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INTEGRITY IN CORPORATE WORLD

30 Aug 2024

INTEGRITY IN CORPORATE WORLD

One of the definitions of Integrity is:

The quality of being honest and having strong moral principals

The corporate world started taking “Integrity” very seriously, after some serious allegations about bribes and other unethical practices to obtain large orders surfaced. Governments started asking for undertaking from all major companies that they will not indulge in any such unethical practice to get orders.

In India many public sector companies have incorporated “Integrity Bond” to be signed by vendors. Even large private companies insist that their dealers also sign similar bonds, assuring that they will not pay bribes to get orders for them.

Everybody is quite happy, getting these bonds or undertakings as a part of their corporate culture , and feel that this will eliminate all unethical practices in their business.

While this is a step in the right direction, it addresses only one aspect of Integrity in business. There are other equally important aspects, like supplying the right product or system for a given requirement.

The tendering procedure is predominantly towards choosing  the “Lowest Bid” for any requirement. (What we call  L1). This puts pressure on the vendors to quote their lowest price. They try to cut the margins on their product and quote the best price. So far so good! This suits the aim of the purchaser to get the product at the lowest cost.

But it has another hidden aspect, which might not be good for the purchaser. Often vendors try to quote a product / Model / Rating which is the cheapest, and which may just serve the purpose. But these products are not likely to give long-term service to the customers. The correct practice is to select a product which can meet the existing environmental requirements (like ambient temperature, dust, humidity ) and take into account natural wear and tear and still ensure that the selected Model/Rating will give service for at least 5/10 years. The vendor should also be able to support the product for this period.

Let us take the example of the products we deal in, Variable Frequency Drives (VF Drives). VF drives have become the preferred option for many Industries to control their AC Motors. These VF drives give them better control of speed, torque and improve the efficiency of their process.

Manufacturers offer various models of VF Drives (for any given rating of motor) depending on the application (Like pump, fan, conveyor, crane etc.) and the requirement of torque, speed etc. Sometimes these drives are required to do braking (In crane applications)

So, for a given requirement, say an VF Drive for 100 KW Motor, we can offer 4 or 5 different  models, with varying costs. The vendor must study the customer’s requirements and then offer the correct model, which will technically satisfy the application needs and give him the best performance.

But, due to the pressure of quoting L1 prices, the vendors tend to compromise on the model to be quoted and choose models which are priced lower. It is not that they offer models which will not work. They will work, but under conditions like continuous full load, High Ambient temperature etc. the VF Drives may trip causing production interruptions.

Here, the integrity of the vendor comes into play. Is he prepared to spend time in understanding the customers requirement correctly (may requires site visit by engineer) and then quote the correct model, even if it is not the cheapest. He understands there will be other vendors who may opt to offer lower priced models and he may well loose the order.

Integrity, here is the commitment to the customer that we will not compromise technically and only offer such products, which are 100% suitable for the application. Even if this means quoting a slightly higher price.

Hence in general INTEGRITY should not be restricted to ethical considerations like not paying bribes but extend to the whole culture of doing business without compromising our values.

In the long run, customers do come to value this kind of commitment and understand that they can rely on such vendors to give them the right product and service to ensure that their production process run smoothly and trouble free.