Unit content guide 5 Unit Content Guide.pdf · CIPS qualifications, awards at levels 3 and 6 will have an integrative unit. Learning objectives Determines the level of learning you

Unit content guide

RevisedcontentSeptember2009

Advanced diploma inpurchasing and supplyThe units that make up the award are:

• Management in the purchasing function• Risk management and supply chain vulnerability• Improving supply chain performance

Plus a choice of two optional units:

• Marketing for purchasers• Storage and distribution• Operations management in the supply chain• The machinery of government• Contracting in the public sector• Sustainable procurement

CIPS_L5_UnitContGuide:Layout 2 9/7/09 10:02 Page 2

The content (including references, names and acronyms) are correct at the time of publication, June 2009. Copyright CIPS ©


The Chartered Institute of Purchasing& Supply qualifications ladder hassix levels of awards. For details ofthe entry requirements for eachlevel, please refer to www.cips.org

The CIPS Advanced diploma inpurchasing and supply is a Level 5higher level qualification. It has beenaccredited by the Office ofQualifications and ExaminationsRegulator (Ofqual) and appears on theNational Database of AccreditedQualifications (NDAQ). Please refer towww.accreditedqualifications.org.uk

The Level 5 Advanced diploma inpurchasing and supply consists ofthree compulsory units. Additionallyyou must choose two optional unitsfrom a choice of six includingSustainable procurement optional unit,launched in September 2009 withfirst assessment in November 2009.

Assessment for each unit is byexamination with the exception of theImproving supply chain performancewhen there is a choice for students inthe UK. If your study centre has beenapproved you can choose either aclosed book examination or a work-based assessment.

If you wish to study for this award it isexpected that you will undertake 50guided learning hours per unit, ie a total of 250 guided hours. The definitionof guided learning hours is:

“A measure of the amount of inputtime required to achieve thequalification. This includes lectures,tutorials and practicals, as well assupervised study in, for example,learning centres and workshops.”

You will find that study centres varyon the exact format for delivery of thestudy programme. Additionally CIPSwould recommend that you alsocommit 80 hours per unit of self-study, including wider reading of thesubject areas and revision to giveyourself the best chance ofsuccessful completion of the award.

Below is a list of the units, their NDAQreference numbers and CIPS referencecode which is used to identify the unitfor examination purposes.

Advanced diploma in purchasing and supplyIntroduction

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LEVEL 5 – ADVANCED DIPLOMA IN PURCHASING AND SUPPLY NDAQ QUALIFICATION NUMBER 100/6113/7

Management in the purchasing functionRisk management and supply chain vulnerabilityImproving supply chain performance

Plus choose two optionsMarketing for purchasersStorage and distributionOperations management in the supply chainThe machinery of governmentContracting in the public sectorSustainable procurement

K/500/1713M/500/1714T/500/1715

F/500/1717J/500/1718L/500/1719D/500/5371H/500/5372

CIPS ref code L5-01CIPS ref code L5-02CIPS ref code L5-03

CIPS ref code L5-10CIPS ref code L5-11CIPS ref code L5-12CIPS ref code L5-13CIPS ref code L5-14CIPS ref code L5-15


AssessmentAssessment is the way in whichCIPS will measure whether or not astudent is able to demonstrate theirknowledge, understanding andability to apply their learning in anygiven situation.An assessment could be anexamination, assignment orproject.

Business essentialsThese are commonly occurringthemes through the CIPSqualifications, that do not warranta unit in their own right, but thatare important holistically to thelearning undertaken within CIPSqualifications.

They are areas of importance,innovation and some emergingthemes, such as:• Quality management• International issues• Business finance• Information management• External factors.

Command wordsCommand words are generallyverbs that are used to indicate thelevel of learning undertaken. Theytend to be hierarchical in nature.For example, at Level 3, acommand word will be‘demonstrate’ or ‘explain’, whereasa command word at Level 6 will be‘synthesise’, or ‘critically evaluate’. These words reflect the level ofcomplexity of your learning andultimately your assessment at thatlevel.

Compulsory unitsThese are units that you must takeeither through CIPS or analternative awarding body thatconstitute necessary knowledgeand understanding to fulfil learningrequirements for CIPSqualifications.

If you have undertaken equivalentlearning or have equivalent relatedexperience to the compulsory unitsfrom somewhere else you mayeither be exempt from learning, orgain accreditation for prior learningor experience.

Entry levelThis is the point at which you willenter the CIPS qualifications ladder.This entry will be based upon pre-requisite knowledge,understanding and experience.

ExemptionsStudents who have successfullycompleted certain post-schoolstudies may apply for exemptionsfrom equivalent courses in theirprogramme of study. To earn anexemption from either levels ofqualifications or option units withinqualifications you should contactCIPS or see www.cips.org

Please note that gaining anexemption, does not mean that yougain an exit award at that level,rather that you bypass that level oflearning because of equivalentlearning and achievement gainedelsewhere.

Advanced diploma in purchasing and supplyGlossary of terms

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Exit awardAn exit award is in essence aqualification. CIPS has six exitawards in total• Introductory certificate in

purchasing and supply • Certificate in purchasing and

supply• Foundation diploma in

purchasing and supply• Advanced diploma in purchasing

and supply• Graduate diploma in purchasing

and supply• Executive diploma in purchasing

and supply.

For each qualification you study,you will receive a certificate ofachievement confirming your exitaward.

Indicative contentThe knowledge required in order tofulfil the learning objectives andachieve the learning outcomes – inother words what you need toknow.

Integrative unitsIntegrative units are intended tohelp students see connectionsbetween all aspects of theirlearning within a particular level ofqualification. For the purpose ofCIPS qualifications, awards atlevels 3 and 6 will have anintegrative unit.

Learning objectivesDetermines the level of learningyou must undertake in order toachieve the learning outcomes.

LevelThe level determines thecomplexity of learning, the depth oflearning and the comparison oflearning with other qualifications.CIPS has qualifications at levels 2to 7. The levels are as follows:

• Level 2Introductory Level – this is forsomebody new to thepurchasing and supplyprofession and often in a juniorcapacity

• Level 3Junior technical – alsopotentially new to learning

• Level 4Operational/juniormanager/new to the profession

• Level 5Manager/specialist role

• Level 6Senior managers/specialistprofessional

• Level 7Postgraduate strategic leader

The levels are determined byOfqual, who are the Governmentregulator for education, and enablea clear understanding nationally ofthe level of a person’s learning andability in that field.

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National QualificationsFrameworkThis framework is a governmentframework, where qualificationsthat are approved by Government,as being fit for purpose, andmeeting the quality criteria, arelisted. Qualifications listed withinthis framework are monitoredagainst a variety of measures toensure quality of qualification,associated procedures and delivery.

OfqualOfqual is the Government regulatorfor professional bodies such asCIPS, and act as the caretaker ofqualifications included in theNational Qualifications Framework

Optional unitsThese are units where you havechoice and opportunity tospecialise in an area of interest.There is an opportunity to selecttwo optional units at advanceddiploma and two optional units atgraduate diploma.

.

Qualifications ladderThis ladder represents thehierarchical nature of CIPSqualifications. The ladder has sixsteps within it. It starts with anIntroductory Certificate through tothe Graduate Diploma.

Each step of the ladder isrepresented by qualification withan ‘exit award’.

Statements of practiceA goal for attainment, whichindicates what you need to knowand be able to do to complete yourstudies in a particular subject area.

Each unit has six to seven learningoutcomes which outline what youwill achieve as a result of yourlearning in that particular unit.

StudentMember who is studying a CIPSqualification.

UnitA segment of learning within theCIPS qualifications, which has avalue in terms of hours of learning.Each unit is individual, has its owntitle, rationale and content. A unitwill also have an assessmentattached to it in order todemonstrate achievement andconclusion of the learning.

WeightingsWeightings are allocated to eachunit, to determine how the learningcan be sensibly split.

Each unit has a content weightingof 100%. Within each unit, eachsubject area is given a weightingeg 20% or 25%.

This weighting indicates the levelof input and learning required bythe deliverer and the learner inorder to complete the subject area.However, the weightings do notnecessarily reflect the marks thatmay be allocated to a question inthat subject area of the unit.

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AIDA • Attention, interest,desire, actionAIDA is an acronym used inmarketing that describes a commonsequence of actions which need tohappen when a person is trying tosell a product or service.

ABC Analysis • Stockcategorisation methodApplication of Pareto’s Law of the80/20 rule: ABC classifications aredetermined in ascending rank orderof all products according to theproduct classification as apercentage of the total purchasingspend. Ranking can also be byvolume, value, weight etc.

BBS • Business balancedscorecardKaplan and Norton (1996)developed balanced scorecardapproach to measure performancein organisations adopting a holisticand balanced view looking atperformance against fourperspectives financial, customer,internal business and earningand growth.

BCP • Business continuityplanningA methodology used to create aplan for how an organisation willresume partially or completelyinterrupted critical functions withina predetermined time after adisaster or disruption.

BPR • Business process re-engineeringThe fundamental re-thinking andradical re-design of businessprocesses. To achieve dramaticimprovements in critical,contemporary measures ofperformance such as cost, quality,service and speed.

CAD • Computer aided designThe use of a wide range ofcomputer based tools that assistengineers, architects and otherdesign professionals in theirdesign activities.

CAM • Computer aidedmanufacturingThis is a software process that candirectly convert an object (productdrawing) into code so that amachine, such as a lathe or millingmachine can manufacturethe product.

COSHH • Control of substanceshazardous to healthLegislation that requires employersto control exposure to hazardoussubstances to prevent ill health.

CSR • Corporate socialresponsibilityCSR means the commitment to asystematic consideration of theenvironmental, social and culturalaspects of an organisation’soperations. This includes the keyissues of sustainability, humanrights, labour and communityrelations, as well as supplier andcustomer relations beyond legalobligations; the objective being tocreate long-term business valueand contribute to improving thesocial conditions of people affectedby an organisation’s operations.

DAGMAR • Definingadvertising goals for measuredadvertising resultsA model of marketingcommunications developed for themeasurement of advertisingeffectiveness.

Advanced diploma in purchasing and supplyAcronym guide

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ECR • Efficient consumerresponseThe link to make categorymanagement an operational reality.Supplier and buyers workingtogether to ensure total consumersatisfaction.

EDI • Electronic datainterchangeThe exchange ofdocuments/information betweencomputers using telephone lines.

EFT • Electronic funds transferFinancial or value transactionscarried out between parties bymeans of computer systems. It canalso refer to financial informationabout transactions being passed.

EPOS • Electronic point of saleA system that allows the flow ofinventory/products from warehouseto point of sale in the shortest time.

ERP - Enterprise resourceplanningRefers to any software thatenables companies ororganisations to integrate variousfunctions and programs so thatthey are all interconnected andhave the ability to ‘talk’ to eachother.

EU • European UnionThe European Union was created in1992 following the signing of theMaastricht Treaty replacing theEuropean Economic Communityand other constituent organisationswhich were originally establishedin 1957. Its aim is to create anenvironment for the free movementof goods, services, labour andcapital across the member states.There is also an emphasis on theabolition of trusts and cartels andthe development of joint andreciprocal policies on labour, socialwelfare, agriculture, transport andinternational trade.

FMEA • Failure modes effectsanalysisIs an easy to use and yet powerfulpro-active engineering qualitymethod that helps you to identifyand counter weak points in theearly conception phase of productsand processes. The structuredapproach makes it easy to use andeven for non-specialists it is avaluable tool. The benefitsobtained encompass by and largethe investments in time andresources to execute the analysis.

ICT • Information,communications technologyThis is a broad subject concernedwith technology and other aspectsof managing and processinginformation, especially in largeorganisations.

iDEF • ICAM DEFinitionlanguageiDEF is the shortened version ofICAM DEFinition Language. It wasan initiative by the US Airforceduring the 70s/80s to modernisetheir technology, specifically theuse of computers in manufacturing.ICAM stands for IntegratedComputer-Aided Manufacturingand the aim was to make themanufacturing process quicker andmore efficient.

ISO • International organisationfor standardisationThe ISO is not one organisation, buta network of national standardsinstitutes across 150 countries.International standards are createdthrough consensus agreements byeach of the national delegations.This provides a commontechnological language betweensuppliers and buyers facilitatingtrade and the transfer oftechnologies amongst thosecountries involved.

Advanced diploma in purchasing and supplyAcronym guide

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JIT • Just in timeOriginally a concept imported fromJapan, based on the idea that onlysufficient quantities should bemanufactured or be made availableto satisfy customers’ immediateneeds. Relies on an efficient supplychain for its success.

KPI • Key performanceindicatorAlso known as key successindicators. They are financial andnon-financial metrics used toreflect the critical success factorsof an organisation or contract. Theyare used in business intelligence toassess the present state ofbusiness or a contract and toprescribe the next course of action.

MRP • Material requirementplanning A product-oriented computerisedtechnique aimed at minimisinginventory and maintaining deliveryschedules.

