1. 1 TVPPA Purchasing Workshop Business Ethics for the Purchasing Professional Kimball Bullington, Ph.D. Professor of Supply Chain Management Middle Tennessee State University

2. What are ethics? Why ethics for purchasing? Ethical Traps / ISM Guidelines for Ethics Takeaways

3. Ethics: the study of standards of conduct and moral judgment,… the system or code of morals of a particular philosopher, religion, group, profession, etc. Webster’s New Universal Unabridged Dictionary, 2 nd Edition

4. Moral: relating to, dealing with, or capable of making the distinction between, right and wrong in conduct. Webster’s New Universal Unabridged Dictionary, 2 nd Edition

5. What influences your view of what is right or wrong? Judeo / Christian background (Bible) Protestant work ethic UCC – Reasonableness Laws / Court Cases / Precedents Tradition Educational background News / Media scrutiny

6. Why ethics in purchasing? Money Buyer / Seller Double Standard Professionalism Human nature

7. The answer is easy. Right? Just say no? Ethics policies? Golden rule? Understand human nature. (At least a little bit.)

8. Ethical Traps

9. Pressure to Conform Authority Figure Peer Pressure Don’t make waves

10. ISM Principles and Standards of Ethical Supply Management Conduct 3.Avoid any personal business or professional activity that would create a conflict between personal interests and the interests of the employer.

11. Motivated Blindness Quid pro quo is not necessary. Favors can result in unfairly favoring a supplier. Divided Loyalty

12. ISM Principles and Standards of Ethical Supply Management Conduct 4.Avoid soliciting or accepting money, loans, credits or preferential discounts, and the acceptance of gifts, entertainment, favors or services from present or potential suppliers that might influence, or appear to influence, supply management decisions.

13. ISM Principles and Standards of Ethical Supply Management Conduct 2.Demonstrate loyalty to the employer by diligently following the lawful instructions of the employer, using reasonable care and granted authority. Understand agency Obtain maximum value Avoid compromising activities Avoid using employer’s purchasing power for self Maintain up to date knowledge

14. Indirectness Indirect Responsibility: Unethical supplier behavior: environmental, Employment waste disposal Renewable energy credits / carbon offsets Faceless Victims Lost in a Group

15. ISM Principles and Standards of Ethical Supply Management Conduct 10.Conduct supply management activities in accordance with national and international laws, customs and practices, your organization’s policies, and these ethical principles and standards of conduct.

16. ISM Principles and Standards of Ethical Supply Management Conduct 7.Avoid improper reciprocal agreements. Reciprocal agreements can be illegal if they tend to restrict competition or trade or if they are coerced re: sections 1&2 Sherman Act.

17. ISM Principles and Standards of Ethical Supply Management Conduct 9.Encourage support for socially diverse practices. “All business concerns, large or small, majority- or minority-owned, should be afforded an equal opportunity to compete.”

18. Small Steps

19. ISM Principles and Standards of Ethical Supply Management Conduct 8.Know and obey the letter and spirit of laws applicable to supply management. Common Law Commercial Law Uniform Commercial Code Sarbanes-Oxley Act Restraint of Trade DOT and DHS Health & Safety Environmental Laws Intellectual Property and Trade Secrets

20. ISM Principles and Standards of Ethical Supply Management Conduct 2.Demonstrate loyalty to the employer by diligently following the lawful instructions of the employer, using reasonable care and granted authority. Understand agency Obtain maximum value Avoid compromising activities Avoid using employer’s purchasing power for self Maintain up to date knowledge

21. ISM Principles and Standards of Ethical Supply Management Conduct 6.Promote positive supplier relationships through courtesy and impartiality. Golden rule

22. ISM Principles and Standards of Ethical Supply Management Conduct 11.Develop and maintain professional competence. Education Certification Training Experience

23. Minimizing Comparisons Renaming Everybody does it We didn’t hurt anyone No one will know Desensitization

24. ISM Principles and Standards of Ethical Supply Management Conduct 1.Avoid the intent and appearance of unethical or compromising practice in relationships, actions, and communications. “The consequences of a perceived impropriety can be the same as consequences of an actual impropriety.”

25. ISM Principles and Standards of Ethical Supply Management Conduct 5.Handle confidential or proprietary information with due care and proper consideration of ethical and legal ramifications and governmental regulations.

26. ISM Principles and Standards of Ethical Supply Management Conduct 12.Enhance the stature of the supply management profession.

27. Laws & Regulations for Supply Management Agency law Contract & commercial laws Antitrust laws Trade regulations Industry-specific laws Gov’t procurement regs. Environmental laws Employment laws Worker health & safety Transportation & logistics law Financial laws & regs. Patent, copyright, trade secret, trademark

28. U.S. Laws & Regulations for Supply Management Uniform Comm. Code Uniform Computer Info. Transactions Act Uniform Elec. Transactions Act (@ E- sign) Sherman, Clayton, & Robinson-Patman Acts Foreign Corrupt Practices Act Federal Trade Commission Federal Acquisition Regulations Defense Acquisition Regulations EPA EEOC OSHA Sabanes-Oxley Act

29. Other Traps Poverty and Neglect Low Self-Esteem Authoritarianism Need for Closure

30. Other Traps Addiction Competition Empathy Contempt for Victim Doing is Believing

31. Takeaways 1.Know your profession, relevant laws, and your business. 2.Know & observe ethical guidelines. Often people behave unethically unconsciously. 3.Just because nothing bad happens doesn’t mean it isn’t unethical.

32. Takeaways 4.Be aware that relationships can blind us. 5.Grow professionally. 6.Be aware of perceptions of ethical behavior. 7.Beware of ethical traps that result from psychological / social dynamics. 8.Ethics matters.