To answer that question, the Supply Chain Professional must understand what creates a "conflict of interest." First, it is important while performing the various job functions, that the decisions being made are in the best interest of the employer and not in the best interest of the staff member making the decision. It is not possible to make a decision that benefits both the employer and the staff member, mainly due to the perception of others that the staff member's judgment was influenced because of their benefit or benefits gained by their decision.
What creates a conflict? Any decision that affects the Supply Chain Professional personally, their family, friends, a business that they receive compensation from, or other types of activities that could provide a benefit. A benefit does not need to be monetary gains. A gain can be increased influence, position, power, etc. or it can be perceived as influencing the decision, thus resulting in a conflict.
Second, if the company does not have a policy addressing conflict of interest the Supply Management department should create and have a policy. This policy should be included in the corporate section of the company policy manual instead of in the Supply Management's policy and procedure manual. The main reason is that the corporate section normally requires CEO or a senior manager's signature prior to placement in the manual and distribution to other managers and staff. Having this level of approval increases the validity and enforceability of the policy. The policy should be all inclusive and apply to all levels of staff and not just the Supply Chain Professional and their department's staff.
Third, includes some form of mandatory inter-departmental education. The form of education could be at the next manager's staff meeting, could be computer training and testing, or even one-on-one training. If the staff members involved in the decision-making process are not managers then computer training might offer the best solution. The goal is to have everyone that could be involved in decision-making have documented training about the conflict of interest policy.
Fourth, is the validation that no conflict exists. Initially, during the roll-out of the policy every manager and staff member should sign a statement that no conflict exists with the job that they are currently performing. For instance, a manager should not be making decisions related to the use a specific company if they or a family member has ownership. The other part of this is to ensure that when teams are created to make decisions on products, services, or equipment that none of the team members will have a conflict. This can be done either verbally and documented in the minutes or in written format. I would recommend that the verification should always be performed in writing and that it becomes a part of the teams documentation. A standard form can be utilized for this documentation. Written documentation allows for the replacement of anyone who has a conflict prior to any discussion or influence and the documentation will eliminate any future questions that a conflict might have existed.
Lastly, the Supply Chain Professional should be involved in all teams making decisions about the products, services, or equipment that are to be utilized by the company. A quick look at products, services, and equipment may be necessary because there are times that Supply Chain Professionals are not involved in the decision-making process. Some of these include projects for research, or travel, or staff insurance policies, etc. Whether the Supply Chain Professional is involved or not, this "Conflict of Interest" policy should apply.
There are many instances that we see decisions being made and a conflict exists. For example:
1. Promotion of a staff member to manage a department that would utilized specific companies of which they own one of the competing companies. In this example the staff member was promoted with the understanding that the company is either closed or sold. The staff member sold the company. However, their manager either did not verify the sale or the sale was not validated as eliminating the conflict. In this example the staff member sold the company to a immediate family member. Conflict still exists.
2. Spartanburg, South Carolina School District Seven signed a contract to allow their golf team to utilize a local country club. As it turns out the superintendent and several of the Board Members were a member of this country club.
3. A Purchasing agent creates a consortium of specific products that they are responsible for purchasing for the organization.
4. A manager has invested throught the company's 401k in stocks of various companies. If the company offers and allows their staff to manage their portfolio instead of having an outside company manage the plan for all staff, a conflict of interest could arise sometime in the future.
There are many more examples of how conflicts influence decision-making. The Supply Chain Professional should always be aware of this when any decisions need to be made on behalf of the company. It is imperative that the party with a conflict remove themselves from the process or the company's policy should be in place to allow documentation and removal of conflicts.
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