MRPII • Manufacturingresource planning MRPII is concerned with almostany resource entering intoproduction, including manpower,machines and money in addition tomaterials. This is why the word‘resource’ is usually substituted for‘requirement’ when referring toMRPII.

MSP • Managing successfulprogrammesManaging Successful Programmescomprises a set of principles andprocesses for use when managinga programme. It is founded on bestpractice although it is notprescriptive. It is very flexible anddesigned to be adapted to meet theneeds of local circumstances.

NAO • National Audit OfficeThe National Audit Office is totallyindependent of Government andhas statutory authority to report toParliament on the economy,efficiency and effectiveness withwhich government departmentsand other public bodies use theirresources.

NHS • National Health Service Founded in 1948, this organisationprovides the majority of healthcarein the UK. NHS services are largely“free at the point of delivery,” paidfor by taxes. Employing well overone million people, the NHS is thelargest employer in Europe and oneof the largest employers in theworld.

OGC • Office of GovernmentCommerceOGC is an independent office of theTreasury. Together with itsexecutive agency OGC buyingsolutions, OGC works with publicsector organisations to gain thebest possible value for money fromprocurement in support of theGovernment’s efficiency target.OGC supports initiatives thatencourage better supplier relations,sustainable procurement, thebenefits of utilising smallersuppliers and the potential of e-procurement, and represents theUK at the European Union (EU).OGC also supports majorprogramme and projectmanagement, which involvescomplex procurement.

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OPC • Operations planningand controlThe activities undertaken thatensure all required resourceswithin an organisation aremanaged effectively to produceproducts/services right through tothe delivery of the product/serviceto the customer.

OPT • Optimised producttechnologyThis is a computer-based techniqueand tool originated by EliyahuGoldratt. In principle, it aidsproduction scheduling systems tofulfil the pace of production duringthe most heavily loaded resourcessuch as bottle-necks.

PAC • Public AccountsCommitteeThe Committee of Members ofParliament appointed to examineand report on the accounts ofgovernment departments and otherpublic bodies. The accounts areaudited by the Comptroller andAuditor General, whose reports onthe accounts form the basis for theCommittee’s examination ofdepartmental Accounting Officersand subsequent reports.

PARETOA principle which states that ‘inany series of elements to becontrolled, a selected small factorin terms of the number of elementsalmost always accounts for a largefactor in terms of effort’ see alsoABC analysis. (Source: adaptedfrom The official dictionary ofpurchasing & supply by HKCompton and DA Jessop).

PASA • Purchasing and SupplyAgency (NHS) The NHS Purchasing and SupplyAgency is an executive agency ofthe Department of Health,established in 2000. The role of theagency is to act as a centre ofexpertise, knowledge andexcellence in purchasing andsupply matters for the healthservice. The Agency is an activeparticipant in the ongoingmodernisation of purchasing andsupply in the health service, andcontracts on a national basis forproducts and services which arestrategically critical to the NHS. Italso acts in cases whereaggregated purchasing power willyield greater economic savingsthan those achieved by contractingon a local or regional basis.

PDCA PDCA stands for Plan-do-check-actand is a four-step problem-solvingprocess typically used in qualitycontrol. Also known as the Demingcycle.

PESTLE • Political, economic,social, technological, legal,environmentalAn analytical tool that aidsorganisations developing strategiesby helping them understand theexternal environment in which theyoperate now and in the future.

PFI • Private finance initiativeAn agreement that promotespartnership between both privateand public sectors which enablesthe utilisation of a wide variety ofassets and services in the privatesector. The objective is to improvethe quality and quantity of publicsector capital products and also toprovide more efficient publicservices.

PPP • Public privatepartnershipAny alliance between publicbodies, local authorities or centralgovernment and private companiesto produce capital projects ordeliver public services.

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PRINCE2 • Projects in acontrolled environmentA process based approach forproject management providing aneasily tailored and scalable methodfor the management of all types ofprojects. Each process is definedwith its key inputs and outputstogether with the specificobjectives to be achieved andactivities to be carried out.PRINCE2 is Crown copyright.

SLA • Service level agreementA service level agreement is adocument which defines therelationship between two parties:the provider and the recipient. This is clearly an extremelyimportant item of documentationfor both parties. If used properly itshould:

• Identify and define thecustomer’s needs

• Provide a framework forunderstanding

• Simplify complex issues • Reduce areas of conflict • Encourage dialogue in the event

of disputes • Eliminate unrealistic

expectations.

SMART • Specific, measurable,achievable, relevant, timeframedIs a mnemonic used in projectmanagement at the projectobjective setting stage. It is a wayof evaluating if the objectives thatare being set are appropriate forthe individual project.

SMEs • Small and mediumsized enterprisesA small firm is an independentbusiness, managed by its owner orpart-owners and with less than 50employees.A medium sized company mustmeet thresholds for annualturnover and have fewer than 250employees.

SWOT • Strengths,weaknesses, opportunities,threatsThis is a strategic planning toolused to evaluate the strengths,weaknesses, opportunities andthreats involved in a project or in abusiness venture or in any othersituation requiring a decision..

TQM • Total qualitymanagementIs a set of systematic activitiescarried out by the entireorganisation to effectively andefficiently achieve companyobjectives so as to provide productsand services with a level of qualitythat satisfies customers, at theappropriate time and price.

TUPE • Transfer ofundertakings (protection ofemployment)Legislation that aims to ensure thatan employee whose company istaken over has his existingconditions respected by his newemployer. They also apply in somecases for work transferred tocontractors. This includes hours ofwork, pay, pension entitlement andso on.

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Advanced diploma in purchasing and supplyManagement in the purchasing function

COMPULSORY UNIT

UNIT CHARACTERISTICSThis unit is designed to enablestudents to manage their own areaof responsibility within anorganisation’s internal supply chain,in line with the overall strategicbusiness plan and the operationalplan for the purchasing function.

Students should be able toimplement operational plans fortheir own area of responsibility toachieve objectives set out in theirplan. In doing so they should beable to employ a range ofresources, including human,physical and financial, and manageand delegate tasks effectively.

This unit is about managing theexpectations of the stakeholdersthat are directly involved in thestudent’s own area of responsibilityand will provide them withmanagement techniques to helpthem to involve others, beinnovative, consultative, influentialand persuasive in order to achievetargets effectively.

This unit at level 5 is concernedwith the day to day managementresponsibilities within thepurchasing function and widerorganisation and appropriate linksand understanding of the relevanttheories.

STATEMENTS OF PRACTICEOn completion of this unit, studentswill be able to:• Evaluate the challenges facing

managers in dynamic andchanging organisations

• Analyse the characteristics ofdifferent organisationalstructures and cultures

• Use a range of techniques tosupport and implementjustifiable managementdecisions

• Formulate plans to effectivelymanage work groups and teams

• Propose processes and systemsto enable the successfulimplementation of changeprogrammes to maximisepurchasing efficiency andeffectiveness

• Assess the impact of currentlegislation relating toemployment and equality uponpurchasing and supply activities.

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LEARNING OBJECTIVES ANDINDICATIVE CONTENT

1. THE CHALLENGES OFMANAGEMENT(Weighting 20%)

1.1 Define the termmanagement anddifferentiate managementfrom leadership• Definitions of

management: Fayol,Mintzberg, Drucker, Brechand Cole

• Management: planning,co-ordinating, controllingand motivating staff

• Management styles• Leadership perspectives

and styles: Hersey andBlanchard, Tannenbaumand Schmidt, Kotter,Lewin.

1.2 Identify the keystakeholder groups whoimpact directly on thepurchasing function,analyse their potentialimpact and explain how tomanage their expectationseffectively• Stakeholders: employees,

customers, shareholders,suppliers, government,lenders, trustees, electedmembers

• Identifying and fulfillingstakeholder/customerneeds: good products andservice, return oninvestment, quality, priceand measurable outcomes

• Working within ethicalcodes of conduct andpractice

• Expectations: on time,within budget, meetingterms and conditions.

1.3 Evaluate the key roles andfunctions of managers inthe purchasing and supplyfunction• Ensuring value for

money/quality at thelowest price (purchaser)

• Advising andrecommending suitablepurchasing and supplysystems

• Building good relationshipswithin the purchasing andsupply chain

• Management of resources(human, financial,materials, equipment) tobe effective in the role

• Policy development.

1.4 Compare and contrast thediverse purchasingmanagement practices ofthe private and publicsectors• Tendering• Recommended suppliers• E-commerce: internet,

e-auctions, e-catalogues,electronic data interchange(EDI)

• Outsourcing• Authority levels (ie

purchase orders)• Relationship building• Payment terms and other

contracting arrangements.

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1.5 Create a set of rules forethical behaviour• What are ethics?• CIPS ethical codes• Corporate Social

Responsibility (CSR).

1.6 Propose ways of reportingeffectively to seniormanagement and securingtop level support andsponsorship for initiativesand implementation ofplans• Keeping your stakeholders

informed• Building a business case • Report writing: structure,

content and making itinteresting

• Effective meetings• Presenting your plans.

2.0 ORGANISATIONSTRUCTURES AND CULTURE(Weighting 20%)

2.1 Evaluate the importance oforganisational structure tothe development andperformance oforganisations• Rationale/background:

industrial revolution tomodern day

• Choice of different structuresto aid management

• Organisational structures:conflicts between control andempowerment, autonomyand entrepreneurship

• Power.

2.2 Evaluate the nature andscope of organisationalstructures and theimplications of suchstructures for the purchasingfunction:• Flat• Functional• Matrix• Geographical• Local• Regional• National• International• Global• Centralised/de-centralised.

2.3 Assess and evaluatemethods of job design forpurchasing roles• Identifying responsibilities,

associated tasks andpriorities

• Updating existing roles: viajob description and personspecification

• Training needs analysis• Competency frameworks• Role mapping.

2.4 Define the term ‘culture’and assess differentmodels of culture whichmay exist withinorganisations• Definitions and terms

associated with culture• How organisational culture

impacts on behaviour,values and assumptions

• Organisational influencesof company politics, power,bureaucracy, rules andstandards of behaviour

• Models of culturalstrength, masculine/feminine societies, culturalvalues and individualism/collectivism.

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2.5 Evaluate methods andformulate plans formanaging effectively ininternational or cross-cultural organisations• Stages of planning• Methods: managerial and

leadership styles,approaches,communication and mediachannels

• Evaluation process ofresearch (primary andsecondary), conductingpilot schemes, gatheringfeedback from staff andchoosing most successfuloption

• Considerations: culturaldiversity, existingstructures, codes ofconduct, differing goalsand expectations.

3.0 MANAGEMENT DECISIONMAKING(Weighting 15%)

3.1 Evaluate and apply arange of tools to makeeffective managementchoices and decisions• Problem and decision

making process• Pareto analysis, Ishikawa

(fishbone) diagram,strengths, weaknesses,opportunities, threats(SWOT), decision makingtrees, cost/benefitanalysis, risk evaluation,paired comparison analysis

• Balanced Scorecard (BBS).

3.2 Explain how to formulate,implement and monitoroperational plans for thepurchasing and supplyfunction to achieveorganisational objectives• Aligning plans with

strategicobjectives/direction oforganisation

• Agreeing objectives andtargets: reducing defects,improving lead times,reducing costs

• SMART principles• Importance of and ways to

involve the team in theplanning process

• Monitoring systems andprocesses including annualand periodic reviews

• Reporting structures.

3.3 Evaluate the resourcerequirements for theimplementation ofoperational plans for thepurchasing function• People as a resource• Financial resources• Physical resources• Time.

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4.0 MANAGING WORKGROUPS AND TEAMS(Weighting 25%)

4.1 Evaluate the concept ofauthority, delegation andaccountability whenmanaging the purchasingfunction• Understanding of key

concepts: takingownership, decisionmaking, empowermentand responsibility

• Reasons: workload,prioritising, developingindividuals and the team,minimising blame andachieving results

• Good time management• The delegation process.

4.2 Assess techniques forbuilding, motivating andmanaging successfulteams within thepurchasing and supplyfunction• What is a team/group?• Stages of team

development: Tuckman andJensen

• Team Roles: Belbin,Schutz, Holland, Cattell

• Building a balanced team• Motivational determinants:

innate drive, desire,fulfilling need

• Satisfying individual andteam needs: praise,rewards, recognition,responsibility, promotion,pay

• Building relationshipsthrough leadership, withtrust, fairness, equalopportunities, ethics andrespect.

4.3 Assess the sources ofconflict which may arisewithin the purchasingfunction• Disagreement about

needs, goals, values,priorities and interests

• Poor communication• Lack of trust in leadership• Lack of direction• Lack of clarity in role• Scarcity of resources• Interpersonal and hygiene

factors.

4.4 Explain how to buildrelationships andencourage integrationwith other parts of thebusiness• Changing perceptions of

purchasing (from processto advisory)

• Advocates for theprofession/business

• Consultancy• Adding value.

