Code of Ethics
The Procurement Services Department at Bloomsburg University (BU) adopted the Institute for Supply Management (ISM) standards and code of ethics for application in the performance of its fiduciary responsibilities to the university.
The following are the list of standards, guidelines, and principles upon which the BU Procurement Services Department personnel are bound.
- Integrity in Your Decisions and Actions
- Value for Your Employer
- Loyalty to Your Profession
From these principles are derived the ISM standards of supply management conduct:
- Perceived Impropriety. Prevent the intent and appearance of unethical or compromising conduct in relationships, actions, and communications.
- Conflicts of Interest. Ensure that any personal, business, or other activity does not conflict with the lawful interests of your employer.
- Issues of Influence. Avoid behaviors or actions that may negatively influence, or appear to influence, supply management decisions.
- Responsibilities to Your Employer. Uphold fiduciary and other responsibilities using reasonable care and granted authority to deliver value to your employer.
- Supplier and Customer Relationships. Promote positive supplier and customer relationships.
- Sustainability and Social Responsibility. Champion social responsibility and sustainability practices in supply management.
- Confidential and Proprietary information. Protect confidential and proprietary information.
- Reciprocity. Avoid improper reciprocal agreements.
- Applicable Laws, Regulations, and Trade Agreements. Know and obey the letter and spirit of laws, regulations, and trade agreements applicable to supply management.
- Professional Competence. Develop skills, expand knowledge, and conduct business that demonstrates competence and promotes the supply management profession.
Standards and Guidelines
A distinguishing characteristic of a profession is that practitioners combine ethical standards with the performance of technical skills. Supply management professionals must subscribe to a set of ethical principles and standards to guide individual and group decisions and actions.
Our ethical principles are integrity, value, and loyalty. From these principles our standards are established to (1) encourage adherence to uncompromising ethical behavior, (2) increase awareness and acceptance of ethical conduct, and (3) emphasize the role of ethics when formulating decisions.
These standards are guidelines for use by all who manage or influence the supply chain. The standards do not supplant an organization’s policies, but are a model for consideration.
Every supply management professional is responsible to strive for acceptance and adherence to these ethical standards. Organizations are encouraged to develop, publish, and enforce an ethics policy that supports these standards. The ethics policy should be shared with all employees, including those outside the supply organization, and with suppliers.
Information contained in this booklet will provide insight for handling difficult day-to-day matters. However, standards and guidelines cannot cover every situation and do not take the place of good judgment or sensitivity to other cultures, laws, customs, and practices. When in doubt, consult with management, professional colleagues ... and, of course, your conscience.
1. Perceived Impropriety
Prevent the intent and appearance of unethical or compromising conduct in relationships, actions and communications.
Supply management professionals deal with internal and external customers and suppliers. Interaction and treatment between supply professionals and these constituents must be honest and fair-minded. Avoid actions that appear to, or actually do, diminish ethical conduct. Consequences of a perceived impropriety can be the same as consequences of an actual impropriety.
Recommended guidelines for preventing perceived impropriety:
- Maintain business professionalism in all communications.
- Work to identify situations which, even through unanticipated circumstances, may negatively impact business relationships.
- Discuss an actual or potential impropriety with management. Take action as appropriate.
- Promote actions throughout the organization that alleviate the suspicion of impropriety.
- Select outside business and event venues with care to manage possible misperceptions by the business community or others.
- Avoid excessive discussion of personal matters.
2. Conflicts of Interest
Ensure that any personal, business or other activity does not conflict with the lawful interests of your employer.
Supply management professionals must not use their positions to induce another person to provide inappropriate benefits to themselves or others. This includes family, business, personal or financial relationships. Even though a conflict may not technically exist, supply management professionals must avoid the appearance of such a conflict.
Recommended guidelines to avoid and manage conflicts of interest:
- Potential Conflicts: Discuss actual or potential conflict(s) of interest with management. Reassign supply management responsibilities if warranted or appropriate.
