How fine is the line between collaborative supply chain relationships and unethical supplier selection?

| 0 Comments

 

JimMakuwa.jpgWhen does a collaborative supply relationship become unethical? When parties are driven by the objective of creating a mutual gain, is it fair that a single supplier is privy to information about the buyer’s operations - information that is excluded from the open market for every other supplier to have a fair chance to do business with the buying organisation?


The line between creating a nurturing supply relationship and unethical supplier selection is very thin, argues Jim Makuwa (MCIPS), a lecturer at Commerce Edge, in this month’s SmartProcurement.


In a collaborative relationship organisations need to create an atmosphere of openness, commitment and trust with selected suppliers. This kind of relationship creates a bond that is difficult to break and closes doors to other potential suppliers.


“As buyers we need to worry about this,” says Makuwa. “When a collaborative relationship develops to the point where it resembles an extension of your business it becomes difficult to view issues with an open mind. Openness and transparency may suffer, allowing possible substitute suppliers to cry corruption and bribery.


Do we not cling or align ourselves to tested and proven suppliers?
What is a preferred list of suppliers if every supplier is equal?

 

What begins as collaboration…


Crocker et al, in The Relationship Driven Supply Chain (2008), says collaboration in supply chains means managing the chain beyond traditional or transactional methods.


The key distinguishing characteristic of a high-performing supply chain is the presence of strategic trust, which demands a stable, robust and long-lasting relationship with value adding suppliers as business partners.


A collaborative relationship is considered successful when it is meaningful, compatible with each partner’s business and yields positive gains to the partners.


In order to add value to each other’s business, partners must understand each others’ requirements through trust, openness and sharing of sensitive information, often with only a few suppliers.


The relationship is nurtured over a long term and, often, the collaborating team becomes a seamless organisation.


…could turn into unethical actions


Contemporary organisations are partnering with suppliers as the foundation of their supply strategies, says Minaham in Is Partnering a Shame? (1998).


It is widely accepted that supplier relationships are a powerful competitive advantage for organisations. Relationship exchanges have proven to contribute to product innovation and differentiation.


However, to profit from supplier collaboration, buyers must make informed decisions about the choices of partner, governance, capitalisation, intellectual property rights and the protection of brands and corporate reputation.


Consequently, organisations make deliberate supplier choices, meaning that suppliers falling short of prescribed criteria will be excluded from preferred supplier lists.


Once chosen as a supplier, the mutuality of purpose that arises from collaboration often leads to interpersonal relationships between organisations at personal and organisation level.


These relationships create barriers against switching suppliers owed to the bond that is created over the period of the relationship lifecycle, says Ford in The Development of Buyer-Supplier Relationships in Industrial Markets (1980).


Furthermore, think of all the information exchanged between the parties where interrelationships have become an extension of each other’s businesses?


If a collaborative relationship fails, how safe is the intellectual property and data integrity? How easily can you move to another supplier to avert the possibility of your operations collapsing?


Owed to this dependence on survival, such bonds may be difficult to break - in fact, it can be considered as a barrier against new entrants.


There are gains in a collaborative relationship, but isn’t this a case of creating a ‘class of the elite’, especially if the deals involved are lucrative and spread over a long period?


Will equal opportunity prevail if a preferred supplier bids against other potential suppliers on the open market? Is transparency not blinded by past experience?


Drawing the line between unethical supplier selection and a nurturing relationship is difficult when the relationship is entrenched or you are pursuing a relationship that will ensure innovation and product development.


An ethical method of collaboration is not prescribed. It depends on what you are trying to achieve with the relationship. “I guess parties have to set their own rules through service level agreements, meaning that business ethics rests with the individual buyer,” concludes Makuwa.
 

Leave a comment


SmartProcurement Newsletter
X

Please enter your details below to receive the SmartProcurement Newsletter for FREE on a regular basis.

As part of the SmartProcurement Newsletter you will be receiving World Class Procurement News, Tools, Tips, Tactics, Procurement Training updates, Upcoming Events, and the latest Procurement Career Openings.