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4.5 Evaluate techniques todeal with conflict withinteams and betweenindividuals in thepurchasing and supplyfunctions• Consultation• Mediation• Negotiation• Arbitration• Dispute resolution

(including discipline andgrievance).

4.6 Assess the benefits of asystematic approach torecruitment, appraisal,training and development• High calibre of staff• Recognition of

achievement• Conducting

appraisals/personaldevelopment reviews(PDRs)

• Identification ofdevelopment needs

• Providing appropriatetraining to meetindividual’s role needs

• Retention• Contented workforce• Maintaining high levels of

performance.

5.0 MANAGING CHANGE(Weighting 20%)

5.1 Evaluate the causes oforganisational change andanalyse their potentialimpact on the organisation• Globalisation• Competition• Growth• Diversification• Performance• Technology• Practical analysis using

political, economic, social,technological, legal andenvironmental (PESTLE),SWOT and Lewin’s model:forces for change.

5.2 Differentiate between theneed for fundamental andincremental change inorganisations• Sector characteristics and

dynamics• Take-overs, mergers and

embracing culturalchanges

• Response to marketdemand

• Quality and continuousimprovement

• Meeting customerrequirements.

5.3 Formulate plans to overcomehuman resistance to changeand to implement changesuccessfully within thepurchasing and supplyfunction• Psychological barriers• Physical barriers• Achieving commitment from

staff• Staff involvement• Devolving responsibility• Monitoring results.

5.4 Identify and analyse thecurrent legislation relating toemployment and equality ofopportunity in organisations• The Equal Pay Act 1970 (as

amended)• Employment Act 2002 and

Dispute ResolutionRegulations (2004)

• Health and Safety at WorkAct 1974

• EU Employment Directives,TUPE, equal treatment,working time, young people

• Disability Discrimination Acts1995 & 2005

• Employment Equality (Age)Regulations 2006 andamendment Regulations2008

• Sex Discrimination Act 1975and Amendment Regulations2008.

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5.5 Evaluate the impact of e-commerce and technologyon the management oforganisations and people,and in particular thebenefit to the purchasingfunction• Intranet• Knowledge management

systems• Management Information

System (MIS) / MarketingInformation Systems(MkIS)

• Flexible workingarrangements

• Telecommunications• e-sourcing• e-procurement.

5.6 Identify ways to monitorand control the impact ofthe change process on theperformance of the supplychain and assess theireffectiveness• Budget• Project measurement• Benchmarking• Auditing• Employee and stakeholder

reactions• Appropriate

communicationprogrammes involving thirdparties internal changes.

5.7 Assess the importance ofmanaging continuity ofperformance whilstimplementing change andexplain how to do this• The importance of

maintaining a ‘business asusual’ approach formanaging supply

• The process of internalhandover from oneindividual/team to another

• How a supplierimplementationprogramme is organised,including the potentialbenefits of a trial/pilotperiod and ramp-up/ramp-down phases

• How existing suppliers canbe managed andincentivised to see out thefull terms of their contractswithout disruption tosupply or service levels.

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COMPULSORY UNIT

UNIT CHARACTERISTICSThis unit is designed to enablestudents to undertake risk analysisand a variety of risk assessmentsrelating to different aspects ofpurchasing and supply and toimplement a range of appropriaterisk management tools andtechniques.

Students will use a variety of riskassessment tools and techniquesdesigned to provide a detailedanalysis of supply chain situations,including legal, corporate socialresponsibility (CSR), ethical, healthand safety, financial, international,innovation and a variety of otherpotential risk scenarios. The scopecovers both the proactiveidentification and avoidance of risk,as well as provision for post-eventrecovery initiatives.

By the end of the unit studentsshould be able to:• demonstrate a good knowledge

and understanding of riskawareness and an effectiveapproach to risk management

• apply a variety of tools andtechniques, in a diverse range ofcontexts, to proactively establishthe level of risk presented and torecommend ways of avoiding,mitigating or managing thoserisks.

STATEMENTS OF PRACTICEOn completion of this unit, studentswill be able to:• Analyse the nature and scope of

risks for the organisation• Assess the sources of risks and

the likely impact of those risksupon the organisation

• Plan and implement anappropriate risk managementprocess in order to protect theorganisation’s interests

• Explain how supplier appraisals,pre-qualification of suppliersand contract monitoring canhelp to mitigate risks

• Evaluate systems for testingrisks and monitoring themaccordingly

• Apply risk managementprinciples to various purchasingand supply managementscenarios

• Evaluate the application of arange of techniques to mitigaterisk proactively and to reducethe consequential losses in theinstance of a risk eventoccurring

• Explain how the use of soundnegotiation approaches andtechniques help to ensure betterbusiness value by reducing riskand vulnerability.

Advanced diploma in purchasing and supplyRisk management and supply chain vulnerability

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1.0 UNDERSTANDING THENATURE OF RISK INPURCHASING ANDSUPPLY (Weighting 25%)

1.1 Define the terminologyused in risk assessmentand management• Definition of risk with use

of examples • How risk has a direct

impact on an organisation’ssuccess and how risk canbe directly related to cost

• Key terms: hazard, risk, riskevent, exposure, loss -direct, indirect andconsequential - mitigation,avoidance, assessment,management, forcemajeure and acts of God

• The differences betweenrisk, vulnerability, exposureand loss, as well asunderstanding the range ofmanagement actionsavailable

• What is meant by a riskappetite and use ofpractical examples to showhow this applied.

1.2 Distinguish betweendirect physical loss (egdisrupted supply) andindirect consequentialloss (eg reputation)• Key types of loss that may

occur: financial,reputational,environmental, health,safety, welfare and lostopportunities.

1.3 Analyse potential sourcesof risk to organisations ofboth internal and externalorigin• Internal and external

hazards and risks• Range of risks that might

occur within the workplace• Analysis of external

environment factors usingthe PESTLE tool

• The likely impact on theorganisation and itsappetite for risk

• Basic quantificationmethods for measuring.

1.4 Analyse and explain theuse of segmentation andbusiness tools to reducesupply chain vulnerability• Segmentation tools to help

assess and manage supplychain risk appropriately (egKraljic Model, BostonMatrix, Pareto Principle,KPIs, Spider web orappropriate alternatives)

• How you would take adifferent approach topurchasing from a criticalor bottleneck market tothat of a leveraged oracquisition market

• Management of differentproducts or services withinan organisational portfolio

• Definition of supply chainvulnerability, supply failureand supplier failure

• How to map a typicalsupply chain and identifypotential sources of supplyvulnerability

• The potential impact ofsupply and supplier failure

• Range of mitigatingactivities that a purchasercould use when looking toprotect against supply orsupplier failure.

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1.5 Distinguish betweenstrategic, operational andproject based areas of risk• Examples of how to define

risk at the strategic,operational and/or project-based level

• Range of risk mitigationmethods at each level

• How risk can be boundedand also how, ifunmanaged, it can haveknock-on consequentialimpacts on other areas ofan organisation.

1.6 Evaluate the role of anorganisation’sstakeholders in riskmanagement• The roles and

responsibilities of anorganisation’s risk functionin relation to otherfunctional areas

• The impact of a risk eventat the functional level

• The benefits of a cross-functional team whenassessing, preventing andminimising risk

• The role of purchasing tomitigate against potentiallosses to the wholeorganisation from riskevents

• The merits of taking aconsistent approach acrossthe organisation to theassessment of risk.

1.7 Evaluate how effectiverisk management canhave positive benefits fororganisations• Reduction in levels of

threat• Reduced exposure to

uncertainty• Higher risk opportunities

being successfully pursuedor mitigated

• Successful anticipation ofshocks or other risk events

• Crises being avoided ormitigated

• Successful application ofcontingency or businesscontinuity plans

• Disaster recovery planningand implementation

• Limited or no reputationalor public relations damage

• Securing supply andmitigation of supply chainvulnerability

• Improved decision andpolicy making

• Increased customer andstakeholder satisfaction

• Improved organisationalco-ordination with serviceand delivery partners.

19


1.8 Assess risks involved withusing technology• Reliance on technology• Security• Hackers• Fraud• Storing of vital documents

and materials.

2.0 RISK MANAGEMENTPROCESSES ANDSTRUCTURES(Weighting 25%)

2.1 Develop a riskmanagement strategy• Example of an appropriate

supply chain risk policy• How to define objectives

and content for a riskmanagement strategy

• How an organisation’sappetite for risk may affectthe risk policy

• The purpose of a riskmanagement strategy anda risk managementframework

• The key components of arisk management strategy

• The key implications of theTurnbull report.

2.2 Formulate an effective riskmanagement process inthe context of anorganisation’s strategicobjectives and a dynamicexternal environment• Key stages of a risk

management process; riskidentification, risk analysis,risk evaluation, risktreatment and riskreporting

• Methods for identifying,assessing and quantifyingrisks

• Classification of risk withinthe organisational context

• A risk report and the role ofa board risk committee

• How identified risks shouldbe monitored andreviewed.

2.3 Evaluate the probability ofa risk occurring inparticular circumstances,the possibleconsequences and thepotential range ofmitigating actionsrequired• Definition of probability in

relation to the occurrenceof a risk event

• How the likelihood of a riskoccurrence will affect theapproach to riskmanagement

• Application of the use ofhistoric statistical data inpredicting the likelihood offuture risk occurrences

• Identification of a range ofoperational risks andassign a probability to eachone

• Prioritisation of key riskswith explanation as to howresources might beallocated appropriately tomitigate such risks.

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2.4 Analyse the resourcesrequired for effective riskmanagement and forbuilding a risk awareculture withinorganisations• Responsibility of everyone

in an organisation• Definition of risk

awareness and thebenefits of awareness

• Description of anappropriatecommunicationprogramme to promote riskawareness

• How different functionscan work together toreduce risk

• Promotion of a riskawareness culture amongkey elements of thesupplier base

• How suppliers can assist inthe promotion of riskawareness.

2.5 Propose ways in whichthird party supplierresources are used toreduce risk and mitigatelosses during a risk event• Range of supply solutions

for mitigating losses in theaftermath of a risk event:insurance, loss adjusting,alternativeaccommodation, disasterrecovery plus restorationand recovery services

• Appropriate methods ofpurchasing and paying fordisaster recovery servicesboth during a risk eventand in the normal run ofbusiness

• Incentives to retainspecialist services at timesof national disaster,including flood andhurricane damage.

2.6 Develop an appropriate riskregister for the purchasingand supply function• Definition of a risk register

and the benefits of havingone

• Outline of key componentsof a risk register

• The process of maintainingand reviewing a risk register

• Design of a basic riskregister for the purchasingand supply function

• Procedures for monitoringand managing the key risksidentified.

2.7 Evaluate insurance as afinancial means of riskprotection• The insurance service

including the role of thebroker and the insurer

• How insurers use the re-insurance market to spreadtheir risk

• The key stages to resolve aclaims event

• Definition of captive or selfinsurance with descriptionof its practical application

• The merits of anorganisation self-insuringand the types of risk thatthis might include

• The relative merits ofcaptive self-insurance.

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2.8 Identify and apply a rangeof qualitative andquantitative riskidentification and analysistechniques to ensurebetter decision quality inreviewing alternatives fora superior projectoutcome• Scenario analysis and

planning• Auditing• Decision tree analysis• Fault tree analysis• Dependency modelling• External environment

analysis• Assumption• Identification frameworks.

3.0 MANAGING RISK ANDVULNERABILITY(Weighting 50%)

3.1 Develop appropriatesolutions to mitigate theinherent risk in thefollowing supply chainissues:• Supplier appraisal,

selection and management• Project failure (eg capital

procurement – investmentappraisal)

• International sourcing• Implementation of new

technologies• Corporate social

responsibility (CSR)including ethical,environmental and healthand safety issues

• Public sector procurement.

3.2 Evaluate and applymonitoring and controltechniques for testing riskon an ongoing basis:• Internal audits• Interdepartmental

exchanges• External experts: advisers,

mystery shoppers, researchcompanies and the police

• Use of benchmarking toassess and mitigateexternal risk

• Use of competitiveintelligence

• Quality systems, TotalQuality Management(TQM), quality inspectionand quality control.

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3.3 Develop contingencyplans designed toovercome risk situations• What is meant by a

contingency plan• The key components of a

business continuity plan(BCP) and disaster recoveryplan and how such plansare put into practice

• Key contingency measuresused by a BCP: telephonecascades, emergency andfire wardens, use of ITsystems to help co-ordinate activities, use ofalternative accommodationand back-up informationtechnology systems

• The benefits of businesscontinuity planning from anoperational, financial andreputational perspective.

