Failing to consider ethics in the procurement process is a recipe for disaster, leaving companies at risk of reputational harm or even negligence. If you don’t build ethics into supply chain requirements, then you are endangering your organisation and putting people and the planet at risk.
When we think about procurement requirements, we often focus on two main considerations:
- What do we want it to do?
- How much are we willing to pay for it?
Beyond that, when we get into the weeds of sorting through suppliers, further questions arise, such as:
- Is the vendor reliable?
- Will the vendor deliver on time?
- Is the increased quality of one vendor’s product off-set by the higher price?
However, there are plenty of other requirements that we implicitly hold without always thinking to stipulate them. Do you want the product you are procuring to be inaccessible to 15% of your workforce? Of course not. But are you stipulating accessibility requirements into the procurement process? Do you want the product to be discriminatory? Again, presumably not, but is this also written into the requirements?
No-one wants their supply chain to be unethical in any way. It would risk damage to the organisation running the procurement. At the very least, it is morally negligent not to question the sources and resources used in your supply chain - something the fashion industry has struggled with for some years. Robust management and visibility over your whole supply chain is neither to be taken for granted, nor is it easy.
The problems are also not limited to fashion. In 2012, Target, the 8th largest retailer in the US, was subject to a devastating cyberattack. This led to the loss of 70m personal details and 40m credit card details, costing the company $200m in the first two months of the attack alone. While Target itself had strong cybersecurity in place, the attack occurred through the hacking of a sub-contractor providing heating and air conditioning services.
With the rise of artificial intelligence, and its increasing presence in procurement solutions, this risk is only set to get worse. There are now over 200 ethical guidelines for the creation and use of AI, reflecting the severity and likelihood of ethical problems arising from its introduction into society and the workplace.
The point is that you cannot rely on just your own organisation being ethical if you are to minimise the above risks. It is crucial that you also consider your supply chain to ensure that there are no ethically-weak links in the ecosystem.
Concerningly, in research carried out by Sopra Steria across the UK government, we found that none of the departments we spoke to had an ethics strategy that covered procurement. That is not to say that ethical issues aren’t considered in procurement. The Scottish Government, for example, has won international applause for its work in this area. However, without a strategy there is a risk that the organisation is not joined up in its thinking and that one department is left to shoulder the burden alone.
One way to manage this risk effectively is to embed ethical requirements into the procurement process through an all-encompassing ethics strategy. This would consider not just procurement itself, but also those raising requirements for procurement, and those implementing the procured solutions.
Ethics by design
A good strategy will embrace an ethics by design approach which starts with the question, “what does good look like?” This should extend beyond immediate fit for purpose and price, to include ethical considerations such as discrimination, accessibility, impact on the environment and so on. It would also start before the procurement process itself, feeding into the requirements scoping.
Ethics by design means that having ethics in the requirements isn’t itself enough. Ethics needs to be embedded in the suppliers’ processes (a requirement that the Social Value Act and Sustainable Procurement Duty have helped to start addressing in government procurement), the product or service procured, and the ways in which that product or service is then implemented and monitored throughout its lifecycle.
Find out more
If you would like to talk to someone about your supply chain, how to evaluate it for ethical considerations, how to create an ethics by design strategy, or how to manage the ethics of procuring artificial intelligence, please get in touch with Dr Kevin Macnish (kevin.macnish@soprasteria.com). Kevin heads up Sopra Steria’s Digital Ethics Consultancy and has, with his team, years of experience in managing these problems.