Purchasing in particular is vulnerable to compliance breaches due to unclear rules and bait-and-switch offers from suppliers.
Billions are turned over in the purchasing departments of German companies. Many suppliers are under enormous pressure to sell their goods and services. The temptation is great to sometimes use unfair methods to generate an order.
Purchasing is therefore particularly susceptible to breaches of the rules. Here, insecure contracts as well as unethical behaviour of suppliers can favour corruption and violations of antitrust law. Criminal energy on the part of purchasing is not always involved; often buyers do not know whether they are already in a legal grey area. According to a survey by the Allensbach Institute, transgressions of legal regulations occur most frequently in the purchasing department, even before the sales or finance department.
Suppliers can be a major risk for companies.
It is therefore of utmost importance for purchasing that suppliers work according to ethical principles, as their violations represent a great risk for companies. If companies enter into business relationships with foreign suppliers who, for example, violate labour guidelines (child labour, non-compliance with occupational safety requirements) and are prosecuted, enormous reputational damage can result for the purchasing company. A conviction of the supplier can also lead to delivery failures.
Intensive auditing of the supply chain is essential.
Early and comprehensive information about existing or potential suppliers can prevent the company from violating compliance guidelines, especially in the case of partners abroad or from other cultural groups. The beneficial owner of a company is often not immediately recognisable at a glance. This is especially true if there is an extensive international interlocking structure that inevitably has to be checked. In such cases, it is important for the purchasing decision-maker to allow sufficient time for research on the potential supplier and the identification of the beneficial owner.
Purchasing and compliance must work more closely together.
Management must promote cooperation between the purchasing and compliance departments. Both sides can usefully complement each other in the conduct of business, for example when it comes to defining and adhering to process specifications. The goal should always be a high level of transparency in the procurement process.
The prerequisite is always the identification of the relevant risks.
Within the framework of a specific purchasing risk audit, the relevant risks of the purchasing department should therefore be identified and evaluated. On the basis of a needs-based risk strategy, suitable measures should then be derived to effectively counter the identified risks.
About the author
Eckart Achauer, studied law and business administration, postgraduate studies to become a Master of Business Administration (MBA). In-service training to become a European Quality Manager (DGQ), a mediator specialising in business mediation and a Certified Compliance Manager (TÜV).
He worked for around 10 years in the international insurance industry in the management of a Swiss insurance group in various functions (claims department, sales, assistance) before moving into management and business consulting in 1997.
As a consultant and managing director of various consulting companies, Mr Achauer has specialised thematically in organisational and process optimisation as well as in the development and implementation of management systems - quality management, risk and compliance management.
At Senator Executive Search Partners, Mr Achauer is responsible for the area of compliance management. Within the scope of compliance audits, he analyses their organisational "compliance fitness", he sensitises and trains the management, executives and employees and supports the companies in setting up and implementing individual compliance management systems. In doing so, he always takes into account the specific risk situation of the companies. Due to his many years of experience as a manager and consultant, he is very familiar with the entrepreneurial challenges from practice.