- Guidance on Conflicts: Notify the appropriate person for guidance or resolution when a potential conflict of interest arises.
- Conflict of Interest Statements: Advocate that your employer obtain and review conflict of interest statements that encourage employees to disclose any potential conflict of interest upon initial employment and annually thereafter.
- Secondary Business/Employment: Do not harm the interests of your employer through a secondary business or other employment.
- Personal Business: Do not engage in inappropriate personal business with your employer, employer’s competitors, or suppliers. For example, lending money to, or borrowing money from, any customer or supplier.
- Investments or Business Ownership: Report, for review and guidance, personal and immediate family ownership of stock, or other equity in your employer, employer’s suppliers, competitors, or customers.
- Inside Information: Do not use inside information for personal gain.
- Outside Activities: Do not misuse your position as an employee to the detriment of your employer or its reputation.
3. Issues of Influence
Avoid behaviors or actions that may negatively influence, or appear to influence, supply management decisions.
Every person in a position to influence a supply decision must avoid any activity that may diminish, or even appear to diminish, the objectivity of the decision-making process. Interests of the employer must be served by those who are a part of the supply process.
Influence is a factor in almost all business decisions. Use care to evaluate the intent and perception of influence on supply management decisions. Clarity can often be gained by asking questions such as:
Is the business activity in the best interest of the employer?
How will the business activity be perceived by peers and others?
Sources of influence can be introduced into relationships between buyers and sellers, including:
- Gifts, gratuities, or entertainment
- Business meals
- Product samples
- Political matters
- Market power
- Specifications and standards
Recommended guidelines for dealing with matters of influence:
Guidelines cannot cover every situation and do not take the place of good judgment or sensitivity to other cultures, laws, customs, and practices.
- Employer Policies: Supply management professionals should encourage and recommend the development and implementation of policies that eliminate or reduce inappropriate influences on the supply process.
- Gifts, Gratuities, and Entertainment: The giving or receiving of gifts, gratuities, or entertainment has the potential to influence buying decisions. These may be offered to a supply professional, to others involved with a buying decision, or to a family member.
- Manage and evaluate carefully the acceptance of gifts, gratuities, or entertainment, even if the value is small. Develop and communicate a written policy.
- Consider the frequency of giving or receiving gifts, gratuities, or entertainment and measure the “collective impact.”
- Ensure that you abide by the letter and the spirit of guidelines and policies.
- Do not solicit gifts, gratuities, or entertainment for yourself, your employer, or your family.
- Avoid accepting monies, loans, credits, and preferential discounts.
- Seek direction from management if you are concerned that a business relationship may be impaired or appear to be impaired by refusal of a gift, gratuity, or entertainment.
- Business Meals: Meals are occasionally required when conducting business and are often a part of building business relationships.
- Use care to ensure a meal is for a specific business purpose.
- Avoid frequent meals with the same supplier.
- Share ongoing meal costs with the supplier.
- Relationships: Avoid situations where relationships may negatively impact business decisions.
- Product Samples: Product samples may be offered by suppliers or requested by the buying organization for testing or other purposes. Document transactions covering the acceptance and use of product samples. Clarify the responsibility for the cost of samples, and address any obligation for sharing test results with the supplier.
- Political Matters: All organizations are subject to internal and external forces and pressures. Internal forces and pressures result from an organization’s culture. External forces and pressures result from economic conditions, laws, regulations, public opinion, special interest groups, and political entities. The negative influence of internal and external forces and pressures on supply management can be minimized when the organization adopts, communicates, and behaves based on ethical principles and standards.
- Advertising: Exercise care when accepting advertising or promotional items, participating in activities that promote one supplier over another, or participating in activities that could be perceived as preferential treatment.
- Market Power: Supply management professionals must be aware of their organization’s position (e.g., economic size, power, etc.) in the marketplace and ensure that this position is used within the scope of ethical behavior.
- Specifications and Standards: Supply management professionals must ensure that specifications and standards are objectively developed and communicated.