3.4 Analyse specific key risksand exposures inpurchasing and supplyand identify appropriatemitigating actions• Contractual failure,

consequential loss andprovision for remedies

• Supplier insolvency,monitoring and guarantees

• Quality failure, non-conformity and correctiveaction

• Project failure, projectplanning principles andcorrective action

• Security of supply,contingency planning,stock holding andalternative sources ofsupply

• Technology failure, impacton supply, use of back-upsystems and disasterrecovery

• Security, theft and damage

• Fraud, accounting andpayment exposures,conflicts of interest,purchasing ethics andcodes of conduct

• Product liability,reputational damage,consumer confidence

• Appropriate negotiationstrategies to reduce futurecontract risk and supplychain vulnerability toenhance long termbusiness value

• Key steps in negotiationplanning for success

• Strategic approach andnegotiation techniques

• Best practice methodology• Tactics and standpoints• Behaviours of successful

negotiators • Contractual issues and

remedies• Dispute resolution

alternatives.

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COMPULSORY UNIT

UNIT CHARACTERISTICSAchieving success within thesupply chain involves a complexrange of variables, which canfrequently be dependent on oneanother for the success of thesupply chain.This unit is designed to enablestudents to use a range oftechniques and strategies todevelop and improve supplierperformance in order to achievecompetitiveness, efficiency andprofitability within the supply chain.By the end of this unit, studentswill be able to measure andevaluate the effectiveness ofsupply chain performance. Theywill be able to identify innovativedevelopment of systems to improvethe performance of the supplychain, and make justifiablerecommendations forimplementation in order to aid theeffectiveness of the supply chain.

STATEMENTS OF PRACTICEOn completion of this unit, studentswill be able to:• Evaluate the organisational

procedures and techniques thatcan be used in developing andimproving a range of supplierperformance areas

• Set performance standards towhich supply chain strategiesshould aspire

• Develop an integrated approachto the implementation of supplychain activities which aredesigned to maximisecompetitive advantage andreduce risk exposures

• Propose systems and techniquesto achieve best practice andenhance customer service for allstakeholders.

• Propose and justify differentnegotiation, processes,strategies and styles for a givenrange of situations

• Discuss the contribution that ICTcan make to supply chainbusiness processes.

Advanced diploma in purchasing and supplyImproving supply chain performance

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1.0 DEVELOPING ANDIMPROVING SUPPLIERPERFORMANCE(30% weighting)

1.1 Develop source-relatedactivities so as to informand provide value to otherfunctional areas in theorganisation, in line withthe overall objectives ofthe organisation• The business requirements

for supply, and documentin an appropriate way:specification, service levelagreement (SLA)

• The reasons for usingcross-functional teams todetermine businessrequirements and conductstakeholder consultations

• The need to align supplychain activities to theorganisational strategy

• The need to maintain adegree of supply-chainflexibility to respond tochanging needs

• The need for purchasing toprovide customer serviceto other functional areasand the tools andtechniques to implementsuch engagement andconsultation, regularmanagement reporting,helpdesk solutions,consultative style

• How purchasing, as afunction, can adddemonstrable value to thebusiness; cost reduction,risk mitigation, security ofsupply, enhanced service,improved quality andsupplier innovations

• How purchasing can useits supply-marketknowledge to assess andreport risks, threats and/orsupply chain vulnerabilitiesin an accurate and timelymanner

• An appropriatecommunicationsprogramme that keepsother functional areasinformed aboutpurchasing-relatedactivities and adds value totheir own areas ofresponsibility.

1.2 Develop appropriate KPIs toimprove supplierperformance• The purpose of supplier KPIs

in the improvement ofsupplier performance

• How a supplier KPI isdeveloped and measured

• The need for base-liningexisting performance priorto the development ofsupplier KPIs

• A range of potential supplierKPIs, including priceeffectiveness, cost savings,service enhancements,quality measures andimprovements, innovationand risk/compliance

• The implications of a supplierfailing to meet KPIs andappropriate managementcontrols to assist compliance;service credit/debit regimes,incentivisation and gain sharemodels

• Penalty clauses, liquidateddamages,increased/decreased share ofbusiness etc

• How a supplier’s performancecan be audited to ensure KPIsare accurately reported

• The various processes ofbenchmarking and howbenchmarking can be used togenerate stretching KPIs.

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1.3 Analyse purchasingactivities and explain howto manage them to assurean organisation meets itsobjectives• The benefits to the

organisation of robustsupplier selection andevaluation

• The range of appropriatesupplier selection andevaluation techniquesdesigned to achievebusiness requirements

• The methods of monitoringand measuring supplierperformance

• Information on howpurchasing can influencethe quality delivered fromsuppliers

• How purchasing cancontribute to anorganisation’s approach tototal quality management

• Process improvementmodels, and how they canbe used in a purchasingcontext to bring benefit toan organisation

• A typical purchasingplanning cycle and howpurchasing activities needto be aligned toorganisational plans

• How purchasing cancontribute to fiscalplanning activities

• Ways in which purchasingassists research anddevelopment by third partysuppliers and collaborators

• How should vendors berated to demonstrate apositive contribution to thebusiness’s performance?

• How cross-functionalteams can help purchasingdeliver better results for abusiness.

1.4 Evaluate and explain theimportance of developingand managing externalcontacts with the supplymarket • Reasons for developing

and managing externalcontacts within the supplychain

• Definitions of: innovation,market research, supplieranalysis, marketintelligence, competitiveintelligence (and others)

• Definition of reverseengineering

• The process of supplymarket research/analysis

• How to develop anappropriate relationshipwith third party researchand analysis organisations

• Business reasons toconduct supply marketresearch

• Appropriate processes fortesting and evaluatingsupply innovations

• The processes ofbenchmarking and howthey can be used to gainmarket information

• The ways in whichpurchasing can contributeto production forecasts.

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1.5 Propose ways to developnew and existingsuppliers and improvetheir performance• The processes and benefits

of supplier appraisal andselection

• The processes and benefitsof vendor rating andfeedback

• The terms value analysis,value management andvalue engineering

• The ways in whichsuppliers can work with anorganisation to improveproductivity, efficiency andquality and the role ofpurchasing in facilitatingthese processes

• The meaning of supplieradoption and the processfor adopting a newsupplier and the key stagesin implementation that areneeded to switch supply

• The meaning of sunk andswitching costs

• Practical reasons whysome organisations willnot switch supply, despitepotential benefits

• The process of trialling andpiloting new innovations

• The follow-on processesrequired to implement anew supply innovation;user acceptance andcontrolled roll-outs

• How suppliers can bemanaged and developed tocontain supply-related risksand reduce supply chainvulnerability.

1.6 Devise appropriatesupplier managementorganisational models inboth the centralised anddecentralised purchasingfunction, and demonstratehow other functionalareas might interact inthese models• The relative merits of

single point of contactversus multiple touch-points for managingsupplier relationshipseffectively

• The role of purchasing as afacilitator of supplierrelationships

• The purpose and potentialbenefits of a cross-functional approach tomanaging supplierrelationships

• The role andresponsibilities ofexecutive sponsors ofsupplier relationships

• The advantages,disadvantages andarrangement of adecentralised purchasingfunction.

• The concept of a leadbuyer and how this mightoperate for different typesof supply.

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1.7 Describe appropriateleadership styles tosupport supplierdevelopment• Key factors to encourage a

supplier to develop andimprove the delivery ofgoods and services

• The relative merits ofselling and telling

• Various types of supplierincentive and their relativemerits

• How a gainshare modelworks and potentialproblems with the concept

• Appropriate circumstancesfor purchasing to take adirective approach tosupplier development andthose required for afacilitative approach

• The need for consistentmeasures of progresswhen developing suppliers

• The need for purchasing tocommunicate supplierdevelopment internallywithin an organisation.

1.8 Identify the criticalelements of supplierdevelopment• Respective roles and

responsibilities of thoseinvolved in supplierdevelopment, includingthose of executivesponsors

• The need for continuousimprovement and methodsfor achieving it

• The need for creating andfostering a team-workingcollaborative environmentboth internally andexternally with thesuppliers

• The role of innovationcouncils

• The relative merits of jointproblem solving withsuppliers

• Process improvementtechniques; TQM, SixSigma and businessprocess re-engineering

• Gainshare models forinnovation and processimprovement

• The meaning ofbreakthrough valuecreation and how this canbe achieved in a supplychain context

• The need for policycreation and compliance.

2.0 MAXIMISINGCOMPETITIVENESS(30% weighting)

2.1 Explain how to managesystematic organisationalefforts to create andmaintain networks ofcompetent suppliers andto develop theircapabilities to meetcompetitive challenges• Why and how suppliers

are segmented• The key characteristics of

each segment of thesupply base• Tier 1: strategic, high

value-add, high risk,innovative

• Tier 2: regularpurchases, medium-high value, frameworkagreements

• Tier 3: commodity items,one-off purchases, littlerelationship or value-add

• The need for a consistentsupplier managementprocess and the keycomponents it mightcontain

• The benefits of supplierrationalisation.

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2.2 Evaluate and explaindifferent ways in which tomanage and maintaineffective communicationsbetween an organisationand suppliers in thedevelopment, presentationand transfer of qualityspecifications for theassurance of compliance• The process of cross-

functional involvement inthe development of aspecification and thespecific role for purchasing

• Supplier involvement andthe key benefits andpotential drawbacks to anorganisation

• Some of the key principlesof communicatingeffectively to suppliers

• The benefits of supplierforums and supplierassociations

• Risk transfer issues andmanagement techniques.

2.3 Explain ways in which tomanage cost reduction fororganisational efficiencyand provide added valueto customers• A typical purchase cost

reduction programme andhow such a programme isdeveloped

• The benefits of volume(time and/or quantity)contracts and systemscontracts

• The relative merits ofstockless purchasing andjust-in-time (JIT)

• How customer-drivensupply chain innovationscan be developed and therole of purchasing increating and establishingeffective supply

• The balance between costefficiency and quality/riskissues.

2.4 Plan and develop a well-structured approach tomeasuring theperformance of suppliers • The development of joint

performance appraisalsystems

• Use of cross-functionalteams from bothorganisations to monitor,review and analyse resultson a periodic basis

• The use of bothquantitative and qualitativemeasures

• Use of 360-degreefeedback

• Supplier businesscontinuity plans (BCP).

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2.5 Analyse different supplymarkets and conditions,and develop proposals forthe revision of associatedoperational processes, inconjunction with suppliersand logistics functions• Benchmarking benefits,

limitations and approaches• The benefits of

documenting the key stepsin a supply chain processflow and typical ways inwhich this is achieved;ICAM DEFinition language(iDEF))

• The role of businessprocess re-engineering inimproving the supply chainfor inbound logistics andmaterials flow

• The process of lean supplyand the arguments for andagainst (Lamming/Cox).

3.0 ADVANCED NEGOTIATIONIN THE SUPPLY CHAIN(20% weighting)

3.1 Evaluate differentnegotiation strategies,styles and levels indifferent supply chaincontexts and formulateappropriate strategies fornegotiation within andacross the supply chain• The basic tenets of the

negotiation process andthe key behavioursrequired to negotiateeffectively in a variety ofpurchasing contexts

• The need for teamworkand clear team roles innegotiation

• The role of trust innegotiation for both newand long-standing supplierrelationships

• Open-book negotiationsand their relative merits

• The role of negotiation andassociated aspects indispute resolution

• Issues of risk and rewardand how these may bemanaged in negotiation.

3.2 Analyse and explain howto manage the negotiationprocess in line withorganisational objectives • How a negotiation

campaign is designed anddeveloped and the keyconsiderations required indoing so

• How the businessrequirements for supplyneed to be reflected in thedetailed negotiation plan

• How corporate policyand/or organisationalobjectives may affect thenegotiation plan in termsof behaviour, targets,timescales and/or scope

• Key ethical considerationswhen leading a negotiation.

3.3 Explain advancednegotiation techniques• Transactional analysis• Game theory • Advanced non-verbal and

psychological techniquesfor influencing

• Building and maintainingrapport

• Negotiating in the contextof established long-termcollaborative relationships.

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4.0 IMPROVING THEEFFICIENCY ANDEFFECTIVENESS OF THESUPPLY CHAIN (20% weighting)

4.1 Describe how to developand implementappropriate informationand knowledge sharingsystems betweenpurchasing departmentsand suppliers to providebenefits to both parties• Reduced production cycle

times• Improved solutions to

operationaldifferences/difficultiesincluding planning

• Improved inter- and intra-site communications

• Improved productdevelopment

• Reduced selling efforts• Long-term security of the

business• Reduced risk exposure to

supply chain failure.

4.2 Analyse the application oftechnology to automateand streamline keyoperational processeswithin the supply chain(both internal and externalto the organisation)• Information flow and use

of supply-side extranets• e-sourcing and electronic

ordering/payments: on-linecatalogues, electronicpoint of sale (EPOS),electronic fund transfer(EFT)

• Automated purchase-to-pay systems

• Automated payments,accounting andreconciliation

• Use of an extranet toinclude cross-functionalrepresentatives bothinternally and externally

• Reduction of fraud andpayment error risks

• Planning, monitoring andcontrol systems.

