L5-02 SA Exam Report Jan 2012 PR LH

8/17/2019 L5-02 SA Exam Report Jan 2012 PR LH

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Advanced Diploma inPurchasing and Supply

Risk Management andSupply Chain Vulnerability

L5-02

Senior Assessor’s Report

SeriesJanuary 2012

L E V E

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INFORMATION FOR CANDIDATES

The senior assessor’s report is written in order to provide candidates with feedback

relating to the examination. It is designed as a tool for candidates - both those who

have sat the examination and those who wish to use as part of their revision for

future examinations.

Candidates are advised to refer to the Examination Techniques Guide (see the

following link: http://www.cips.org/en-GB/Qualifications/study-support/ ) as well as

this senior assessor’s report.

The senior assessor’s report aims to provide the following information:

An indication of how to approach the examination question

An indication of the points the answer should include

An indication of candidate performance for the examination question

Each question has a syllabus reference which highlights the learning objectives of the

syllabus unit content that the question is testing. The unit content guides are

available to download at the following link:

http://www.cips.org/Qualifications/About-CIPS-Qualifications/cipsqualifications/

ADDITIONAL SOURCES OF INFORMATION

The Supply Management magazine is a useful source of information and candidates

are advised to include it in their reading during their study. Please see the following

link to the Supply Management website: http://www.supplymanagement.com/

http://www.cips.org/en-GB/Qualifications/study-support/http://www.cips.org/en-GB/Qualifications/study-support/http://www.cips.org/en-GB/Qualifications/study-support/http://www.cips.org/Qualifications/About-CIPS-Qualifications/cipsqualifications/http://www.cips.org/Qualifications/About-CIPS-Qualifications/cipsqualifications/http://www.supplymanagement.com/http://www.supplymanagement.com/http://www.supplymanagement.com/http://www.supplymanagement.com/http://www.cips.org/Qualifications/About-CIPS-Qualifications/cipsqualifications/http://www.cips.org/en-GB/Qualifications/study-support/


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SECTION A

Candidates were required to answer TWO mandatory Section A questions related

specifically to the case study.

Question 1

This was a two part mandatory question - part a) being worth 13 marks and part b)

being worth 12 marks).

Q1a) Evaluate Flaire’s situation and the influences of the development of a new

CSR policy for managing risk and vulnerability.

(13 marks)

Analysis of the QuestionThe mandatory question sought to test candidate ability test candidate ability to

analyse a serious reputational issue, determine a pragmatic way forward and identify

the steps or measures an organisation could take to ensure the development of a fit

for purpose CSR policy which once developed is complied with by all its key suppliers

thereby reducing risk and vulnerability.

Analysis of the Answer

Candidates were expected to recognise the urgent Public Relations need for Flaire

to demonstrate that despite the Rascale incident it still very much aligns with the

principles of the Ethical Trading Initiative. To be able to demonstrate this Flaireneeds to adopt a course of action that shows it is not abandoning the rights of the

Eastern European workers who have had their rights violated. This likely means

embracing option 2 but with a focus on continuous improvement of the element of

its supply chain that is problematic. This would be more likely to restore confidence

in the company as a responsible organisation and crucially restore share price.

Revisiting or developing a new CSR policy is indicated with a focus on the manner in

which its potential or existing supply chain approaches worker rights. Possible steps

or measures might include: contractual obligations on suppliers to adopt

complementary polices and practices which align the Ethical Trading Initiative (ETI);development of Key Performance Indicators for suppliers and possible penalties

and / or incentives for compliance / non compliance; auditing / Spot-checks on

practices being followed; regular employee surveys; PR considerations for suppliers

and sub-contractors; development of an ethical code of practice to be observed by

all members of Flaire’s supply chain; renegotiation of existing supplier

arrangements to ensure compliance.


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Exam Question Summary

This mandatory question was reasonably well answered by candidates with most

managing to achieve a pass. Candidates seemed to give competent answers in the

form of an evaluation as called for in the question. Most answers recognised the

Public Relations need for Flaire to demonstrate it is committed to the Ethical Trading

Initiative. Similarly most answers latched onto option 2 and made a case for Flaire to

develop a new CSR policy. More marks would have been achieved had some

candidates talked about control measures to offer customers reassurance that the

required ethical standards are being met. Additionally, some candidates didn’t bring

out the high cost to the company (e.g. bankruptcy, loss of shareholder value,

criminal and or civil prosecutions, loss of credit rating and of course loss of

reputation and confidence in the company). There were instances where some

candidate answers were very generic with limited linkage to the case study.

Q1b) Outline the content of a new CSR policy for Flaire to mitigate

supply chain risk in the future.

