Supply Chain Ethics 2

[MCER12]

I’d like to earn some extra money, but I also want to be legal and ethical about it. I've described the simplified situation below. Any advice would be appreciated.

I am employed by a large automotive business, Company A. I also have a small personal business, Company B.

Company C can provide rock bottom prices for Company A parts.

Instead of Company C selling directly to Company A, I use my involvement with Company A to insert Company B, who introduces a small mark-up, and then sells to Company A. Company A still sees a cost savings.

Can I legally and ethically be a full-time employee of Company A, while personally profiting by sourcing through Company B?

 

[Ron]

In my occasionally humble opinion...no...it is unethical.

 

[RossABQ]

I think it depends on whether your function at Co. A includes specifying or selecting components offered by companies such as Co. C. If you design dashboards, but Co. C sells oxygen sensors, I'm not seeing a direct conflict. You of course would need to disclose your ownership of Co. B to Co. A, at which point they'd likely go around you to Co. A directly. Or fire you. Most companies don't allow moonlighting by professionals, because of the liability insurance they provide you. But there isn't necessarily an ethical violation.

 

[RacingAZ]

I agree with Ron. It sounds to me, you just want a kickback commission from C. A will find out eventually who your supplier is. Ask yourself, if A finds out your making money on the side at their expense, from simply being a middle man and probably on A's time, how do you think A will react? If I'm A, I'll be mad as hell for your double dealing.

It doesn't mean you can't sell to A though. It needs to be an arm's length type of transaction to be ethical and above board. How do you do this? You need another person (maybe your wife) in your personal company to do the selling to A. You can't be the purchasing person for A and you have to disclose to A your connection with B. That way, you can't be accused of using company time to land business for B.

Also, if A is a large auto business, don't you think C already approached A to sell their stuff even before you thought about your proposed arrangement? A is probably aware of C's existence already and they just haven't done business yet, for some reason.

One last thing, where are you located? If you're in Asia or some 3rd world country, what you're proposing will probably fly, most of the time. I'm not saying it's right but that's just how some countries work.

 

[ajack1]

I always find the best way to approach these types of situations is to ask myself how I would react if the roles were reversed.

So how would you react if you were the boss of company A and found out what you are doing, or even if you found out someone you employ in company B had set up company D and was doing exactly the same as you?

I would actually be amazed if what you are doing/ planning to do is legal and it is certainly not ethical in my view.

 

[vanmorrison]

Good question.

I view this as a conflict of interest. It is costing Company A more money to buy from Company B than direct from Company C. Is there any value added to Company A by sourcing through Company B? Even if there was value it is still unfair business dealings.

An association at arm's lenght would be questionable if you are in a posistion that influences where the material is being sourced from. You have indicated in your OP that you are in a position of influence.

I suspect that you feel deep down inside that this could be considered wrong...follow your instinct. You should disclose your association with Company B to Company A.

Regards,
Van

 

[TheTick]

If I were boss of company A, you would be terminated with extreme prejudice.

 

[MikeHalloran]

I agree that it's unethical, period.

An employee would be crazy to do it, because it puts his day job in peril.
A BOSS, however, might get away with it even if he got caught.
He might even humorously name his company B, BOSSCO, or something like that.
Not that I have seen it done...




Mike Halloran
Pembroke Pines, FL, USA

 

[jmw]

About the only possible solution is if Company C will give company B a better price than it would ever give Company A.
But I can't see where that would ever be the case unless B uses more of these than A. That would mean B is competing with A....

If your function at Company A is purchasing, you shouldn't even be asking the question.

I'm not even sure how to regard company B since it appears to be in the same market as Company A and either competing or something else.

About the best that you could hope for is that, if you are not a buyer for Company A, either Company A or Company C might give you a finder's fee for putting them both together.

However you look at it, you don't add value (unless there is something you haven't told us). So sooner or later A will meet C and you will get cut out and probably, as said above, find yourself on the street.

In any event, you'd need to be above board with your employer. Maybe there are reasons they would be happy to buy through you. If you can't think of any such reasons then see the advise above.
It will end in tears.

JMW

http://www.ViscoAnalyser.com

 

[Compositepro]

"I use my involvement with Company A to insert Company B". This is the unethical part.
Middlemen in a supply chain is extremely common and there is nothing unethical in that.

 

[IRstuff]

If this were stock, you'd be in jail for insider trading.

TTFN

FAQ731-376
Chinese prisoner wins Nobel Peace Prize

 

[GregLocock]

It's definitely unwise, even if it results in a better service or price for company A(and I can see how that is possible). There is no way you can show you are squeaky clean in the transaction. You'd have to demonstrate beyond all reasonable doubt that the price that Company B offered was unaffected by your prior knowledge of the situation. Which you've already demonstrated is not the case.

The question is, does totally separate company D that offers the same service/product as Company B, also have the same facts at its disposal?

Obviously not.









Cheers

Greg Locock


New here? Try reading these, they might help FAQ731-376

http://eng-tips.com/market.cfm?

 

[SiliconeAurora]

I think vanmorrison asked the right question. Is there a service Company B provides that is legitimately worth the markup in price to Company A? If that is the case, it moves from definite unethical to really uneasy grey area. It would still be a conflict of interest, but if Company A is getting a better value for their buck, then it's a justified one.

If this is not the case, and you just want a part of the profits, then it's obviously unethical.

 

[jmw]

Is this another of those threads where thee OP has lost interest in the answers?

JMW

http://www.ViscoAnalyser.com

 

[mauricestoker]

If you pay me a pass through I'll ask.

 

[drawoh]

MCER12,

Will company B provide any sort of value or service for its money, or is this just a mark-up scheme?

JHG

 

[Ron]

jmw...he didn't hear what he wanted to hear.

 

[moon161]

The only way to get away with such conflict of interest would be to work for Goldman-Sachs, in which case, you might get a bonus and a bailout as well. Otherwise, the best you can expect is to be blackmailed by someone in purchasing.

 

[kontiki99]

Someone once told me it's more important to look completely honest that is is to actually be completely honest.

If this scheme all blows up, will you have a defensible position?

I turn down regular opportunities friends have a handle on, that are supposedly OK, simply because I don't want to ever be seen doing anything that could look dishonest.

Like loading company equipment into my trunk after hours.
I'm paid enough, I have enough toys, I don't touch the stuff.
I think we should be selling it and give the procedes to charity if anything.

 

[MechEngr07]

It could be that his boss reads these forums and "B" is no longer a 'subset' of "A"