Business liabilities are not only limited to compliance with environmental and safety standards as part of supply chain and public operations management.
Purchasing and Supply with Nyasha Chizu
The liabilities stretch to address legal and ethical standards on how to deal with suppliers, communities and government.
Leadership in procurement should ensure that policies are in place to make better societies.
Corporate social responsibility, also known as corporate conscience, corporate citizenship or sustainable responsible business, refers to some form of corporate self-regulation that is integrated into the business model.
The policy is built-in to ensure businesses monitor and ensure active compliance with the spirit of the law, ethical standards and international norms.
The policy aims to embrace responsibility for actions during normal course of business through encouragement of activities that have a positive impact on the environment, consumers, employees, communities and all other stakeholders.
Corporate social responsibility from a procurement perspective is viewed at four levels in an organisation.
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The first level is for economic responsibility that addresses the immediate needs of business and shareholders.
Procurement decisions need to drive profits to satisfy this stage. Buyers have a role to ensure that input costs are controlled so as the organisation to realise profits.
The second level is that of legal responsibility.
Procurement must ensure that all procurement is concluded while obeying rules. The rules are in two forms, there are laws that govern procurement in the form of procurement act and regulations in the public sector or procurement policies and manuals in the case of private sector. Social responsibility in procurement will require that procurement is in sync with laws and policies of the country and organisation.
The procurement process must comply with the law and goods bought should also comply with legal requirements such as licensing, taxes and duties as required by the law. Being ethically responsible is the third level.
Ethics are viewed at two levels, as moral principles that govern a person’s or group’s behaviour and the moral correctness of specified conduct.
The first level of ethics requires that procurement personnel belong to a certain school of thought that promotes professionalism.
It is, therefore, necessary that as other professionals such as accountants, lawyers, engineers, quantity surveyors, architects, auditors, health personnel etc align to the professional institute that promotes best practices of the same school of thought, the same is applied to procurement.
Procurement personnel are currently not mandated to belong to a certain school of thought and the result is irresponsible procurement decision making across the public and private sector.
Moral correctness of specified conduct is derived from assessing behaviours in line with set standards.
The lack of procurement standards makes it difficult to audit the moral correctness of procurement conduct. Although there are policies and procedures as well as regulations for procurement, such are being abused due to the non- availability of procurement standards at the peril of all stakeholders.
The fourth and final stage of the hierarchy of corporate social responsibility can only achieved after the first three stages of economic responsibility, legal responsibility and ethical responsibility have been achieved.
Procurement will, therefore, be able to focus on making better societies by being philanthropically responsible.
The philanthropic status is achieved only when the fundamentals are correct, simply put, when your house is in order is only when you can help a neighbour.
Social responsibility in procurement does not mean cleaning the streets.
A strategy is, therefore, required to ensure an organisation and the nation embrace the level of corporate social responsibility as discussed.
Nyasha Chizu is a Fellow of the Chartered Institute of Purchasing and Supply writing in his personal capacity. Feedback: [email protected]
