THE GUARDIAN OF THE CORPORATE REPUTATION -- WHO IS IT?

You are probably thinking that this is an easy question to answer, because by all logic it is everyone. But not everyone is affected by a misstep, and not everyone thinks about the ramifications of breaches -- ethical, legal, financial etc. -- which would irreparably harm an organization's reputation and potentially lead to its eventual demise.

In a recent conversation which I had, the question was posed "Is procurement the keeper of the keys to the corporate reputation vault?" And quite honestly, from my perspective, procurement has probably the most important role to play. But let's first look at the other players.

• Legal: Well, there is an excellent argument to be made that legal is the inevitable authority on what could get an corporation into legal trouble. But considering the massive amount of interpretations that the law could take...this is an important consideration, but not the final one. Because often what is legal and what is not in important regarding fines, imprisonment and reputation as well...but there are things that might be perfectly legal, but are seemingly questionable -- ethically, morally etc. -- and might make a good headline in the newspaper...Legal yes, but a strike out on the reputational front.
• Internal Auditor: Again, the internal auditor has an important role to play, but is often fiscally focused, although some internal auditors can be used as sounding boards for other issues. But the actual title "internal" auditor, harkens to the focus is internally and yes, ensures that things are being done correctly so that the organization can pass an external audit..but just like legal....not necessarily bigger picture focused.
• Marketing/Communications: I put these two areas together, because they are impacted by the same issues to a certain extent. Certainly Marketing and Communication "spin" the message....trying to get clients to buy their product/service. When a misstep occurs both are severely affected -- communications trying to get ahead of the story and spin the issue, and marketing considering their options for messaging based on the headline story -- and how it is going to affect the brand. And although Marketing helps to build the brand, the message is a pitch and doesn't look at internal operations trying to figure out what could hit the company in the backside. And communications? Well there is a lot of reactivity there...and not the "keeper of the keys" activity.

There are other areas within organizations that could be discussed, but if I listed them all this would be a very long entry. So let me get to Procurement and why with the global view that procurement has, one needs to seriously consider the impact on the corporation's reputation, and also one needs to consider how some of the measurements that are used to determine a procurement team's efficacy may in fact be counter-productive.

First, let me go back a step and talk about the definition of "keeper of the keys". I want to make sure that no one believes that what I'm suggesting is "policing". That is not or never should be the role of procurement. This is at a higher level, which looks at moral, legal, ethical issues -- risk mitigation and the like.

Procurement has a 360 degree lens into the internal and external aspects affecting the organization. With appropriate market intelligence a good procurement department understands potential issues with suppliers -- including how they do business (around the globe) and the risks associated with those who have questionable business practices. Also, procurement has a lens into conflict of interest issues....and hopefully has a full disclosure policy to ferret out any potential issues regarding impartiality of the evaluation team.

How about sustainability? A lot of sustainability initiatives to date have been driven by the proverbial "low-hanging fruit", and that is in building operations (turn off the lights!), recycling etc. But what about the rest? What about travel and potential alternatives, such web conferencing etc. -- Travel is usually managed and negotiated through the procurement office -- so what better place to initiate positive change?

How are suppliers meeting their "global" obligations re sustainability? Right now, there is too little done within procurement organizations here -- beyond putting something into RFPs which says "Are you Green?" Reality check here -- no one is going to say no, and unless you are actually going to audit them and beyond them -- their suppliers as well -- their is absolutely no point in putting this into an RFP. Yet the point remains the same -- this could and should be driven by procurement.

I could go on ...but this posting is already too long...Nevertheless, I have one more comment to which I alluded to earlier, which is about counter-productive measurements. This brings me back to the nit which I have always had, regarding the inordinate amount of focus on cost savings -- which unfortunately drives the focus to be on price (and let's be serious here -- we can talk about total deliverable costs -- but often the measures issued by the powers that be end up being price driven) -- this pushes procurement to make decisions which may in fact be contraindicated when trying to focus on the corporate reputation -- not always, but it does have significant impact.

So the question becomes -- when it comes to the corporate bottom-line what is more important? A few thousand dollar savings, or a long term excellent reputation? I'm sure these days if you ask Mattel or Toyota you'd know what they'd say...the loss to the top-line can be measured by decisions made as a result of incompatible metrics....

....So procurement in my mind, should be the "keeper of the keys"....but the savings metric needs to be relegated to a lower status for procurement to become effective in this role.