Temptations in the Supply Chain: Moral vs Ethical Sourcing

Ethical Dilemma

• Situation: Your company needs to source a critical raw material for production. The most reliable and cost-effective supplier is located in a country known for questionable labour practices and the potential use of child labour. There are alternative suppliers, but they are significantly more expensive or have longer lead times, which could jeopardize your company's production schedule and profitability.
• Dilemma: The ethical dilemma is to choose between: Prioritizing cost-effectiveness and timely delivery: This potentially supports your company's financial interests and ability to meet customer demands. However, it could mean indirectly supporting unethical labour practices.
• Upholding ethical standards: This involves sourcing from a more expensive or less reliable supplier. This demonstrates a commitment to responsible sourcing, but may negatively impact your company's performance and potentially even result in price increases passed on to consumers.

Moral Temptation

• Situation: A potential supplier offers you a substantial personal gift or bribe in exchange for securing a lucrative contract for their company.
• Temptation: The moral temptation is to: Accept the bribe: This would mean personally benefiting financially at the expense of your company and betraying the trust placed in you as a procurement professional.
• Reject the bribe: This is the ethical course of action, but you risk losing out on a potentially significant personal financial gain.

Key Differences

• Scope: Ethical dilemmas involve a conflict between two or more morally valid options, often impacting a broader range of stakeholders (company, employees, consumers, and the community where the supplier operates). Moral temptations focus on personal gain versus doing the right thing.
• Complexity: Ethical dilemmas are often complex, requiring careful consideration of various principles, potential consequences, and trade-offs. Moral temptations may be more straightforward, but the decision to resist can be difficult.
• Legality: Moral temptations often involve illegal or improper actions (e.g., bribery), whereas actions stemming from ethical dilemmas may not have clear legal boundaries.

Mitigating Risks in Supply Chain Procurement

To address ethical dilemmas and moral temptations in procurement, companies can:

1. Establish a strong code of ethics: Develop a clear code outlining expectations for ethical behaviour, including supplier relationships and anti-corruption measures.
2. Due diligence: Conduct thorough background checks on suppliers, including their labour practices, environmental impact, and ethical track records.
3. Transparency: Encourage transparency throughout the supply chain, using audits and open communication to identify and address potential issues.
4. Training: Provide regular training for procurement professionals on ethical decision-making, conflict resolution, and identifying red flags.
5. Reporting mechanisms: Establish clear channels for reporting unethical behaviour or potential risks.