Procurement Policies and Procedures
Vendor Ethics
“It is unwise to risk dealing with suppliers who are known to have questionable ethics. The buyer who knowingly associates with such firms exposes himself to the probability of being ‘known by the company he keeps.’ Such a reputation, however unjustified, can drive away valuable, reliable, competitive sources.
In addition, the buyer may expose his company to a number of serious business risks. An unethical supplier may reveal proprietary information to competitors or use it himself. He may knowingly bid low to ‘buy in,’ only to raise his price later at a crucial point in the schedule—in effect performing blackmail. He may knowingly promise a delivery that cannot be made in order to get an order. He may claim the ability to produce a product that is beyond the capability of his firm, fully intending to ‘shop’ the order to other firms. He may even resort to commercial bribery in an attempt to achieve a supply position that is not warranted by his firm’s real ability.
Even though there may appear to be short-term advantages to special ‘deals’ with unethical sources, it is poor policy to succumb to the temptation, since long-term objectives will often be jeopardized. In fact, it is seldom that the supposed short-term advantages actually materialize.”