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Absolutely agree! My experience in the last 5 years has made me believe that over and over again..
There are Chances to involvement of Frauds in Procurement .But if Procurement Procedure is capable of avoiding such corruptions.
Considering the theme of the question it can be said that, there is a high opportunity to conduct fraudulent activities by procurement personnel. As procurement personnel are directly related with the purchase and procurement related activities, they can be active in those fraudulent activities which damage the fame of the organization as well as management.
However, besides procurement guy other persons like sales & marketing people can also be involved in such fraud activities. It is the responsibility of the management and the organization to ensure the implementation of checking policies due to which it may becomes difficult for them to conduct such low level action.
Finally, we can say that, we can try to improve the morale of people and establish such system so that they won't try to do such fraudulent actions.
Only in cases, where evaluation process is done by Team comprised of functional members from several departments and a negotiation with supplier is followed after evaluation, the chances of of Functional Manager frauds increases! However it cannot be generalized and may vary from organisation to organisation and culture to culture.
Thanks for invitation.
There are chances of procurement frauds committed by people of other functional areas, say drawing up specifications to favour a particular supplier or requesting higher quantities than actually required or requesting urgent delivery unnecessarily to favor a supplier who has the goods in stock. But these issues are hardly noticed or perceived in general.
Whereas procurement frauds by people of procurement department can be easily made through numerous procurement steps and easily circulated in the community or organisation.
So, it the the responsibility of procurement department to check the purpose, specifications (to be generic and not specific), actual quantity required and delivery time requirement. With this approach and commitment of procurement manager, procurement frauds could be greatly minimised.
Procurement frauds can be done without complicity, collusion and or improper work performance of procurement department- head or faulty procedures / improper implementation. We have to find out the final beneficiary of corruption to understand the nexus. Sometimes, junior procurement officer can be made the victim, but then he may be compelled to act in certain way by his senior and ultimately, the information of omission/ commission should be brought to the notice of procurement head even through confidential means. After all, responsibility and authority goes together and proper punitive action should be initiated. However, one must be cognizance of the fact sometimes corporate vested interests group will be extensively protecting their political interests and downplaying their role to the detriment of an individual or a less influential group- in that case a neutral arbiter is pivotal to proper decision making to a just and long lasting solution
Do you agree that Procurement frauds are generally committed by people in function areas other than procurement but the perception is otherwise?
It is the duty of us all to treat others in a true, honest and proper manner, avoiding deception, misrepresentation and misdirection. It is the responsibility of the Procurement function to be especially vigilant in protecting those principles by applying a duty of care in its dealings with others. These principles lie at the core of the procurement profession. The procurement function is in the privileged position of receiving information from organisations that other functions may not immediately have. There is an underwritten principle that all such information should be treated in confidence as if the information were their own. This principle is not unique to the procurement function however but to all who work in other functions within the organisation and who may also have access to such privileged and confidential information.
It is unfortunate however that some functions may be over-zealous and even sometimes dishonest in their enthusiasm to win business. They may be unaware of or choose to ignore their duty of care or the principles of confidentiality. The procurement function must entrench and enforce those principles to ensure that others within the organisation are left in no uncertain terms as to their responsibilities. Where the procurement function can demonstrate that it has established all the controlling principles to avoid dishonesty and deception then no blame should be attached to it. It must also be involved in the promotion of the company’s commitment to discretion and confidentiality to its suppliers. Where the procurement function is actively involved in pressing home those established principles it will be seen to be acting in a pre-emptive manner to avoid the betrayal of sensitive information.
The perception of outside agencies can be based upon unreasonable assumptions and are often ill-informed. Those ill-informed views can be overcome through the application by the procurement function of firm internal controls to protect the confidential information of others and by promoting externally their firm commitment to the protection of such information. It is a sorry fact that where these controls are absent then the procurement function will be at the forefront where blame is to be attributed to the organisation.
may be , but procurement PIC must stop like these issues because he is the control on cost
No sorry, I disagree. This is totally dependant on the individual. If the staff member is that way inclined, it won't matter where they work.