4.3 Evaluate and explain thebenefits of automatedprocesses and informationflows and their impact onthe supply chainperformance• The benefits of automated

supply chain processes:reduced cost, improvedcommunication, reducederror, reduced lead time,higher accuracy, greaterquality, improved supplierrelations, real-timeinformation, reduced fraud,management informationand feedback

• The benefits of automatedprocesses and theinformation gained fromthem for suppliers andtheir businesses

• How and why suppliersmight choose to investjointly with the purchaserin automation of the supplychain

• Extranets and how inpractice they work with asupply base

• The benefits of automatedpurchase-to-pay systems

• The importance, natureand contribution of ICT toknowledge management.

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OPTIONAL UNIT

UNIT CHARACTERISTICSThis unit is designed to providestudents with an appreciation ofthe basic principles of marketing sothey can interact more effectivelywith marketing colleagues withintheir organisation. It provides aninsight into the role of marketingwithin an organisation and sets outmarketing’s relationship withpurchasing and other businessfunctions.

Students will be introduced toconcepts, tools and techniques thatare widely used by their marketingcolleagues. It will help purchasingstudents to understand theterminology of marketing and toidentify ways that they cancontribute more effectively towardstheir organisation’s marketingefforts. The unit is applicable tostudents working for organisationsin all sectors (including not-for-profit/third tier sectors) andgeographic territories. Whereappropriate, internationalmarketing aspects are considered.

By the end of the unit studentsshould be able to evaluate andapply marketing tools andtechniques in a range of contexts,and to understand how marketingcontributes to key businessobjectives, in particular growth inincome, profit and market share,and enhanced customersatisfaction.

STATEMENTS OF PRACTICEOn completion of this unit, studentswill be able to:• Evaluate the key components of

effective marketing, planningand control within anorganisation and develop amarketing and promotional plan

• Assess how marketers developa detailed understanding ofcustomers and applysegmentation techniques

• Analyse the market researchprocess and market researchtechniques

• Apply the marketing mix to arange of organisations anddetermine how the marketingmix elements can be integratedto achieve business objectives

• Analyse the value of developinglong-term customerrelationships and applytechniques which buildcustomer loyalty andsatisfaction

• Identify how purchasers cancontribute towards the effectivedevelopment of the marketingmix and execution of marketingplans.

Advanced diploma in purchasing and supplyMarketing for purchasers

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1.0 MARKETINGMANAGEMENT,PLANNING ANDCONTROL(Weighting 20%)

1.1 Examine the marketingfunction within anorganisation and explorethe concept of marketingorientation• Definitions of marketing• The contribution of the

marketing function withinan organisation

• Production orientation,product orientation, salesorientation and marketingorientation

• The steps an organisationmight take to achieve ahigh level of marketingorientation.

1.2 Evaluate marketing’sinteraction withpurchasing and otherfunctions• Marketing’s relationship

with purchasing and otherorganisational functions

• The impact of marketingdecisions and activities onpurchasing and otherorganisational functions

• Areas of potential conflictbetween marketing andpurchasing, and otherfunctions within anorganisation

• How internal conflicts canbe managed and resolved.

1.3 Analyse and explain therationale and backgroundto marketing planning• Strategy and its relevance

to marketing planning• Tools and models used in

the development ofstrategic options: Ansoffmatrix and Porter’s genericstrategy

• How strategic options canbe prioritised andevaluated

• Options for enteringmarkets overseas andpotential barriers to entry

• How effective (SMART)objectives are developed

• Corporate objectives andmarketing objectives

• The role of the marketingplan within anorganisation.

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1.4 Assess the value ofplanning and the stages inthe marketing planningprocess• Benefits of marketing

planning• Potential challenges and

issues encountered withmarketing plans

• The marketing planningprocess

• The contribution of thepurchasing function in thedevelopment of marketingplans and throughout themarketing planningprocess.

1.5 Evaluate the uses andapplication of themarketing audit• The role and uses of a

marketing audit• An organisation’s macro

environment• An organisation’s micro

environment• The uses of a SWOT

analysis• SWOT analysis in respect

of different organisations• How to analyse the

competitive environmentusing Porter’s Five Forcesmodel.

1.6 Evaluate and measure theperformance of marketingplans• The importance of

monitoring the executionof marketing plans andmeasuring their success

• Marketing keyperformance indicators(KPIs)

• Methods of measuringmarketing performance

• The role of budgets inmarketing planning.

1.7 Assess the differencesbetween goods andservices marketing• The specific characteristics

of services versus goods• The specific challenges

faced by servicesmarketers

• How challenges aremanaged by servicesmarketers.

2.0 UNDERSTANDINGCUSTOMERS AND THEIRNEEDS(Weighting 20%)

2.1 Analyse organisationalbuying behaviour• Characteristics of

organisational markets• Organisational decision

making process• Roles of individuals within

organisational buying• Influences on

organisational buyerbehaviour

• Implications oforganisational buyingbehaviour on marketingactivities.

2.2 Analyse consumer buyingbehaviour• Characteristics of

consumer markets• Consumer decision making

process• Influences on consumer

buyer behaviour• What motivates consumer

buyers• The implications of

consumer buyingbehaviour on marketingactivities.

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2.3 Evaluate and applysegmentation, targetingand positioning• Benefits of segmentation• The criteria for an effective

segment• Segmentation methods for

the consumer market• Methods used in

segmenting organisationalmarkets

• Meaning of targeting andthe three target marketstrategies

• How organisations decidewhich markets to target

• How positioning is used toachieve competitiveadvantage and how thepositioning concept isapplied to a range oforganisations.

3.0 THE MARKETING MIX(Weighting 30%)

3.1 Analyse how products aredeveloped and managed• Components of a product• Role of branding and the

importance of developingstrong brand values

• Key strategic brandingdecisions and identifyalternative brandingstrategies

• The concept of productportfolio management andapply recognised productportfolio managementtools, the BostonConsulting Group matrixand the product life cycle

• The rationale fordeveloping new products

• New product developmentprocess

• The adoption of newproducts by customersusing the diffusion ofinnovation concept

• The contribution of thepurchasing function in thedevelopment of newproducts.

3.2 Analyse the role of pricingwithin the marketing mix• Importance of pricing and

organisational pricingobjectives

• Factors that should beconsidered whendetermining productpricing

• Main approaches to pricing• Pricing strategies to

products at each of the lifecycle stages

• The different pricingstrategies that could beconsidered for productsperforming at differentlevels in the BostonConsulting Group matrix

• The involvement andcontribution of purchasingin pricing decisions.

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3.3 Analyse the role ofchannel management inthe marketing mix• Meaning of channel

management and its role inachieving marketing andbusiness objectives

• Main channels ofdistribution and thefunctions that channelintermediaries perform

• Criteria used to evaluateand select distributionchannels

• How an organisationselects, motivates andmanages channelintermediaries to achievehorizontal and verticalintegration

• The impact of informationtechnology on channelmanagement

• The contribution of thepurchasing function inchannel management.

3.4 Analyse the role ofpromotion (customercommunications) in themarketing mix• The role and importance of

customer communications• Potential customer

communication objectives• Communications models;

AIDA and DAGMAR• Stages in the development

of a promotional plan• Components of the

promotional mix• Role of the promotional

mix in influencingorganisational andconsumer buyers

• Techniques used tomeasure promotionaleffectiveness

• How the promotional mixis used at different stagesin the life cycle and atdifferent levels in theBoston Consulting Groupmatrix

• The role and contributionof the purchasing functionin the specification andproduction of customercommunications.

3.5 Analyse and apply theextended marketing mix• The rationale for the

development of theextended marketing mix

• Role and importance ofpeople in servicesmarketing

• Meaning and importanceof ‘process’ in servicesmarketing

• Contribution of ‘physicalevidence’ servicesmarketing

• How the extendedmarketing mix componentshelp marketers to addressthe challenges they facewhen marketing services.

3.6 Explain how themarketing mix can beapplied in internationalmarkets• Additional factors that

marketers should considerwhen applying themarketing mix ininternational markets

• The contribution ofpurchasing in developingthe marketing mix forinternational markets.

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4.0 MARKETINGINFORMATION ANDRESEARCH(Weighting 15%)

4.1 Explore the role andimportance of marketresearch and explain howit informs marketingdecisions• Meaning of market

research• Importance of market

research as a decision-making aid

• Potential marketingproblems and how theycan be helped throughmarket research

• Sampling and its key rolein market research

• Sampling techniques• Quantitative, qualitative,

primary and secondaryresearch.

4.2 Apply the stages of themarketing researchprocess to obtaininformation to aidmarketing decisions andplanning• The stages of the

marketing researchprocess

• Research objectives• Contents of a full research

plan • Techniques used for

collecting primaryqualitative and quantitativedata

• The internal and externalsources of secondary data

• Quantitative andqualitative data collectionmethods

• Primary and secondarydata.

4.3 Examine competitoranalysis, and evaluate itsuses and the sources ofinformation• Uses of competitor

intelligence• Type of competitor

information which is likelyto be of use to marketersand purchasers

• How competitorintelligence can begathered

• Main sources ofcompetitor intelligence

• How the purchasingfunction can assist incompetitor analysis.

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5.0 MANAGINGRELATIONSHIPS(Weighting 15%)

5.1 Identify and analyse keystakeholder groups• An organisation’s

stakeholders• The various needs and

objectives of differentstakeholder groups

• How marketing strategyand activities can lead tosatisfying stakeholderobjectives

• Role of communications instakeholder management

• Purchasing’s contributionto stakeholdermanagement.

5.2 Examine the role ofprospects and explaintheir contribution inbuilding market share• Definition of prospects• Key role of prospects in

building market share• How relationships with

prospects can be managed• Marketing activities which

can be used to identify andconvert prospects.

5.3 Assess the management ofcustomer relationshipsand identify good practicein relationshipmanagement• Definition of ‘customer’• Relationship marketing and

transactional marketing• Techniques in building and

managing long-termcustomer relationships

• Meaning and use ofCustomer RelationshipManagement (CRM) inmanaging customerrelationships

• Stages of the process inimplementing CRM withinan organisation

• Challenges and benefits ofimplementing CRM withinan organisation.

5.4 Evaluate the long-termbenefits of customerloyalty and satisfaction• Meaning of customer

loyalty• Benefits of achieving

customer loyalty• The ways that customer

loyalty can be created andmaintained

• Customer satisfaction andhow it can be achieved

• How customer satisfactioncan be measured.

5.5 Examine and evaluate therole of staff asstakeholders• Staff as a major asset to

an organisation• Role of internal

communications intraining, motivating andeducating staff

• Different methods ofcommunicating internallywith staff

• The internalcommunications plan.

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OPTIONAL UNIT

UNIT CHARACTERISTICSThis unit aims to identify the majorareas of concern in effectivelymanaging storage and distributionthroughout the supply chain. It isessential that goods are movedthrough supply chains to customersat the right time, in the rightcondition, at the right place and atthe right cost. Failure in any ofthese areas will add unnecessarycosts to the ultimate customerwhile success will add value, anddelight the customer.

It is essential that the managementof inventory, storage, distributionand general logistics are co-ordinated, both upstream anddownstream, in order to reducelead times, provide agility andreduce unnecessary costs. In orderfor this to happen it is essentialthat relationships, both internallyand externally, are honed to theappropriate level.

To be effective, storage anddistribution must fit in a seamlessway to the total supply chainlocally, nationally and globally.

STATEMENTS OF PRACTICEOn completion of this unit, studentswill be able to:• Evaluate the objectives and

scope of storage and distributionin the supply chain

• Assess how the activity canmeet its service and costobligations while adding value

• Evaluate the factors thatstrategically affect the designand organisation of a storageand distribution network

• Compare different transportmodes, and decide whether tooutsource transport or managethe activity in-house

• Compare and evaluate theapproaches used for evaluatingthe cost and servicerequirements when designingthe layout of storage andwarehouses

• Evaluate the various types ofstorage and handlingequipment, coding systems andreturns procedure required inmodern storage andwarehouses

• Compare and evaluate variousmethods for controlling theactivity in terms of security andachieving stated performancecriteria

• Major legal areas of concern tostorage and distribution

• Evaluate how and why ICT canimprove the efficiency andeffectiveness of the activity.

Advanced diploma in purchasing and supplyStorage and distribution

39



1.0 OBJECTIVES AND SCOPEOF STORAGE ANDDISTRIBUTION(Weighting 15%)

1.1 Determine the scope andobjectives of storage anddistribution• The objectives of the

activity• The role of storage and

distribution in a typicalbusiness environment

• The differences betweenroles the activity has indifferent organisations

• The network ofrelationships required forthe activity to functioneffectively.

1.2 Analyse and explainconnections betweendistribution, storage andthe supply chain• The total cost concept and

the idea of sub-optimisation

• The total cost concept andwhy it is relevant

• The major areas that needto be evaluated in order toarrive at an optimalsolution

• The cross-functional team-working skills that need tobe developed to avoid sub-optimisation problems.

