Explain key aspects of corporate

governance of a procurement or
supply chain function.

Chapter: 2.4 Compliance and Structured Processes.

By/ Almahi Suliman

Procurement Consultant
Explain key aspects of corporate
governance of a procurement or supply
chain function.
• By the end of this subchapter you will
understand:
• Conflicts of interest
• The need for documented policies and
procedures of procurement
• Organisational accountability and reporting for
procurement roles and functions
• The status of procurement and supply chain
management within organisations
• Codes of ethics in procurement
• The CIPS code of conduct
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Explain key aspects of corporate
governance of a procurement or supply
chain function.
• A corporate governance is the system of standards,
procedures and policies by which an organisation is
controlled. It is framework that is created around the
organisation’s values and objectives.
• Corporate governance is about making organisations
effective, efficient and successful and their procedures
and policies ethical.
• Corporate governance aims to direct and control actions
of stakeholders. The policies contain the role and
expectations of people within the organisation.
• The ensure that individuals do not take advantage of the
organisation in any unfair way which could result in
personal or professional gain.

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 Vision
Although the content
of the related policies is Gaols
different in every Mission
Corporate
organisation, corporate governance
governance is always
made up of the same Objectives
elements. strategy

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Conflict of interest:
• A conflict of interest occurs when a person’s involvement within an
organisation includes multiple interests. Interests could be financial or
having a family member working within the business. These interests
could influence the person’s decisions in favour of their own gain or
giving preferential treatment. 4D Model in addressing
conflict of interest

Disclose
• A buyer having a close friend or family member as a procurement
manager
• A buyer having a relationship with subordinate or supplier Distance
• A buyer awarding a contract to a family member
• Creating a rival organisation to the one in which a person is employed
Delegate
• Accepting payment from suppliers in exchange for information.
• Accepting corporate hospitality or gifts in return for awarding a contract
Disassociate
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 Codes of ethics in procurement:

• Ethics is about doing the right thins, the right way.

Ethics within procurement relates to the following:
• Human rights. Including modern day slavery, working
conditions, child labour, trafficking, fair pay, etc.
• Bribery and coercion, including conflicts of interest, being
influenced by gifts or blackmail.
• Fair trade. A movement working with developing counties
to enable producers to achieve fairer trading conditions
• The environment. Including reducing pollution, promoting
sustainability and using renewable resources.

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 Ethical values

Ethics within Ethics

conduct of practices
research

Ethics within
procurement

Rules
applying to
Moral
ethical
principles
behaviour
and conduct
Ethics in rules
and
regulations

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The main elements in a
code of ethics
ethics What the code covers
Values Defines an organisation’s values, moral and beliefs. The code explains that the
organisation works fairly, impartially and transparently to promote honesty, respect
and integrity.
Principles Explains how an organisation intends to meet its values. Principles may include
customer satisfaction, meeting standards (ISO) and continuous improvement. CSR.
Personal responsibility Outlines each individual’s responsibility for making sure the code is upheld by
themselves and colleagues. Positive intervention.
Compliance Standards, regulations and internal policies to be adhered with.
reporting Sets out the process through which an individual can report a concern. [open door
policy]

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Benefits of procurement
code of conduct
Element Benefits
Framework Procurement professional works towards the goals, in the same way in accordance with the
code.
Reputation Procurement professionals represent their organisations in front of suppliers
Protection Code of conduct gives more protection to procurement professionals
Focus Code of conduct focuses on good practices
Involvement The key stakeholders are consulted in hence involved in drafting code of conduct.
Involvement enhances commitment.
Diversity A code of ethics should consider the culture and diversity

Failure to follow the code of ethics can cost a procurement function in terms of valuable time and resources as
well as bad publicity.

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CIPS Code of Conduct:
• As a member of CIPS, I will:
• Enhance and protect the standing of the
procurement
• Maintain the highest standard of integrity in all
business relationships
• Promote the eradication of unethical business
practices
• Enhance the proficiency and stature of the
profession
• Ensure full compliance with laws and regulations

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The need for documented policies
and procedures for procurement:
• A policy is part of an organization’s strategic
plan and contains information on how an
organization will conduct itself and its business
activities.
• Policies may be based on the following:
• Organisational objectives
• Legislation
• regulations
• Standards
A policy is a document outlining how a business will conduct itself.
A procedures is the way the policy will be carried out

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Purpose of policy and
procedures:
• Ensure conformance to regulations and
standards
• Ensure compliance with legislations
• 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
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Organisational accountability
• Organisational accountability is about all members of
the business working both collective and independently
to achieve the objectives that have been defined
through the policies and subsequent procedures.
• Each department within an organization is a team.
Collectively all departmental teams form one large
organizational team.
• The organizational team is a cross-functional one
comprising of members from all areas of the
organization.
• Each department team will be made up of different
types of people, all of whom have varying personalities,
strengths and weaknesses.

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 Organisational accountability:
• Accountability can be enhanced through the following:
• 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.
• Within procurement, accountability relates to:
• 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 constraints
• Ensuring specifications are representatives of the need
• Addressing or reporting on potential areas of concern

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Procurement professional can hold
themselves accountable through
reporting the following:
• Concerns
• Poor practice
• Budget variance = actual spend – budget (and according request
budget increase, reduce costs, reduce order volumes, change
suppliers, or cancel orders)
• Supplier delivery information
• Product quality information
• Percentage of defects/rewords
• New suppliers
• Contracts up for review
• Cost reductions
• Price increases
• Changes in legislations or regulations

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 The five levels of competency that describing
capabilities an individual should have at each
competency:
Level of Description Jobs
competency
Tactical Applies key tasks associated with the work of procurement Buyer assistant
and supply.
Operational Provides advice and guidance to key stakeholders on the Buyer, procurement officer
performance of organisational procedures and processes
connected with procurement and supply
Managerial Develops, improve and fulfils organisational and functional Senior buyer, executive, manager
objectives in procurement and supply.
Professional Formulate direction and advice, manages change, and Strategic procurement manager
leads and influences both internal and external Supply chain manager
stakeholders in procurement and supply.
Advanced Leads procurement teams within an organisation and Procurement director
professional influences the board to adopt leading-edge procurement Supply chain director
strategies and establish best practice; influences supply
markets with innovative sourcing solutions.
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• Our location: Khartoum 2, Nearby Ozone
• website www.outsourcemena.com
• Phone +249 183580586
• Business WhatsApp: +249123450445
• email [email protected]

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