WAYS OF ACHIEVING ETHICAL BEHAVIOR
Purchasing executives must ensure that their departmentâ€™s performance is above suspicion. It is no easy task, because of the difficulty in classifying some activities as being distinctly ethical or unethical. Two approaches however can be used as starters in seeking to achieve this objective. First, definite policies on all matters involving ethics should be formulated and communicated to all personnel. Secondly, an attempt should be made to create a working environment, where unethical temptations seldom become realities.
The surest way to ensure ethical conduct on the part of the purchasing staff is to create a proper environment which is conducive to such conduct. The foundation for such an environment consists of the personnel themselves. Purchasing management will be repaid many times for the effort, put into thorough careful investigation and selection of the buying personnel. If the bulk of the people basically honest, the purchasing executive has the major portion of the ethics battle won. Honest people being selected, the next step is to remunerate them adequately, in order to ensure decent standard of living to them.
Finally, the concept of the age old â€˜monkey see, monkey doâ€™ has great relevance in the matter of ethical conduct. The purchasing executive and his supervisors must live, to the letter, the departmentâ€™s policies and ideas. Numerous studies have confirmed beyond doubt, that the action and attitudes of supervisors are the most influential single factor in determining the attitudes of a work group.
The dictionary defines reciprocity as a state of exchange, and co-operation for a return in kind. In a business context, it refers to the practice of buying from a company that buys from you, because this company buys from you. A formal definition of reciprocal buying is the practice of giving preference in buying, to these vendors who are customers of the buying company as opposed to vendors who do not buy from the company. The practice is based on a principle, â€˜Do unto your customers as you would have them do unto you.â€™
Reciprocity has both proponents and opponents. Arguments of proponents of the policy run more or less, on the following lines:
1. When quality, price and service are assured, it is god to give preference to own customers.
2. It adds to the sales of the buying company.
3. It creates better trade relations between the buyer and the seller.
The opponents criticize the practice citing the following lines:
1. False market can be created with companies that may later change their minds or fall behind technically.
2. Reciprocity does not follow sound principles of buying and selling on the fundamental criteria of quality, price and service.
3. Companies may relax their competitive efforts in technical and production causes as a result of reduced competition. Consequently, purchasing costs may be higher.
4. Sales departments may develop a false sense of security, resulting in the deterioration of a firmâ€™s selling effort.
5. Company reputation may be impaired because of bad publicity resulting from reciprocity. Sellers of new, advanced products and processes will not waste their time with companies known to be tied up with reciprocal agreement.
6. New customers may be hard to find because of pre-established relationships with competitors.
7. Conspiracy and restraint on trade situations can develop with attendant legal dangers.
Dangers from reciprocal buying far outnumber the benefits from it. Not many people, therefore, advocate the practice nor many industries follow it. But companies manufacturing high volumes, highly competitive and standardized products are more susceptible to reciprocal pressures than companies producing highly differentiated products. To be specific, industries receptive to the practice are transportation, petroleum, steel and cement industries. Industries less responsive to reciprocity include those concerned with electronic data processing, electronics and defense.