1.3 Develop effective andmeasurable servicestandards• The concept of the term

customer in storage anddistribution environments

• Methods that could beused to improve theinternal and externalcustomer interface

• How to developappropriate action plans toimprove customer service

• The various measures ofcustomer performanceinternally and externally

• The cost of service levelsversus benefits.

1.4 Assess and evaluate theconcept of adding value instorage and distribution• The concept of adding

value in the above contextwith appropriateillustration

• The role of other functionsinternally and externally inhelping to add value to theactivity

• Appropriate measurementcriteria in this area.

1.5 Analyse the problemsassociated with the areaof service to cost trade-offs• The major cost and service

parameters that need to beevaluated in the storageand distribution area

• Appropriate methods ofappraising such a problem

• Environmental factors thatcould have an impact inthis area

• Ways of quantifying costsand service in this area.

40


2.0 DISTRIBUTION PLANNINGAND MOVING GOODS (Weighting 15%)

2.1 Evaluate the strategicfactors affecting thechoice of a storage anddistribution network• Macro level factors

affecting the choice of astorage and distributionnetwork

• Major methods of storage• The concept of a

distribution network• Current methodologies that

could be used in this areato provide an optimalsolution.

2.2 Appraise and evaluate therole of third partycontractors and logisticservice providers• How you would evaluate

the use of third partycontractors and logisticservice providers

• How to develop anappropriate action planand methodology for suchan exercise

• Appropriate KPIs in theselection process

• The internal-externalinterfaces that would needto be consulted in such anexercise and why

• Key stakeholders inthis area.

2.3 Appraise and evaluatedifferent transportationmodes• Differentiation between

the various transportmodes

• The characteristics andsuitability for differentconsignments

• The concept of multi-modaltransportation and itsadvantages.

2.4 Assess the importance ofgood transport routing andload planning• The factors that need to be

considered in vehiclerouting

• Major factors that must beconsidered in loadplanning

• Appropriate computergenerated models thatcould be used to assist inthe areas of routing andload planning

• How appropriate KPIscould be developed in thisarea

• Major KPIs that could beused in these areas.

2.5 Assess the impact of UKimport customs controlsand risks associated withdifferent Incoterms• The associated problems

with UK import control• How the risks can vary

with imports depending onthe Incoterm chosen.

41


3.0 WAREHOUSING ANDMANAGEMENT OFGOODS (Weighting 25%).

3.1 Appraise and evaluate therole and effects ofwarehousing and storageof goods on the efficiencyand effectiveness of theactivity• Appropriate methodologies

for evaluating the cost andservice requirements whendesigning the internallayout of a stores orwarehouse

• Major principles to beevaluated in anywarehouse or stores

• The different types ofdesign and theirassociated advantages ordisadvantages

• Single and multiple storeybuildings and their costeffectiveness in differentsituations.

3.2 Assess the different typesof warehouses andequipment available• The different types of

warehouses and stores tobe found in differentorganisations

• Manufacturing versusservice

• Push/pull environments• Public versus private sector• The use of different types

of storage and handlingequipment found in astores and warehousingenvironment

• Methods for increasing theuse of space in such areas

• How to evaluate costimplications in the use ofdifferent types of storageand handling equipment

• The use of Pareto analysisand stock-turn with respectto stock management.

3.3 Evaluate different types ofcoding systems• The different types of

coding systems to be foundin a stores environment:• Significant• Sequential

• Methodology that could beused to introduce a newcoding system

• The benefits and problemslikely to be associated withdifferent coding systems

• The role for bar coding andthe benefits likely toaccrue from itsdevelopment.

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3.4 Assess the methods usedin the introduction of newitems and the handling ofobsolete and redundantstock• The introduction of new

items and the importanceof management in thisarea

• How obsolete andredundant stock is likely tocause difficulties andmethods that could beused to minimise suchproblems

• The need for improvedcommunications to reducesuch problems

• The use of managementinformation systems thatcan be used to help controlthe problems associatedwith new introductions,obsolete and redundantstock.

3.5 Propose methods forhandling customer returnsand reverse logistics• The issue of handling

customer returns indifferent environments

• How the problem ofcustomer returns might beexamined and improved

• The concept of reverselogistics

• Improvements that couldbe made in the area ofreverse logistics

• How KPIs could beestablished in this area.

3.6 Evaluate methods formanaging unit loads,pallets, cages and toteboxes• Terms associated with

managing unit loads:pallets, roll cages, toteboxes and their uses

• The problems associatedwith the management ofthese

• How improvements inefficiency in these areascan improve corporateprofitability.

3.7 Appraise and evaluateinventory control systemsfor independent anddependent demand• Definitions of independent

and dependent demand• Fixed order point• Periodic review• The impact of inventory

control systems on storageand distribution.

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4.0 CONTROLLING STORAGEAND DISTRIBUTION,INCLUDING LEGALASPECTS (Weighting 30%)

4.1 Examine and analysemethods for improvingsecurity in the area• Different security

measures that could beused in the area

• The effectiveness ofdifferent systems

• Methodologies that couldbe used to improveefficiency andeffectiveness

• How improvementsbetween internal andexternal customers canreduce security problems.

4.2 Establish systems forcontrolling and managingstorage and distributionactivity• The use of different

systems established tocontrol and manage theactivity

• The need for an integratedcomputer system

• The need for systems thatallow management byobjectives andmanagement by exception.

4.3 Establish performancecriteria for controllingstorage and distribution• Major performance

criteria:• Service levels• Utilisation• Performance ratios• Comparative ratios• Benchmarking

• Evaluating chosen criteriawith internal and externalcustomers

• Defining action plans forimprovement.

4.4 Assess the different rolesof efficiency andeffectiveness• The difference between

efficiency and effectiveness.

4.5 Assess the use ofoperational researchtechniques in storage anddistribution• The use of the following in

the storage anddistribution area:• Network analyses• Distribution modelling• Simulation• Queuing theory

• The appropriate techniquein a given situation.

4.6 Identify and explain therequirements of health andsafety legislation within astorage and distributionenvironment• The areas affected by the

Health and Safety at WorkAct 1974

• The roles andresponsibilities of staff andmanagement in theworking of the Act

• Major roles placed onorganisations as a result ofthe Act.

4.7 Explain the requirementsof the control ofsubstances hazardous tohealth (COSHH)regulations within astorage and distributionenvironment• The requirements of

COSHH in the materialsand environments to whichthey are applicable

• The roles andresponsibilities ofmanagement and staffunder the Act.

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4.8 Examine legal issuesinvolved with the transportof hazardous goods• The role of major transport

legislation in the control ofhazardous goods

• The role under thislegislation for drivers andorganisations involved.

5.0 EVALUATING THE ROLE OFINFORMATION ANDCOMMUNICATIONTECHNOLOGY (ICT) (Weighting 15%)

5.1 Evaluate the role of ICT instorage and distribution• Why there is a need for ICT

and its likely scope• The role of information

providers internally andexternally

• The need for such systemsto be integratedthroughout the supplychain

• The role of an integratedsystem in a move towardsa more optimal solution

• The use of the computer inbasic stores management.

5.2 Evaluate majordevelopments in ICT andtheir effect on store anddistribution• EDI• EPOS• Data capture devices• Voice recognition systems• Mobile computing• Radio frequency

technologies• Truck and trace systems in

different environments.

5.3 Evaluate the use andimpact of the internet onthe storage anddistribution function• How the use of the

internet can improveefficiency andeffectiveness in thestorage and distributionareas

• How the internet can beused for selecting suppliers

• The need to developrelationships withsuppliers to allowmaximum use of theworldwide web.

5.4 Evaluate the use ofEnterprise ResourcePlanning (ERP) and itsoverall value to theorganisation.• The need for an

organisation-wide system(ERP) and the impact it islikely to have on the supplychain

• The role of storage anddistribution when involvedin an ERP system

• The need for such anintegrated system and itslikely benefits

• Examples of ERP systems.

45


OPTIONAL UNIT

UNIT CHARACTERISTICSThis unit is designed to enablethose who work in purchasing toassess the efficiency andeffectiveness of an organisation’soperations. This is the process ofconverting input resources intooutput products and services thatoccurs in all types of organisation,whether in manufacturing orservices, public sector or private.

Students should be able tounderstand how operations staffadd value to its inputs through theeffective management ofproduction and delivery. Operationsstaff are likely to be the mostimportant internal customers ofpurchasing and supply chainmanagers.

By the end of this unit students willbe able to analyse and evaluate anoperations environment andimplement a strategic plan thatallocates resources in terms ofmaterials, labour and machinery. Inaddition they will be able toconsider the infrastructurerequirements of the managementcontrol systems, as applied todifferent process types andtechnologies, and select the rightapproach.

STATEMENTS OF PRACTICEOn completion of this unit, studentswill be able to:• Compare the challenges facing

operations managers whooperate in increasingly complexglobal markets for goods andservices

• Formulate an operationsstrategy that will integrate withthe product requirements of amarketing function

• Advise on the benefits of makeor buy/outsourcing decisionsassociated with specificcomponents and services

• Assess the relationship betweendesign and procurement andpropose potential design toolsthat will ensure cost effectivedevelopment of new productsand services

• Plan and manage an operationsfunction and advise on theoptimum layout for specifictypes of product and processwork flows

• Formulate effective resourceplans and schedules that willdeliver products in a costeffective manner

• Propose philosophies, tools andtechniques for continuousimprovement and be able toapply these approaches withinan operations function in orderto improve the overallcompetitiveness of the business.

Advanced diploma in purchasing and supplyOperations management in the supply chain

46



1.0 THE CONCEPT OFOPERATIONS (Weighting 20%)

1.1 Define operationsmanagement and assessthe influences onoperations management inthe broader competitiveenvironment• Definitions of the term

operations management• Distinguishing operations

management as one of thekey functions in anorganisation

• Improvements in transportand communicationstechnology

• The convergence ofconsumer preferences

• Increased competition andimplications of shorterproduct lifecycles.

1.2 Evaluate the input-transformation-outputmodel and explain how itrelates to operationsmanagement• The varied resource inputs

to the input stage• The meaning of

transformation and howthis applies tomanufacturing andbusiness processes

• The different types ofoutput from thetransformation processes.

1.3 Compare the differentcharacteristics ofproducts and serviceorganisations and analysehow they impact onoperations managementpractice• Aspects of tangibility• Quality and specification

issues• Demand management• Training and development• Capacity management• Service quality and

managing the customer.

1.4 Evaluate the strategicrelationship between theoperations function andother main functionswithin the business• Marketing• Finance • Purchasing and supply

chain• Human resources• Information Technology

(IT).

1.5 Analyse key performanceobjectives, theirrelationship with the orderwinning criteria and howthey contribute to thesuccess of a business• Cost • Quality• Responsiveness and speed• Flexibility • Dependability.

1.6 Analyse the significanceof strategic outsourcingdecisions in terms of:• Span of control within an

organisation• Core competencies• Impact on other functions.

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2.0 THE DESIGN OFPRODUCTS ANDSERVICES(Weighting 15%)

2.1 Analyse the designprocess for products andservices• Definition of the term

design• Aspects of customer

satisfaction• Approaches to designing

better products• Understanding the full

design business process.

2.2 Evaluate the benefits thatarise from thorough designevaluation andenvironmentally sensitivedesign with respect to theproduct life cycle• The contribution of

purchasing to design• Compare and contrast

areas of conflict betweenpurchasing and design

• Trade-offs in designingenvironmentallyacceptable products

• Environmentally preferredmaterials

• Life cycle analysis• End of life issues.

2.3 Analyse the contributionthat purchasing andsupply can make to thedesign of products andservices by theapplication of certain tools• Standardisation• Modularisation• Value analysis and

engineering• Computer aided design.

3.0 THE DESIGN ANDMANAGEMENT OF THEOPERATIONS NETWORK(Weighting 25%)

3.1 Analyse the criticalfeatures of an operationsnetwork and explain howthey contribute to themanagement of supply anddemand• Network design and

investment• Strategic decisions in

developing a network• Feasibility factors• Benefit factors• Financial factors• Organisational structure• Integration• Outsourcing: make versus

buy.

3.2 Distinguish between thedifferent process types inmanufacturing and serviceindustries• Process types in terms of

variety and volume• Processing technologies• Process layouts and

workflow.

3.3 Compare and contrastdifferent approaches tojob design• Definition of the word job• The use and techniques of

work study and workmeasurement

• Advantages anddisadvantages of thedifferent approaches to jobdesign

• F W Taylor/Gilbreth’s work• Scientific management

approach• Motivational approaches• Socio-technical systems

approach• Human factors approach• Empowerment and self-

managed teams.

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3.4 Evaluate the techniquesused to plan and controlquality• Definition of quality• Dimensions of quality• Cost of quality

management tool• Quality management and

quality managementprinciples

• Techniques used to planand control quality inproducts and processes.

