An Ethical Framework for Purchasing Decisions

As the importance of the purchasing function in corporations increases, there has been a concurrent increase in the importance of ethics in the purchasing environment. The purchasing linkage is critical to effective operation of corporations as high‐quality raw materials and supplies available on a timely basis are required for global competitive success. Bottom‐line productivity and profitability, as well as long‐term viability, are directly dependent on effective functioning in the purchasing arena. The traditional organisational structure of the purchasing function has the potential to encourage unethical employee practices. Viewing the relationship between an organisation and its suppliers as adversarial creates conflict as well as inherent ethical dilemmas in the purchasing function. This article discusses various categories of unethical purchasing situations and illustrates ways to lessen or avoid these dilemmas through the introduction of just‐in‐time(JIT) inventory control procedures. The internal co‐operation necessary in the purchasing/operations interface under JIT facilitates development of a corporate culture supportive of ethical behaviour. Moreover, since in JIT the supplier is considered part of the team – the“person at the previous work station” – these concepts can reinforce intraorganisational ethics as well.