A code of conduct with suppliers should not be viewed as a complete list of non-negotiable rules. It is a regulation that allows a company to take risks, but at the same time to safeguard its interests. A code of conduct is also a token of partnership, by which the buyer clearly expresses the requirement that both parties to the transaction follow the rules. This is one of the elements of a lasting relationship.
What is a code of conduct?
A model code of conduct contains behaviour guidance for suppliers and employees involved in the purchasing process. Some of the principles are general without regard to the company’s size or industry, and remain binding for all enterprises in any code of conduct. These are standard provisions established by non-governmental organisations, local communities or other superior bodies. However, specific provisions of the code should reflect individual needs and particular operational aspects of the enterprise.
An effective code needs to be clear
A code of conduct should clearly specify the criteria of cooperation with suppliers – economic, social and environmental requirements. It can be effective only if the instruction is in the form of an official document laying down a simple procedure that will answer the questions of employees engaged in the purchasing process. The code should specify:
For the buyer:
- What are the principles that should guide the employees when they select suppliers, cooperate with clients and local communities;
- The manner of supplier assessment;
- The rules for accepting remuneration and additional bonuses from suppliers.
For the supplier:
- The requirements a supplier has to meet to participate in a contract award;
- Information about ethical standards expected from suppliers;
Additionally, this kind of regulation should also specify consequences and responsibilities in case of a failure to comply with individual provisions.
Are codes of conduct popular?
In practice, such regulations are typically to be found in ethical codes. These are provisions addressed directly to buyers, and one of their elements is a transparent supplier selection process and transparent relations with suppliers during the supply or service performance. Provisions addressed directly to suppliers should be treated separately. At the moment, such codes are not commonly used, in particular, in case of group of companies or international groups. I believe that such practices should definitely be promoted. In particular, the acceptance of the code should be an obligatory condition in e.g. supplier certification.