(12 marks)

Analysis of the Question

The mandatory question sought to test candidate depth of knowledge and

understanding of key CSR policy content to mitigate supply chain risk in the future.


Candidates were expected to bring out in their answers that Flaire should spend

time and effort up front pre-qualifying prospective fashion tailor suppliers from a

CSR perspective ensuring that all their sub contract supply chain embraces the

principles and ethos of the Ethical Trading Initiative. Other considerations for a CSR

policy content might include: Supplier receptiveness to ethical contractual

obligations & KPI’s; Supplier organisational capability and capacity without excess

subcontracting; Openness and transparency regarding sub contract working

practices; Quality control & assurance capability; Health, safety & environmental

procedures; Management systems in place; Track record / past experience;

Commitment to continuous improvement and long term contract relationship.


This mandatory question was reasonably well answered by candidates with most

managing to achieve a normal pass. Most candidates listed steps or measures that

could be taken - which gained marks to enable a pass but the majority of answers

failed to expand on bullet points. Stronger answers brought out the need to select

suppliers who build ethical procurement practices into every day work supporting

ethical trade and good working conditions. Supplier relationships should be open

and honest if problems arise that way reputational damage such as in the case of


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the rogue tailor can be minimised. Recognition of cultural differences was

mentioned by some candidates.

Question 2

Q2) Propose TWO suitable ‘monitoring and control techniques’ that could

be used by Flaire to test supplier risk on an on-going basis to avoid a

recurrence of the Rascale Limited incident.

(25 marks)


This mandatory question sought to test candidate depth of knowledge of monitoring

and control techniques that could be used in the context of the Flaire/Rascale

Limited case study to test risk on an ongoing basis.


Candidates were expected to select TWO from a broad choice of monitoring

techniques such as: Internal audits, Cross functional pre reviews, Quality inspection

and control / Quality systems / TQM (Total Quality Management), Benchmarking,

Competitor intelligence, Management consultant reviews, Use of external

experts/forensic style auditors. Irrespective of choice what was indicated was a

discussion around their application for effective risk management to maximise

avoidance of a recurrence of the Rascale event which severely damaged the

organisation reputation and share price. Following a monitoring process which

identifies and evaluates potential risks will help Flaire implement mitigation

strategies to manage supplier risks to a tolerable level and therefore meet

stakeholder expectations by achieving its strategies, objectives, targets and goals.

The chosen monitoring techniques will require commitment and leadership from the

top down and should accept that the real cost is not in providing assurance but in

the costs endured by breaches, failures, waste, inefficiency and adverse impact.


Answers to this mandatory question varied in quality. Although many scored well,others could have achieved more marks had they not veered off at a tangent and

talked about risk generally not supplier risk. Most candidates selected Internal audits

and Quality inspection and control as their techniques. Simple monitoring, control

and continual improvement techniques are deployed by cross functional teams to

help eliminate risk from the supply chain (in the case of Flaire - a complex

international network of tier 1 suppliers and very likely sub-contractors which may or

may not be transparent). The entire supply chain should be committed to the same

ideal of ethical working practices and quality output. Stronger candidate answers

expanded on this, giving examples.


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SECTION B

Candidates were required to answer TWO from a choice of FOUR optional Section B

questions of a more general nature across the L5-02 Risk Management & Supply

Chain Vulnerability syllabus.

Question 3

Q3) Discuss THREE alternative risk identification and analysis techniques that

could be used to aid decision quality.

(25 marks)


This optional single (25 mark) question sought to test candidate knowledge,

understanding of different qualitative and / or quantitative risk identification and

analysis techniques to ensure better decision quality in reviewing alternatives for a

superior outcome in either an operational or project requirement.


Candidates were expected to focus their discussion around three alternative

techniques from a broad range such as: Risk identification, Identification

frameworks, Ishikawa cause & effect (or fishbone) diagram, IRM Risk management,

Scenario analysis, Auditing, Risk assessment workshops, Business process studies,Brainstorming/Questionnaire, Delphi analysis, Decision trees, Dependency

modelling, SWOT analysis, Event tree analysis, Business continuity planning, PESTLE

analysis. What was indicated here was a comprehensive articulation of their use in

identifying and analysing risk to aid decision quality. It was permissible for answers

to take the form of a combination of diagrams and/or text).


This was a popular optional question amongst candidates however the answers

varied in quality. Although 3 techniques were identified and briefly described bymost candidates there was a common weakness in not expanding to talk about their

use in analysing risk to aid decision quality. Most candidates chose to talk about

Decision trees, SWOT analysis, PESTLE analysis.

