Ethical Issues Associated with Procurement and the Role of International Freight Forwarders

Supplier Selection and Evaluation Process
Steps in the Supplier Selection and Evaluation Process
Supplier selection and evaluation process consists of six different steps as follows:
The first step involves the identification of potential suppliers. At this stage, the buyer considers the competitive global economy and focuses on discovering the new viable suppliers. Moreover, it will consider issues such as the importance of discovering new suppliers, the reasons for screening the qualifications presented, the actual screening process that looks at aspects such as reference checks, surge capacity availability, and buy-in from the internal customer(s), and the creation of a supply base. In the second step, the supplier is requested to provide information about their products and or services. The information given will depend on the Request for Information (RFI), Request for Proposal (RFP), and Request for Quotation (RFQ) documents. The contractual terms between the buyer and suppliers will be stated in the third step.
The fourth step involves negotiation where the buyer considers the qualifications of the supplier and the terms of the contract including the payment. In the following step, the supplier and award of contract are evaluated where the buyer carries out a follow-up monitoring as a way of informing the suppliers about future selection processes. The last step involves supplier selection research that looks at their purchasing literature and later evaluation using a given methodology (Murphy & Knemeyer, 2014).
Challenges of Implementing a Global Sourcing Strategy
Companies engaging in global sourcing face long lead-time and large inventory level as the two most significant problems. The challenge of long lead times includes geographical distances, which complicated the supply chain management. Such distances are also known to exaggerate the uncertainties impacts at demand or supply end. Moreover, issues of customs clearance and possible economic and social instability are expected to prolong the lead-time. In developing countries, some of the challenges include the lack of manufacturing technology and skills. Large inventory is also a contributing factor that results in long lead-time because of miscommunication between the suppliers and retailers that result in unnecessary inventory. Eventually, the overall cost of implementing global sourcing may increase due to hidden costs (static, dynamic, and hidden) and additional dynamic (Holweg, Reichhart & Hong, 2011).
Ethical Issues Associated with Procurement
Some of the ethical issues associated with procurement are a conflict of interest where individuals look at their interests and not that of the organization they are representing. For instance, employees purchasing goods from companies whom they have personal relationships decide to leave the organization open to fraud or overpayment of items procured. Bribes when selling a particular product and kickbacks after selling a product are ethical issues raised by most vendors, which are in the form of gifts or cash (Holweg, Reichhart & Hong, 2011). In other cases, procurement officers misuse company assets resulting in the misrepresentation of clients and the provision of wrong information. Vendors are also discriminated against due to their nationality, gender, race among others, which is not a factor related to the product’s quality creates major ethical concerns, especially for private organizations. Organizations found procuring substandard goods might also be subject to unethical dealings (Holweg, Reichhart & Hong, 2011).
Functions that Performed by International Freight Forwarders
International freight forwarders offer door-to-door shipments as part of their responsibilities, which eventually reduces stress among their clients. When making shipments, freight forwarders cover more than one transport mode under a single bill of lading. Therefore, using international freight forwarders guarantees service deliver at decreased costs associated with transportation because of the competitive freight quotes. Lastly, international freight forwarders offer storage, handling, packing and even distributing of goods and services to various clients (Murphy & Knemeyer, 2014).
Challenges Associated with Inventory Management in Cross-Border Trade
Currency challenges are associated with inventory management when it comes to cross-border trade because they are not familiar with a country’s transaction taxes among other charges like currency conversion rates. Concerning the visibility into inventory, cross-border trade is demanding compared to regions within their borders. Some of the issues that come into play include customer preferences, geographical differences, and cultural diversity. For cross-border trade, the one-size-fits-all model for retailers does not apply because the market is diversified. The other challenge relates to regional perception because many retailers tend to focus on only one part of the issues, which does not work well for a cross-border trade (Murphy & Knemeyer, 2014).


References
Holweg, M., Reichhart, A., and Hong, E. (2011). On Risk and Cost in Global Sourcing.
International Journal of Production Economics, 131(1), 333-341.
Murphy, P. R., & Knemeyer, A. M. (2014). Contemporary Logistics (11th Ed.). Pearson