3.5 Develop an asset andmaintenance andreplacement strategy• Differences between

preventative and repairmaintenance

• Time to replace an assetcalculation.

3.6 Analyse and explain thecomplexity surroundingfacility location decisions• Reasons for complexity• Demand side decisions• Supply side decisions• Location analysis tools.

4.0 THE PLANNING ANDCONTROL OF RESOURCES (Weighting 25%)

4.1 Explain the objectives foroperations planning andcontrol (OPC) and theactions necessary tocontrol operations• Definitions of OPC• The different stages of

OPC• Definition of capacity• Strategic capacity planning• Measuring capacity• Smoothing capacity• Capacity calculations.

4.2 Analyse, select and usebasic techniques toforecast demand• The use of some basic

techniques for forecasting• Qualitative and

quantitative forecastingtechniques

• Characteristics of ‘push’and ‘pull’ operations

• Independent anddependent demand.

4.3 Analyse and explain themechanics of materialsrequirements planning(MRP), manufacturingresource planning (MRPII)and enterprise resourceplanning (ERP)• MRP/MRPII and how they

work• Advantages and

disadvantages ofMRP/MRPII

• ERP – applications andcontent.

4.4 Identify and analyse thekey roles and objectives ofproject management• Definition of project

management• The project life cycle• Creating a project network• Calculating the critical path• Resource constraints.

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5.0 PHILOSOPHIES ANDMETHODS FOR MAKINGIMPROVEMENTS INOPERATIONSMANAGEMENT(Weighting 15%)

5.1 Explain the culturalchange required toimplement total qualitymanagement (TQM)• Total quality management

(TQM) as a philosophy• The development of TQM

by Deming, Crosby andJuran

• Benefits of TQM• Criticisms of TQM.

5.2 Examine and evaluate thephilosophy of just in time(JIT) and continuousperformance improvementin the context of leanmanufacturing• The definition and

philosophy of JIT• JIT as the basis for a

continuous improvementprogramme

• The advantages of JIT• Aspects of lean

manufacturing and leansupply chains.

5.3 Analyse and explain thedifferent approaches tocontinuous improvement • Process mapping• FMEA• The PDCA cycle• Different methods for

managing and reducingstockholding.

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OPTIONAL UNIT

UNIT CHARACTERISTICSThis unit seeks to explore thedrivers and decision makers ofcentral and local government andthe National Health Service (NHS),and the impact these have uponthe public sector procurementfunction. This unit will also includeconsideration of the background tocurrent public procurement policyand procedures, the regulatoryframeworks and rules relating toprocurement practice and the roleof elected representatives andofficials in making significantprocurement decisions.

An understanding of governmentpolicy, regulations and governmentinitiatives such as the efficiencyagenda, social agenda andsustainability drivers will beimperative to the success of anycandidates.

This unit will also include anunderstanding of the systems andprocesses developed and adoptedfor audit monitoring andmeasurement, includinggovernment accounting andbudgets, and the roles of theNational Audit Office (NAO), AuditCommission and Public AccountsCommittee (PAC).

STATEMENTS OF PRACTICEOn completion of this unit, studentswill be able to:• Demonstrate knowledge and

understanding of thebackground to current publicprocurement policy andprocedures

• Examine the value and scope ofpublic procurement and theroles of key decision makers andorganisations

• Analyse the impact ofprocurement policy andgovernment initiatives onprocurement

• Outline and assess thesignificance of the financialaccountability cycle forprocurement policy and practice.

Advanced diploma in purchasing and supplyThe machinery of government

51



1.0 THE BACKGROUND TOCURRENT PUBLICPROCUREMENT POLICYAND PROCEDURES(Weighting 25%)

1.1 Evaluate the principlesand process for publicprocurement• Arguments and evidence

for and against the use oftransparency andcompetition in lettingcontracts

• Procedures by whichtransparency andcompetition may beachieved

• Arguments and evidencefor and against the use ofprocurement for politicalpurposes including theeconomic survival of UKcompanies

• Measures for protectingagainst fraud.

1.2 Assess the impact ofpolicies on contracting outof services, the PrivateFinance Initiative (PFI) andbest value on the role andsignificance ofprocurement• Explanations for and

evidence of historical roleand significance ofprocurement in the publicsector

• Theories on the use of themarket for the provision ofpublic services; transactioncost economics, principal-agent, contestablemarkets, functionalmatching

• Impact of policies;contracting out of services,the PFI and best value onincreasing the role of themarket in the provision ofpublic services

• Analysis and evidence ofcurrent role andsignificance ofprocurement in centralgovernment departmentsand agencies, localgovernment and the NHS.

1.3 Evaluate theimplementation of privatesector best practiceprocurement and explainhow it can be transferredto the public sector• Culture and goals of public

and private sectorprocurement

• Analysis of claimed privatesector best practices suchas partnership, supplychain management, costreduction and innovation

• Arguments and evidencefor and against theadoption and adaptation ofprivate sector best practicein public procurement

• Mechanisms for improvingprofessional procurementskills and competencies inthe public sector.

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1.4 Evaluate the potential fortraditional publicaccountability systems toact as a constraint onefforts to improveprocurement practice• The government

accounting cycle, itsorigins and purposes

• Analysis of the impact oftraditional public sectoraccountability systems:annual budgeting, role ofthe Accounting Officer,internal and external auditand the role of the PAC onprofessional procurement.

2.0 THE VALUE AND SCOPEOF PUBLICPROCUREMENT AND THEROLES OF KEY DECISIONMAKERS ANDORGANISATIONS(Weighting 25%)

2.1 Assess the value andmajor components ofprocurement spend withinGovernment departmentsand agencies, localgovernment and the NHS• Major components of

procurement spend; directpurchases only, grants, PFIprojects, all non-pay spend

• Analysis of robustness ofsources of data onprocurement spend inGovernment departmentsand agencies, localgovernment and the NHS

• Analysis of spend byproduct, service orprojects.

2.2 Explain how to managethe spend on goods,services and projects bymarket sector todetermine the politicaland economic impact ofpublic procurement• Value, frequency and

volume of spend on goods,services and projects bymarket sector

• Impact of public sectorprocurement spend oncapacity andcompetitiveness of keymarket sectors

• Policy implications ofimpact of public sectorprocurement spend on keymarket sectors.

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2.3 Identify and discuss theroles of electedrepresentatives (ministers,Members of Parliament(MPs), local councillorsand council committees)and officials (PermanentSecretaries, Agency andNHS Trust ChiefExecutives and FinanceOfficers) in theprocurement process• Implications of the need for

democratic oversight forthe governance of publicprocurement

• Roles of electedrepresentatives (ministers,MPs, local councillors andcouncil committees) in thegovernance of publicprocurement

• Roles of officials(Permanent Secretaries,Agency and NHS TrustChief Executives andFinance Officers) in theprocurement process

• Impact of devolution inScotland, Wales andNorthern Ireland onprocurement policy in thedevolved countries.

2.4 Identify and discuss theroles of the Office ofGovernment Commerce(OGC), the NHSPurchasing and SupplyAgency (PASA), and theImprovement andDevelopment Agency(IDeA) in localgovernment, as well asequivalent bodies inScotland, Wales andNorthern Ireland• Significance of the

development of policy andcoordinating organisationsfor public procurement atcentral, regional, local andsectoral levels

• Analysis of the roles ofspecific organisations:OGC, the NHS PASA, andthe IDeA

• Arguments for and againstand evidence of theeffectiveness ofcentralised or collaborativeprocurement nationally,regionally or by sector.

3.0 THE IMPACT OFPROCUREMENT POLICYAND GOVERNMENTINITIATIVES ONPROCUREMENT(Weighting 30%)

3.1 Evaluate the effectivenessof regulatory goals ofprobity and transparencyin procurement• General risks from

procurement• Arguments for using

probity and transparency tomanage procurement risks

• Mechanisms for balancingthe risks of fraud and non-discrimination against theneed for innovation andentrepreneurialism inprocurement.

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3.2 Analyse the extent towhich procedures basedupon formal competitionachieve value for moneyand competitive supply• Definitions of competition

and competitiveness andthe differences betweenthem

• Definition and applicationof the concept of value formoney

• Evidence of theeffectiveness of formalcompetitive procedures inachieving value for moneyand competitiveness

• Innovative mechanisms foradapting formalcompetitive procedures toenhance value for moneyand competitiveness: earlyinvolvement ofprocurement expertise,early involvement ofpotential suppliers, use ofe-procurement, improvedmanagement informationon markets and suppliers.

3.3 Assess the contribution ofprocurement to meetinggovernment efficiencytargets• Definitions and application

of concepts such aseconomy, cost efficiencyand allocative efficiency

• Significance and risks ofprocurement’s contributionto government efficiencyplans in central and localgovernment and the NHS

• Evidence and methods ofachieving improvedefficiency in central andlocal government and theNHS.

3.4 Propose ‘spend to save’initiatives throughdeveloping a robustbusiness case withdeliverables• Role of procurement in

enhancing quality,performance andinnovation

• Areas in whichimprovements may beachieved eg supplierdatabases, electronicprocurement systems,setting up strategiccontracts

• Arguments to justify‘spend to save’ initiativesby identifying deliverablesand drawing uponevidence of theirachievement in the publicand private sectors.

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3.5 Analyse or evaluate thearguments for and againstusing public procurementto promote Governmentinitiatives• Arguments for and against

the use of publicprocurement for socio-economic purposes

• The policy and legalcontext in relation to theuse of public procurementfor socio-economicpurposes

• Scope for variations ofprocurement practice tomeet the requirements ofdifferent cultures; ethnic,religious

• Procedures andmechanisms by whichpublic procurement may beused to achievesocioeconomic goals; thesocial agenda, localsourcing, sustainability anddiversity within existinglegal constraints.

3.6 Analyse and explain thecomplexity of balancingconflicting procurementgoals within competingpolitical and culturalcontexts• Conflicts between

regulatory, commercial andsocio-economic goals ofpublic procurement

• Political and organisationalcontexts within whichpressures to achieveconflicting procurementgoals operate

• Evidence of the successfulmanagement of pressuresto achieve conflictingprocurement goals incentral and localgovernment and the NHS.

4.0 THE SIGNIFICANCE OFTHE FINANCIALACCOUNTABILITY CYCLEAND THE ROLE OF AUDITFOR IMPROVINGPROCUREMENT POLICYAND PRACTICE(Weighting 20%)

4.1 Assess the implications ofthe governmentaccounting cycle forprocurement• Implications of the

accounting cycle for multi-year service contracts,complex projects, non-conventional finance andvalue for moneyprocurement spend

• Mechanisms for adaptingthe accounting cycle tofacilitate mechanisms forrisk-taking, innovation andan entrepreneurialapproach to modernprofessional procurement.

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4.2 Evaluate the roles of theNAO and AuditCommission in promotinggood procurementpractice within theaccountability framework • Evidence of promotion of

good procurement practicein reports by the NAO andAudit Commission

• Mechanisms andprocesses for successfulcollaborative workingbetween the procurementand audit functions

• Limits of collaborativeworking to ensure theindependence of the auditrole.

4.3 Evaluate whether thehighlighting of poorprocurement practicereinforces a riskavoidance culture• Evidence of the positive

and negative impact ofreports by the PAC andother audit bodies onprocurement

• Means of influencingorganisational policy andprocedures towards apositive approach tomanaging risks fromprocurement spend basedupon a strategic approach,senior managementownership and theeffective deployment ofprocurement expertise.

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OPTIONAL UNIT

UNIT CHARACTERISTICSThis unit recognises the differencesin contracting and regulatoryrequirements within the publicsector environment. It is intendedto go beyond the Level 4Developing contracts in purchasingand supply, in order to take on thechallenges of managing a contractfrom inception through toconclusion.

The unit is designed to providestudents with the knowledge andunderstanding to analyse conceptsunderlying the contracting process,including markets, transparency,competition, relationships andtrust.

As a result of studying this unit,students will be expected to beable to manage the contractingprocess efficiently and effectivelythrough developing the businesscase for the procurement,analysing the nature and scope ofthe contract, applying appropriateselection procedures anddeveloping positive relationshipswith suppliers, to realise intendedbenefits in the context of publicaccountability and responsiblestewardship.

STATEMENTS OF PRACTICEOn completion of this unit, studentswill be able to:• Explain the steps and processes

involved in developing thebusiness case for the contracts

• Analyse the nature and scope ofthe contract

• Analyse and explain how tomanage the supplier selectionprocess through the applicationof appropriate rules andprocedures

• Evaluate and explain how to goabout developing andmaintaining positiverelationships with suppliers torealise benefits.