4. Responsibilities to the Employer
Uphold fiduciary and other responsibilities using reasonable care and granted authority to deliver value to your employer.
As an agent for the employer, the supply management professional serves the fiduciary and lawful interests of the employer to the exclusion of personal gain. This requires application of sound judgment and consideration of both legal and ethical implications.
Recommended guidelines for satisfying responsibilities to employers:
- Understand the agency authority granted by your employer.
- Obtain the maximum value for your employer.
- Avoid activities that compromise, or create the perception of compromising, the best interests of your employer.
- Notify your employer of known or suspected unlawful or unethical activities.
- Avoid unauthorized use of your employer’s name.
- Avoid using the employer’s purchasing power to make purchases for specific individuals’ non-business use. If employer-sponsored personal purchasing programs exist, make certain that the arrangements are fair to suppliers, employees, and the employer.
5. Supplier and Customer Relationships
Promote positive supplier and customer relationships.
Supply management professionals are responsible for developing and maintaining effective business relationships with suppliers and customers. Impartiality across all business interactions and transactions enhances the reputation and good standing of the employer, the supply management profession, and the individual supply professional. Long-term relationships with key suppliers should not prevent establishing appropriate working relationships with other suppliers.
Recommended guidelines for maintaining positive supplier and customer relationships:
- Develop and implement policies and procedures for business processes that are fair, unbiased, and applied consistently.
- Encourage prompt and fair problem resolution.
- Avoid unreasonable demands.
- Communicate promptly, openly, and directly.
- Establish a process for suppliers and customers to notify your employer of known or suspected unlawful or unethical activities.
6. Social Responsibility and Sustainability
Champion social responsibility and sustainability practices in supply management.
Supply management professionals are in a position to lead and direct the development and integration of sustainability and social responsibility policies and strategies into the business and supply chain. Supply professionals are also in the position to reinforce the importance of personal commitment and how they impact sustainability and social responsibility initiatives and outcomes.
While there are many key and important facets of sustainability and social responsibility, the specific areas of diversity and inclusiveness (supply base and workforce), human rights, and environment are addressed below.
Recommended guidelines for support of diversity and inclusiveness - supply base:
- Provide socially diverse suppliers the opportunity to participate in sourcing opportunities.
- Promote inclusion of diverse suppliers in the organization’s supplier development and mentoring programs.
- Ensure long-term program sustainability through application of forward-thinking concepts beyond price.
Recommended guidelines for support of diversity and inclusiveness — workforce:
- Drive employee diversity within the organization.
- Proactively promote diverse employment practices throughout the supply chain.
Recommended guidelines for support of human rights:
- Treat people with dignity and respect.
- Support and respect the protection of international human rights within the organization’s sphere of influence.
- Lead the organization and its supply chain to ensure application of human and employment rights.
Recommended guidelines for support of the environment:
- Encourage the organization to be proactive in examining and implementing opportunities to be environmentally responsible throughout the supply chain.
- Encourage environmental responsibility across the supply base.
- Promote development and diffusion of environmentally friendly (“green”) practices and products throughout the organization and supply chain.
- Champion consumption of environmentally responsible products and services within the organization.
- Design and redesign products and services to effect positive environmental improvement.
- Develop a complete understanding of the organization’s environmental footprint and its impact on sustainability. Implement strategies to reduce and eliminate negative footprint impact.
- Implement market intelligence capabilities to address changes in domestic and international legislation.
7. Confidential and Proprietary Information
Protect confidential and proprietary information.
Confidential and proprietary information requires protection and should be shared with others only when needed. Access must meet ethical guidelines, contractual obligations, and government regulations. Supply management professionals should ensure that recipients of confidential and proprietary information know that they have an obligation to protect it.
