The procurement function and corporate reputation

Reputation as a strategic asset

A strong reputation is one of the most valuable intangible assets a company has. It affects customer loyalty, recruitment, market value, and access to capital. Procurement contributes by ensuring responsible supplier choices, ethical processes, and transparency throughout the value chain.

How procurement can strengthen reputation

A mature procurement function contributes to the company’s standing through multiple channels:

• Ethics and transparency — Openness and fair processes build trust among stakeholders.
• Sustainability and ESG — Environmentally responsible supplier choices and traceability signal accountability.
• Innovation and collaboration — Strategic partnerships show that the company thinks long-term.
• Risk prevention — Systematic supplier oversight reduces the risk of scandals.
• Signaling value — Procurement choices express the organization’s values.

Risks of weak procurement governance

When control and transparency are lacking, a single supplier incident can damage the entire organization’s reputation. Violations of labor rights, environmental standards, or corruption in the supply chain can immediately impact trust and brand value.

Characteristics of procurement that builds trust

• Clear ethical guidelines and a supplier code of conduct
• Full traceability and documentation across the supply chain
• Regular audits and due diligence
• Active communication about responsible procurement
• Technology support for transparency and ESG reporting

Measuring reputational impact

To measure how procurement affects corporate reputation, you can track KPIs such as:

• Reputation index among customers and suppliers
• Number of ethical deviations or incidents in the supply chain
• Share of suppliers that meet ESG requirements
• Number of positive media mentions related to sustainability and collaboration
• Improvements in supplier scores and audit results over time

Summary

The procurement function is now one of the most visible indicators of how a company practices responsibility. Ethical and transparent procurement is not only a defensive mechanism, but an active way to build trust and strengthen the company’s brand. Through responsible procurement processes, the business can protect — and in many cases increase — its standing in the market.

References

Harvard Business Review (2007): 'Reputation and Its Risks'

Fairmarkit (2024): 'Why Managing Reputational Risk is a Procurement Challenge'

ResearchGate (2023): 'Impact of Ethical Procurement Practices in Enhancing Corporate Reputation and Stakeholder Trust in Canada'

ScienceDirect (2020): 'Green Supplier Management and Reputational Effects'

Procurement Magazine (2024): 'Procurement as the Key to Reputation Management'

Sustainability Directory (2023): 'To What Extent Can Sourcing Choices Improve Corporate Reputation?'

arXiv (2022): 'Corporate Reputation under Supply Chain Pressure'