Four Wildly Effective Ways to Work with Procurement
How do you work with Procurement? Do you have a good relationship? If so, why and how? That’s this week’s question. This is the fourth in a series we’re running here at Compliance Kristy about how we can work successfully with several functions: Internal Audit, Human Resources, Legal, and Procurement. Along the way, I’m asking YOU, the experts, about how you successfully work with each function. I’ll be taking your answers (anonymously of course) and putting them into my presentation at the SCCE Conference in Las Vegas.
As for me? Following please find Four Wildly Successful ways I’ve found to work with Procurement.
1. Train Procurement on Red Flags for Modern Slavery
Procurement is in a great spot to catch signs of modern slavery, human trafficking and human rights abuses. If a price is too good to be true, it probably is, and may be available on the backs of people forced into labor or indentured servitude. In addition to spotting totally unrealistic low prices, Procurement should be trained about other red flags, like a refusal to enter into audit clauses that allow for on-site visits in high-risk countries. The more information Procurement is given, the more likely they are to see red flags so they can warn Compliance when there might be a problem.
2. Ensure They Understand Competition Issues and Price Sharing Issues
I can’t tell you the number of companies I’ve gone into where someone in Procurement or Purchasing has bragged that they got a great price by sending one vendor’s quote to a competitor, then asking them to match or beat it. Instead of discussing their needs and asking for the best possible price, they accidentally engage themselves in conduct that could be considered anti-competitive and that could get the company in trouble.
Be sure to train the Procurement department on competition / anti-trust issues so that you’re sure they won’t accidentally engage in anti-competitive behavior. They may think they’re helping the company to get the best price, but if that price comes with a fine and reputational harm, it won’t be worth the deal.
3. Have a Clear Conflict of Interest Process with Procurement
Sure, you’ve got the annual disclosure you require from your employees or managers to discover conflicts of interest, but is it enough? One place Procurement can be infinitely helpful is in including a conflicts of interest disclosure on the part of vendors and suppliers as part of your on-boarding process. A simple check-box or two-sentence section within on-boarding forms can make an enormous difference. An example would be, “Please check the box if any of your relatives work at our Company.” If a vendor clicks “Yes,” Compliance can follow up to ensure that no conflict of interest exists.
By asking Procurement to help you root out conflicts of interest from the third-party providers, you’ll get a more fulsome picture of the risks facing the company from unfair business practices.
4. Make ONE Due Diligence Questionnaire to Include in the Review Process
Vendors and suppliers complain bitterly about the multitude of questionnaires and forms they have to fill out in order to work with many large companies. Bribery due diligence? Please fill out this online form. And after you finish that, fill out the data privacy questionnaire, then the human rights and modern slavery survey. Perhaps you finish off with the health and safety questionnaire, as well as the diversity form.
Instead of requiring multiple due diligence requirements, work with Procurement to come up with a single form that can be filled out by potential vendors and suppliers. Procurement should notify compliance (or the relevant department) if it gets an answer that concerns it. By having one streamlined process, you’ll make it easier for everyone.
How else have YOU found to work effectively with Procurement? What is Procurement in charge of in your company, and what is managed by compliance? Share your answers with me and the fellow participants at the SCCE conference by emailing me at KristyGH@SparkCompliance.com. Looking forward to seeing you soon!