother-in-law is a new part owner of Micron.  I was wondering how soon it would be before he started steering business to that company.  He is not the straightest character.” Sharon was shocked.  After a few moments, she announced that her original choice was still the best selection.  At that point Mark reminded Sharon that she was replacing a terminated buyer who did not go along with one of Dave’s previous preferred suppliers.

Assignment Questions

1. What does the Institute of Supply Management (formerly the NAPM) code of ethics say about financial conflicts of interest?
2. Ethical decisions that affect a buyer’s ethical perspective usually involve the organizational environment, cultural environment, personal environment, and industry environment. Analyze this scenario using these four variables.
3. What should Sharon do in this situation?

Notes:

• There are 3 ethical situations.
  • Please read and answer the 3 questions after each scenario.