Examples of information that may be considered confidential or proprietary include:
- Contract terms and conditions
- Bids and quotations
- Product costs
- Descriptions of formulas and processes
- Designs and drawings
- Organizational plans, goals, and strategies
- Financial information not available from public sources
- Information that may influence stock prices
- Wages and salaries
- Personal information about employees, officers, and directors
- Sources of supply
- Computer software programs
Recommended guidelines for confidential and proprietary information:
- Develop and communicate a policy regarding protection of confidential and proprietary information.
- Mark and identify confidential and proprietary information appropriately.
- Use nondisclosure agreements that state the terms for use of confidential and proprietary information.
- Accept no confidential or proprietary information unless you have the right and need to use it.
- Protect confidential and proprietary information given to you.
- Require that confidential and proprietary information given to others be protected by them.
- Use confidential and proprietary information only for its intended purpose.
Avoid improper reciprocal agreements.
Reciprocity is both a legal and an ethical issue that may result in legal sanctions against the organization, its management, and/or its supply management personnel.
When supply management professionals or their organizations give preference to suppliers because they are also customers, or when the organization influences a supplier to become a customer, the professional or the organization is engaging in a practice known as reciprocity. Agreements involving a specific commitment to buy in exchange for a specific commitment to sell also constitute reciprocity.
Recommended guidelines for dealing with reciprocity:
- Understand suppliers that are also customers may not be a problem if the customer/supplier is the best source.
- Use care with supplier lists and ensure they are not provided to others for their use in pursuing improper reciprocal agreements.
- Apply and obtain accounting, legal, and ethical guidance when potential issues of reciprocity arise.
- Recognize that forcing a supplier into a trading relationship is not appropriate.
- Recognize that reciprocal relationships may be an illegal restraint of trade in some countries.
9. Applicable Laws, Regulations, and Trade Agreements
Know and obey the letter and spirit of laws, regulations, and trade agreements applicable to supply management.
Supply management professionals should develop and maintain an understanding of the legal concepts that govern their activities as agents of their employers in the countries in which they operate. These include laws, regulations, and trade agreements at the international, national, state, provincial, and local levels. In addition, it is common for industries to have unique regulations and laws that supply managers in those fields must comply with.
Some examples of laws and regulations that supply management professionals should be aware of include:
- Agency law
- Contract and commercial laws
- Electronic commerce laws
- Antitrust laws
- Trade agreements
- Trade regulations
- Industry-specific laws and regulations
- Government procurement regulations
- Patent, copyright, trade secret, and trademark laws
- Environmental laws
- Employment laws and regulations
- Worker health and safety laws
- Transportation and logistics laws and regulations
- Financial laws and regulations
Additional laws as appropriate
Recommended guidelines for understanding and complying with applicable laws, regulations, and trade agreements:
- Seek training in legal aspects that govern conduct of supply management professionals.
- Supply managers are responsible for understanding and following laws, regulations, and trade agreements that are specific to the countries in which they are doing business. Seek legal counsel when conflicts may exist.
- Interpreting the laws is the responsibility of legal counsel. Involve legal counsel early in analysis and planning to identify and avoid potential legal issues.
- Supply managers involved in governmental procurement must understand and apply laws that are specific to their particular governmental body.
10. Professional Competence
Develop skills, expand knowledge, and conduct business that demonstrates competence and promotes the supply management profession.
Competence is expected of supply management professionals. Developing business skills and increasing knowledge of supply management demonstrates a commitment to the profession and positively impacts you, your employer, peers, and suppliers. Professional development requires continuing education.
Recommended guidelines for achieving a high level of professional competence:
- Conduct periodic self-assessments of your knowledge of supply management and business.
- Establish a self-development program designed to remain current with changes impacting the supply management profession.
- Mentor and teach those who want to learn from you.
- Earn and maintain the Certified Professional in Supply Management (CPSM), Certified Purchasing Manager (C.P.M.), and other professional credentials.
- Become actively involved in a supply management and other professional associations.
- Encourage, support, and participate in ongoing ethical training.
- Encourage ongoing professional development of employees and suppliers.
- Personally adopt and promote the ethical standards expected of a supply management professional.