Procurement corruption a strong contender
The Organization for Economic Co-operation and Development established the persistence of procurement difficulties in a 2016 report on the subject. The source determined that public procurement volume was responsible for 29 percent of OECD member country expenses, but that this sector was also susceptible to problematic bribes. Citing previous information, it said that 57 percent of foreign bribes were intended for procurement contracts.
This was a significantly higher percentage than any of the other given purposes for bribes, including customs clearance or favorable tax treatment. This corruption was said to ultimately be expensive and hurt public funds, and it isn't difficult to imagine even private businesses suffering some of the same results through unacknowledged corruption and payment scams.
"Corruption was said to ultimately be expensive and hurt public funds."
Perhaps unsurprisingly, there can be marked differences in the chances of corruption depending on where organizations choose to operate. However, this doesn't mean that only certain countries represent the key dangers to procurement: Every company can stand to investigate possible issues.
Transparency International's 2016 Corruption Perceptions Index measured 176 countries to determine where each stood in a ranking of corruption: the higher the score, the less corrupt the country. The two nations tied for first place were Denmark and New Zealand, both of which achieved a score of 90. The U.S. ranked at No. 18 with a score of 74.
The index took various symptoms of corruption into account, including how effective laws and regulatory measures were, as well as whether or not any major, significant corruption cases surfaced to swing the scales.
Moving away from "dark" procurement
Information, benchmarking and proactive sourcing can all be tools to help lower corruption. This is reflected in the relationship between the various business partners working together and the ultimate opinion of the consumer. Global Supply Chain Institute Director Mike Burnette recently spoke to Global Trade Magazine about the importance of transparency.
"A lack of ability to provide that kind of information in the face of safety or environmental violations can create a negative perception of the brand that may require immediate remediation and could take a brand years to recover from, if at all," he said of product sourcing data.
Complete procurement transformation could help change the nature of business operations for the better. One way to be more aware of procurement threats is to upgrade the strategy and BPO model so there's a relevant structure in place. Over time, the business will likely need to adapt its sourcing solutions to proceed, and a more advanced platform will be flexible enough to allow for important changes in the future.