Purchasing in particular is susceptible to compliance violations due to unclear rules and bait offers from suppliers.
German companies' purchasing departments turn over billions. Many suppliers are under enormous pressure to sell their goods and services. The temptation is therefore great to sometimes use unfair methods to generate an order.
Purchasing is therefore particularly susceptible to breaches of the rules. Insecure contracts and unethical behavior on the part of suppliers can encourage corruption and violations of antitrust law. It is not always criminal energy on the part of the purchasing department that is involved, but often buyers do not know whether they are already in a legal gray area. According to a survey by the Allensbach Institute, violations of legal regulations occur most frequently in the purchasing department, even before the sales or finance departments.
Suppliers can represent a major risk for companies.
It is therefore of the utmost importance for procurement that suppliers work in accordance with ethical principles, as violations of these principles represent a major risk for companies. If companies enter into business relationships with foreign suppliers who, for example, violate labor guidelines (child labor, non-compliance with occupational safety regulations) and are prosecuted, this can result in enormous reputational damage for the purchasing company. A conviction of the supplier can also lead to delivery failures.
Intensive examination 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 backgrounds. The beneficial owner of a company is often not immediately recognizable at a glance. This is particularly the case if there is an extensive international interdependency structure that inevitably needs to be checked. In such cases, it is important for the purchasing decision-maker to allow sufficient time to research the potential supplier and identify the beneficial owner.
Purchasing and compliance must work more closely together.
The company management must promote cooperation between the purchasing and compliance departments. Both sides can complement each other when it comes to business transactions, 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.
The relevant risks to the purchasing department should therefore be identified and evaluated as part of a specific purchasing risk audit. Suitable measures should then be derived on the basis of a needs-based risk strategy in order to effectively counter the identified risks.
About the author
Eckart Achauer, studied law and business administration, postgraduate Master of Business Administration (MBA). In-service training as European Quality Manager (DGQ), mediator specializing in business mediation and 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 specialized in organizational and process optimization 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 compliance management. As part of compliance audits, he analyses their organizational "compliance fitness", raises awareness and trains management, executives and employees and supports companies in setting up and implementing individual compliance management systems. In doing so, he always takes into account the specific risk situation of the company. Thanks to his many years of experience as a manager and consultant, he is very familiar with the business challenges faced in practice.
