Relationships Do Affect Sourcing Decisions

Regardless of who is involved in the process of selecting a supplier, an impartial and fair process is what matters most.

The creation of robust relationships is an intrinsic element of conducting business in the supplier management field. To build strong alliances there must be a foundation of trust and respect. Preservation of supplier confidence and trust is strengthened through a sound sourcing process.

All potential suppliers must believe that they have a bona fide opportunity to win the bid, even if the incumbent has already established relationships inside the company. Complications can occur when procurement personnel have existing friendships with the suppliers involved in the sourcing event.

One of procurement’s primary roles is to establish decision criteria that achieve an equitable supplier selection process. A balanced decision process should determine which supplier relationship will have the best impact on the business.

Most companies have established conduct policies involving the ethical standards of supplier interaction that clearly delineate conflicts of interest. ISM’s first principle of supply management states that one must “avoid the intent and appearance of unethical or compromising practice in relationships, activities, and communications.” Even if you are the only person who knows of the potential for conflict, but you must take precautionary actions to avoid it.

Situations may arise in which a close friend of an employee works for a supplier participating in the bid. Several specific steps can help you remain impartial if your friend works for a supplier.

If you are a part of the sourcing event, it is essential to recuse yourself from the selection process. Additionally, the person leading the event needs to know about the relationship with your friend. Finally, if your friend asks you specifics about the bid, you need to state clearly how important it is to remain outside of the process entirely.

If your friend’s job is at stake, remaining unbiased can be extremely complicated. You may feel pressured to sustain your relationship by providing information about pricing or a chance for your friend’s company to re-bid. By trying to help your friend, you may actually jeopardize your own credibility, compromise your company’s ethical standards, and put your own position at risk. No matter how strong the temptation, the requirements of the business take precedence.

Because most companies run sourcing events regularly, managing an impartial process is essential to maintaining credibility with all of the prospective suppliers. Sourcing events involve several companies and individuals. The supplier selection process must transcend any single individual’s role. As Mr. Spock told Captain Kirk in Star Trek 2, “The needs of the many outweigh the needs of the few.”

ciao…mam

Michael A Massetti is a high technology supply chain executive who has managed procurement, quality, supply chain planning, customer operations, distribution/logistics, operations engineering, and more.

Michael Massetti LinkedIn Profile

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