3.1 - Explain aspects of corporate governance impacting the procurement or supply chain function Flashcards
Corporate governance
The mechanisms, procedures and processes that are used to control and direct an organisation
name 5 elements of corporate governance and how they link
- Vision (policies and procedures)
- Mission (management, stakeholder & board accountability)
- Strategy (performance management)
- Objectives (stakeholder protection)
- Goals (Values & ethics)
Conflict of interest
A situation where someone within an organisation has opposing loyalties
Name 6 examples of conflict of interest
- A buyer having a close friend or family member as a procurement manager
- A buyer having a relationship with a subordinate or supplier
- A buyer awarding a contract to a family member
- Creating a rival organisation to the one in which a person is employed
- Accepting payment from suppliers in exchange for information
- Accepting corporate hospitality or gifts in return for awarding a contract
Name the 2 ways in which conflicts of interest present themselves
- An actual conflict of interest occurs when a procurement professional has to make a decision that may affect them personally
- A perceived conflict of interest occurs when a procurement professional has private interests that could affect a decision-making process
Whats the 4D conflict of interest model
- Disclose
- Distance
- Delegate
- Disassociate
Name 4 things policies may be based on
- Organisational objectives
- Legislation
- Regulation
- Standards
Name 10 policies and procedures
- Ensure conformance
- Ensure compliance
- Protect from coercion, bribery or fraud
- Organisational protection
- Continuity of supply
- Promote efficiency
- Promote ethical behaviour
- Provide references
- Assist audit processes
- Aid with legal cases
organisational accountability
All members of the business working together to achieve the objectives
Name 5 levels of competence
- Tactical
- Operational
- Managerial
- Professional
- Advanced professional
Name 4 ways accountability can be enhanced
- Defining clear roles and promoting team leadership
- Promoting a sense of ownership for team results
- Providing freedom, control, support and ownership
- Not focusing on the negatives and embracing the positives
Name 7 things procurement relates to within procurement
- Conforming to the CIPS Code of conduct
- Compliance with any ethical policies
- Conducting supplier appraisals fairly and transparently
- Awarding contracts to the most suitable and cost-effective supplier
- Managing spend to keep within budget constrainst
- Ensuring specifications are representative of the need
- Addressing or reporting on potential areas of concerns
Whats the formula for variance
Variance = actual spend - budget
Name 5 things buyers may need to do from the reporting of variances in the budget
- Request a budget increase
- Reduce costs
- Reduce order volumes
- Change suppliers
- Cancel orders
Name 8 elements which give an organisation a view on how the department is performaning
- Supplier delivery information
- Product quality information
- Percentages of defects/reworks
- New suppliers
- Contracts up for review
- Cost reductions
- Price increases
- Changes in legislation or regulations
Name 6 ethics within procurement
- Ethical practises
- Rules applying to ethical behaviour and conduct
- Ethics in rules and regulations
- Moral principles
- Ethics within conduct of research
- Ethical values
Name the 5 main elements of a code of ethics
- Values
- Principles
- Personal responsibility
- Compliance
- Reporting
Whistle blowing
When an individual reports activity or information which they believe to be illegal, unethical or not in accordance with the organisations policies and procedures
Name 6 benefits of having a code of ethics within a procurement function
- Framework
- reputation
- Protection
- Focus
- Involvement
- Diversity
Name 4 procurement challenges that a code of ethics will guide practitioners through
- Human rights issues
- Bribery and coercion
- Movements such as fair trade
- Environmental issues
Name the 4 key principles of the CIPS Code of ethics
- Understanding and commitment
- Ethical practise
- Professionalism
- Accountability
Name the 3 parties involved in the tripartite structure of the ILO
- Employees
- Employers
- Governments
Whats the aim of the ILO
Take all opinions into account and reach a solution that provides fair and acceptable conditions for all parties involved
Name the 8 core conventions of the ILO
- Freedom of association and protection of the right to organise
- Right to organise and collective bargaining
- Forced labour
- Abolition of forced labour
- Minimum age
- Worst forms of child labour
- Equal remuneration
- Discrimination (Employment and occupation)
Remuneration
The amount of payment and benefits a person gets in return for work
Whats the purpose of the CIPS Code of conduct
To outline the actions and behaviours which must be followed by CIPS members
Name the 5 sections of the CIPS code of conduct
- Enhance and protect the standing of the profession
- Maintain the highest standard of integrity in all business relationships
- Promote the eradication of unethical business practises
- Enhance the proficiency and stature of the profession
- Ensure full compliance with laws and regulations by
