Question

CASE STUDY ON SUPPLIER ETHICS Alex has been the purchasing manager for Rocket Industries for cades. He is tough but fair. Rocket's auditor presents Alex with a re- that clearly reveals that Booster Engine has been underbilling Rocket for a proprietary product for six months. The value of the un- derbilling has now reached $14 million. Alex attends a corporate strategy session that very morning during which the chief financial officer (CFO) reports that the quarterly earn- ings are expected to be soft, at $85 million, up only $3 million over last year at this time. The president asks the gathered leadership to review their operations with the CFO before the weekend to see if there may be better news to report next Monday. As the meeting closes, the president presents Alex with a diamond ring for 30 years of service and compliments him on running a "tight ship" and being the industry standard for purchasing practices. Discussion: 1. What should Alex do with the auditor's report? 2. Should the auditor provide a copy of the report to the CFO? 3. What are Alex's options with regard to Booster Engine? 4. Does the timing of releasing corporate earnings influence Alex's options or actions? aging the opponent. Is that ethical conduct, or is that the way the game tics is played? It is common practice for companies to recruit and hire best performers from their competitors. Volkswagen did just that to al Motors. Many companies require new hires to sign confidentiality ments if they will be working in business-sensitive positions. These

Answer 1

Supplier Ethics

Supplier code of conduct has been created to ensure or rather established a complete smooth process in terms of Purchase , Supply chain . Ethical purchase includes :

Ethical trading , Ethical Audit , Ethical business practice, presently Corporate Social Responsibility, assurance about business

In the present scenario , Alex is very tough as well as fair person and recently awarded for tight ship and maintain consistency Standard Purchasing Practice . Looks like Alex is following perfect Supplier Ethics .

In this case , we notice that Engine company continuously doing Under billing amount to $ 14 Mio , which is really dangerous. I believe this matter need detail investigation and Alex as Purchasing Manage needs to highlight to CFO with immediate effect . Alex needs to highlight that present revenue is under by $ 14 Mio and After adding the same , current revenue would be $ 85 + $ 14 Mio = $ 99 Mio , which is quite good number and revenue growth would be $ 3Mio+ $ 14 Mio = $ 17 Mio.

Alex as a purchase Manager and as per Prudent business policy , Process , to maintain high Ethical standard , Alex needs to highlight this case to CFO and do further investigate this matter.

Alex on the basis of Auditors report , schedule meeting with Booster Engine . If require Alex schedule meeting with Booster procurement team , Sales team as well as Finance team . Alex needs to find out the reason for Under Billing . I presume Booster Engine must be a good customer and they must have written Agreement with Rocket Industries. Booster Company respective team member must follow listing Agreement pricing and they should bill accordingly . Alex should touch base with Rocket company respective team member in this matter . This incident is not ONE OFF item . last 6 Months company is not disclosing correct revenue , which have a significant impact on Financial, Tax purpose .

Auditor definitely provide and highlight this matter with Company CFO . Always this type of incident disturb material number  of the company , Auditor do more risk base transaction audit . This type of Incident always welcome some system loopholes .

Definitely Corporate Earnings will impact above matter financial way . Already explained above about revenue impact after considering above material under billing amount .