More marks were achieved by candidates that brought out that early up front effort

through the deployment of sound risk identification and analysis techniques greatly

enhance decision quality and ultimately increase the chance of a superior outcome

whether that be in a project or operational requirement.


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Question 4

Q4) Assess FIVE risks involved with using technology in an

organisational supply chain setting of your choice.

(25 marks)


This optional single (25 mark) question sought to test candidate knowledge, test

candidate knowledge, understanding and ability to expand on technological

applications in the supply chain setting and to articulate where there might be risks

associated with the use of such technology.


What was indicated here was answers which articulated five examples of risk and

areas of vulnerability that are involved in using technology and then building on that

with a discussion of risks areas such as: Fraud, Hackers, Security, Reliance on

Technology, Storage of vital documents and materials etc.

The embedding of technology represents a large investment for many organisations

both in terms of initial implementation and subsequent maintenance. Organisations

quickly become reliant on such technology and the related running and maintenance

costs can be significant. Once embedded, most organisations quickly develop an over

reliance on information technology associated with supply chain management. It

shouldn’t be underestimated the cost exposure with such technology and as such

this is a risk. A further risk is around technology security matters and issues. The risk

posed by computer hackers and related disruption to systems and capability to

functions such as procurement is high in most industries. The risk of fraud associated

with procurement / business technology is also high. Most organisations have the

risk associated with storing vital data and documents etc.


This was an unpopular optional question which was not answered by a large

proportion of candidates. Those that did answer it achieved marginal scores. Moremarks were achieved by candidates who expanded their discussion to talk about

safeguards and contingency planning considerations if things go wrong with

technology.


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Question 5

Q5) Explain, using examples, how you would evaluate the probability

of a supply chain risk occurring and possible consequences.

(25 marks)


This optional question sought to test candidate ability to explain or evaluate the

probability of a risk occurring in particular circumstances, the possible consequences

and the potential range of mitigating actions and prioritisation.


What was indicated here was answers which included a discussion around a process

of risk management - capturing: identification of potential significant risks / hazards;

determination of the consequence of each risk / hazard (including who might be

affected); determination of the likelihood of each risk / hazard; assessing the overall

risk; removing the overall risk; re-assessing the overall risk. Numerous tools exist to

help with risk assessment and answers may incorporate a diagrammatic illustration

although this is not essential.


This was a reasonably popular optional question amongst candidates. The quality of

answers varied. Some strong answers were evident, however many answers didn’t

include a full summary of a typical risk management process as indicated above.

More marks were achieved by candidates who expanded their discussion to talk

about prioritisation of risks and courses of action to mitigate the risks and continue

to monitor etc

Question 6

Q6) Critically analyse insurance as a mechanism to mitigate the

effects of supply chain risks and vulnerability.

(25 marks)


This optional question sough to test candidate knowledge, understanding and ability

to critically discuss and analyse insurance as a mechanism or means to protect an

organisation against exposure to risk, vulnerability and uncertainty.


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What was indicated here was answers which articulated why insurance can offer

protection specifically against supply chain related risk and vulnerability but also why

different organisations depending on their attitude to risk can be positive or negative

towards insurance.

Candidate answers should analyse and compare specific risk appetite of

organisations and perceptions of external factors occurring which might be out-with

organisational control in terms of its supply chain. Insurance is a mechanism which

companies can call on to back up risk that they have taken on for example liabilities

and indemnities given to another party under a contractual arrangement across the

supply chain. Without the insurance policy or cover in full force and effect the

indemnities given under the contract could be worthless as the party giving the

indemnity may not have sufficient substance.

Typical Insurances that are in place are: Suppliers/Contractors all risk insurance,

Employers liability insurance, Public liability insurance, Professional indemnity

insurance, Third party risks Insurance, Insurance against damage, Self insurance

and/or captive insurance)

Insurance premiums are increasing as underwriters take a more cautious view of

risks – and there comes a point when organisations have to consider whether they

are a sustainable form of protection that they can afford.


This was not such a popular question amongst candidates from this cohort.

The quality of answers from those who did attempt it varied. Some good answers

were evident, however some answers were weak in that they only listed a few types

of insurance with no reflection on whether the risk they might insure against are

within the control of organisations through procedures and controlled working

practices and behaviours etc. If such risks are within an organisations control then

there is a compelling case as to why insurance is necessary as the risks are

controllable. More marks were achieved by candidates who brought this out in their

answers.


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APPENDIX

The matrix indicating the learning objectives of the new revised syllabus unit content

for L5-02 that each of the questions in the paper tested is summarised in the

attached appendix table.

Documents

L5-02 SA Exam Report Jan 2012 PR LH