* Email Address:
* Title:
* First Name:
* Surname:
* Company:
  Position:
* Country:
* Public / Private:

 

Career opportunites

Purchasing and Supply Manager

  • <500 000 >500 000 Gauteng Permanent Procurement Management Supply Chain
Purchasing and Supply ManagerThe CSIR has a vacancy ...More

Senior Manager Public Sector

  • >500 000 Gauteng Permanent Procurement Management Projects / Category Management
 Senior Manager Public SectorTotal Cost to Company: R1.1mil ...More

Senior Manager: Mining

  • >500 000 Gauteng Industrial Engineer Permanent Projects / Category Management
Senior Manager: MiningTotal Cost to Company: R900k – ...More

SUPPLY CHAIN MANAGER

  • >500 000 Gauteng Permanent Procurement Management Supply Chain
SUPPLY CHAIN MANAGER(Total Cost to Company R750k – ...More

Master Data Management Advisor

  • >500 000 Gauteng Permanent Procurement Management Projects / Category Management
 MASTER DATA MANAGEMENT ADVISOR(Total Cost to Company R750k ...More

PRO - Performance Reporting

  • >500 000 Permanent Procurement Consultant Procurement Management Projects / Category Management
PRO - Performance ReportingTotal Cost to Company: R800k ...More

PRO - Risk & Governance

  • >500 000 Gauteng Permanent Procurement Management Projects / Category Management
PRO - Risk & GovernanceTotal Cost to Company: ...More

Supply Chain Site Manager

  • >500 000 Gauteng Permanent Procurement Management Supply Chain
Supply Chain Site ManagerTotal Cost to Company R1mil ...More

Chief Financial Officer

  • >500 000 Gauteng Permanent Procurement Officer / Specialist
Chief Financial OfficerTotal Cost to Company R1.5mil – ...More

Process Engineer- WMS

  • <500 000 >500 000 Industrial Engineer Permanent Projects / Category Management Western Cape
Process Engineer- WMS(Total Cost to Company R350K – ...More

Forecast Analyst

  • <500 000 Analyst Permanent Procurement Management Western Cape
Forecast Analyst(Total Cost to Company R350K – R500K) Location: ...More

Group Category Manager: Indirects

  • >500 000 Permanent Procurement Management Projects / Category Management Western Cape
Group Category Manager: Indirects(Total Cost to Company R700K ...More

Group Category Specialist: Chemical

  • >500 000 Gauteng Permanent Procurement Officer / Specialist Strategic Sourcing
Group Category Specialist: Chemical(Total Cost to Company R700K ...More

Sourcing Specialist - 3rd party

  • >500 000 Gauteng Permanent Procurement Officer / Specialist Strategic Sourcing
Sourcing Specialist - 3rd partyTotal Cost to Company ...More

Global Procurement Lead (Processing)

  • >500 000 Gauteng Permanent Procurement Management Supply Chain
 Global Procurement Lead (Processing)Location: JohannesburgTotal Cost to Company ...More

Global Supplier Performance Manager

  • >500 000 Gauteng Permanent Procurement Management Supply Chain
Global Supplier Performance Manager Location: Johannesburg  Cost to ...More

Group Customer Service Lead

  • <500 000 >500 000 Analyst Gauteng Permanent Procurement Officer / Specialist
Group Customer Service Lead  Location: Johannesburg As the ...More

Business Intelligence Manager

  • <500 000 >500 000 Gauteng Permanent Procurement Management Supplier / Business Development
Business Intelligence Manager Location: JohannesburgLead the development, implementation, optimization ...More

Group Procurement Manager

  • <500 000 >500 000 Gauteng Permanent Procurement Management
Group Procurement Manager Location: Johannesburg  A Global Organization ...More

Commodity Manager Packaging

  • >500 000 Commodities Gauteng Permanent Projects / Category Management
Commodity Manager Packaging  Location: Johannesburg Salary: R850k– R1.1mil ...More