Advanced diploma in purchasing and supplyContracting in the public sector

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1.0 PREPARING A BUSINESSCASE FOR CONTRACTS (Weighting 25%)

1.1 Evaluate potential risksand define appropriateprocedures to managerisksTypes of risk:• Political • Limited competition in the

market• Failure to meet

performance standards• Change of law• Security of supply,

contingency planning,stock holding andalternative sources ofsupply

• Quality, project ortechnology failure

• Supplier insolvency,monitoring and guarantees

• Security, theft and damage• Fraud, accounting and

payment exposures,conflicts of interest,purchasing ethics andcodes of conduct

• Contractual failure,consequential loss andprovision for remedies

Procedures to manage risks:• Allocation of risks between

client and contractoraccording to which party isbetter placed to managethe risk

• Governance arrangementsthrough which risks canbest be managed:contractual incentives andpenalties, liquidateddamages, relationships

• Procedures for monitoringand managing the key risksidentified.

1.2 Assess the relative meritsof internal, external ormixed provision of thepurpose of the contract• Arguments for and against

internal, external or mixedprovision by public, privateand third sector providers

• Policy on contracting out,competitive tendering, useof private finance, privateand voluntary sectorexpertise

• Models for determining theappropriate governancearrangements, egtransaction costeconomics, relationalcompetence analysis.

1.3 Identify the correct level ofapproval for the purchaseand explain theimportance of and how toobtain authority toproceed• Official (by grade, by

department (purchasing,finance etc)), legal andpolitical (councilcommittee, ministerial)approval levels inaccordance withestablished procurementand ethical procedures

• Relevance of approvalprocedures under Gatewayreviews or programme andproject managementtechniques such asPRINCE2 and ManagingSuccessful Programmes(MSP)

• Internal and externalstakeholders with whomconsultation is necessary.

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1.4 Evaluate the importance ofinvolving procurementstaff with expertiseappropriate for therequirement at an earlystage• Risks of not involving

procurement at an earlystage

• Procurement knowledgeand competencesappropriate for variousrequirements

• Communication skillsappropriate for interactingwith more senior staff andstaff from differentprofessional and technicalbackgrounds.

1.5 Analyse and evaluate theappropriate fundingmechanisms for thecontract• Advantages and

disadvantages of variousfunding mechanisms:conventional (fromdepartmental budgets),privately financed: e-bondissue, PFI contract

• Whole life costing• Investment appraisal

techniques.

2.0 THE SCOPE AND NATUREOF THE CONTRACT(Weighting 30%)

2.1 Evaluate the supplymarket for changes tosuppliers, technology, thenature and extent ofcompetition• Number, size, location,

socio-economic aspects(SMEs, minority owned) ofsuppliers

• Technological changes egnew processes,equipment, intellectualcapital

• Porter’s 5 forces model:barriers to entry, threat ofsubstitutes, power ofsuppliers, power of buyers,intensity of rivalry andstrategies to increasepower of buyers.

2.2 Evaluate opportunities foraggregation of requirementsand co-operativeprocurement.• Other buying organisations

with similar requirements bysector, region, size

• EU and UK rules onaggregation and joiningpreviously let frameworks orcontracts

• Nature of the client’srequirement: standard, someadded/amended features,tailored for client

• Optimum geographical scopeof sourcing and delivery:local, regional, national,European Economic Area;global.

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2.3 Analyse the opportunities forsustainable procurement. • Policy on and sources of

sustainability: ‘green’procurement, energyefficiency, recycling,biodegradability, ethicalprocurement

• Mechanisms and EU/UKrules on enhancing access bySMEs and minority ownedbusinesses: splitting largecontracts: geographically, bycategory; preferenceschemes; outreach eg meetthe buyer, internet,multilingual documentation.

2.4 Explain how to go aroundplanning the appropriateduration of the contractand the optimum numberof suppliers in relation tothe nature of therequirement, the supplymarket and theopportunities foraggregation• Factors impacting on

contract duration: durationof the requirement; marketcharacteristics;technological change,stability/volatility of price,capacity, storage; EU/UKrules and policy; supplierrelationships

• Factors affecting thenumber of suppliers:capacity of the market;impact on competition;range of products/servicesincluded; ease ofmanaging the supply chain;number and location ofcustomers and deliverypoints; scope forenhancing access by SMEsand minority ownedbusinesses; risk of too fewsuppliers.

2.5 Analyse and explain theimportance of involvingclients, potentialsuppliers, financial andtechnical experts at anearly stage in developingand managing the contractspecification• Advantages and

disadvantages ofperformance, functionaland technicalspecifications for variousproducts, services, projects

• Policy and EU/UK rules oninvolving potentialsuppliers in specification

• Types of financial andtechnical expertise forvarious requirements andtheir sources, eg in-house,other government body,private consultancy

• Cross functional teamworking.

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2.6 Analyse the intended costsand benefits from thecontract• Sources of information on

costs and benefits of therequirement: supplierassociations, tradeliterature, standard labourcosts, supplier’s accounts,other procurement agencies

• Factors affecting sharing ofbenefits and costs from thecontract: nature of therequirement: strategic,bottleneck, non-critical,leverage; nature of therelationship; cost ofprovision; nature andallocation of risks

• Opportunities forincentivisation throughtargets appropriate for therequirement and therelationship

• Factors affecting allocationof responsibility formonitoring and reportingbetween client andcontractor

• Types of management andoperational information:cost, quality, deliveryperformance against target;timeliness of reporting;problem solving and disputeresolution; performanceagainst critical targets or‘gates’.

3.0 MANAGING THESUPPLIER SELECTIONPROCESS (Weighting 15%)

3.1 Analyse the selectionprocedures appropriate tothe contract requirement• EU and UK rules and policy

on supplier selectionprocedures

• Advantages anddisadvantages ofcompetitive and negotiatedselection procedures

• Appropriateness of variousselection procedures:competitive tender,framework agreements,competitive dialogue, for arange of requirements:goods, services, projects

• Types of and opportunitiesfor electronic procurement:e-tendering, e-auction.

3.2 Analyse and explain howto manage a transparenttendering process• Obstacles to accessing

public procurement:identification of businessopportunities; excessivetender documentation;compliance with standardsand technicalspecifications; uncleardelivery requirements;inadequate volumeinformation; vagueselection criteria;insufficient time torespond; no contract awardinformation

• Mechanisms for reducingbarriers to supply: developcommercial expertise;clarity of roles ofprocurement staff,technical experts and enduser; consistency in thetender process; singlepoint of access; explicitweighting of criteria.

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3.3 Identify and analysetender evaluationprocesses in accordancewith procedures using theadvertised selectioncriteria and weights, andensure that successful andunsuccessful suppliersare provided with theopportunity for debriefing• EU and UK rules and policy

on selection criteria andweighting

• Relevance of selectioncriteria for variousrequirements: products,services, projects; policies:access of SMEs andminority businesses,through life capability; useof procurement for socio-economic purposes;sustainable procurement

• Organisational policy,procedures and ethicalaspects of the constitutionand operation ofevaluation panels

• Mechanisms for theprovision of effectivefeedback: email,telephone, face to face; on-demand or providedautomatically; presentationof outcomes of evaluation.

4.0 THE IMPORTANCE OFPOSITIVE RELATIONSHIPSWITH SUPPLIERS(Weighting 30%)

4.1 Evaluate the impact ofappropriate relationshipson the contracting process• Characteristics of types of

relationships • Factors affecting the

relationship strategy:strategic or operationalrequirement; degree ofclarity and certainty aboutthe requirement;competitiveness of thesupply market; one-off,short term or long termduration; power of buyerand supplier.

4.2 Evaluate the costs andbenefits of developingpartnership andrelationships based onmutual trust withsuppliers:• Potential costs of

developing partnership:‘hard’: systems alignment,senior management andstaff time, relocation;‘soft’: cultural change,building trust, jointactivities

• Potential benefits ofdeveloping partnership:improved communications;integrated systems; sharedunderstanding of therequirement; improvedproblem solving anddispute resolution;continuous cost, qualityand process improvement(Cox and Hines 1997;Erridge 1995; Erridge et al2001).

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4.3 Analyse what is meant bya ‘shared understanding’and explain how that canbe achieved• Policy on, and evidence of,

supplier innovation andbenefit sharing

• Models of developingpartnerships: Ellram

• Types of deliverables withtargets and deadlines

• Agreement on factorstriggering variations to, ortermination of, thecontract: change controls,exit strategies.

4.4 Analyse and explain howto plan and manage thesupply chain relationship• Joint governance

arrangements appropriateto the relationship:Siemens/Office of NationalSavings, balancing toplevel policy making withmiddle and lower levelreporting onimplementation andperformance againsttargets

• Negotiation and problemsolving strategiesappropriate to achievinggoals within a partnershiprelationship

• Types of data to enhancecurrent and future supplymarket intelligence:performance of currentsupplier against targets;level of competition frompotential alternativesuppliers; development ofnew technology, processesor intellectual capitalimpacting on the market.

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OPTIONAL UNIT

UNIT CHARACTERISTICSThis unit is designed to providestudents with a working knowledgeof sustainable procurement: what itis, how it aligns with overallorganisational strategies, policiesand operations and how torecognise, apply and successfullymanage sustainable procurementactivities to achieve futureimprovements and benefits andmitigate risk.

Through the exploration andevaluation of external and internalsustainability factors, drivers,barriers and trade-offs, studentswill cover a wide range ofsituations across sectors andindustries.

By the end of the unit, studentsshould be able to recognise andimplement appropriate sustainablespecifications, sourcing and whole-life contract management forproducts and services and evaluatehow sustainable procurementimpacts on business performance.They will be equipped with supplieraudit, assessment anddevelopment tools to measure andincrease sustainable procurementactivity in the global supply chain.They will furthermore beencouraged to develop andimplement policy and engagestakeholders, acting as catalystsfor change in the internal andexternal environment in which theirorganisations operate.

STATEMENTS OF PRACTICEOn completion of this unit, studentswill be able to:• Compare definitions of

sustainable procurement inrelation to sustainabledevelopment and apply themappropriately to differentbusiness sectors within local,national and global markets

• Evaluate the key internal andexternal factors, in particularlegislation, which influence theachievement of successfulsustainable procurement acrossdifferent business sectors,organisations and geographicregions, taking into account bothcurrent and emerging globaltrends

• Analyse the importance ofaligning sustainableprocurement policy andoperations to overall businessstrategy of the organisation

• Assess the main criteria forsustainable procurementspecifications, sourcing andwhole-life contract managementof products and services

• Apply supplier audit,assessment and developmenttools to the supply chain in orderto measure and improvesustainable procurement

• Evaluate the drivers, barriers,conflicts and trade-offs toachieving sustainableprocurement within theorganisation

• Evaluate ways in whichprocurement personnel could actas catalysts for change inengagement with the internaland external environment tomitigate risk, secure supply andensure sustainable supplychains.

Advanced diploma in purchasing and supplySustainable procurement

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1.0 DEFINING ANDDEVELOPINGSUSTAINABLEPROCUREMENT(Weighting 20%)

1.1 Define sustainableprocurement in relation tothe concept of sustainabledevelopment• Sustainable development

and sustainableprocurement in context

• Brundtland Commissiondefinition

• Sustainable consumptionand production

• Differing definitions ofsustainable procurement

• The United NationsEnvironment Programmefor SustainableConsumption

• European Unionsustainable developmentstrategy

• Sustainable ProcurementTask Force

• How sustainableprocurement supportssustainable development

• Why sustainableprocurement should begood for business.

1.2 Analyse current andemerging global trends inthe field of sustainableprocurement• Innovation and the

successful implementationof sustainable procurementideas

• World-wide demographictrends

• Overall production andservice capacity andcapability

• Corporate socialresponsibility (CSR)

• A changing skills base• Alternatives to fossil fuels

and rising energy costs• Availability, use, and

depletion of diminishingnatural resources

• Sustainable procurementas a qualifier for allpurchasing decisions.

1.3 Evaluate the externalfactors influencingsustainable procurementand apply the PESTLEmodel in the context ofdifferent organisationsand sectors, including thepublic, private, thirdsectors and their tiers:• The “triple bottom line” of

environmental, social andeconomic factors

• International and localinfluences on sustainableprocurement• Political (eg

government policies,targets and incentives –workforce structure,waste management,conservation andprotection of naturalresources, land use,water management,Local Government Act2000, Local Agenda 21,Special DevelopmentAreas)

• Economic (eg basicprinciples of supply anddemand, costs,exchange rates,employment market,availability of materialsand energy/fuels).

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• Social/ethical (egavailability of skills,working conditions andpractices, corruption,corporate citizenship,CIPS ethical code,societal values, ethicalfarming, fair trade)

• Technological (eginnovation, newtechnologies, materialsand processes)

• Legislative (egenvironmental laws,workforce legislation)

• Environmental (egrenewable versus non-renewable energy, wastemanagement/reduction– landfill capacity,packaging, carbonfootprint reduction,global climate change –availability of agriculturalland, water, greenhousegas/CO2 emissions,pollution)

• External stakeholderpressure and attitudes (egBSE, bird flu, use of artificialcolours and flavours, GMcrops, animal testing)

• Standards (eg Labelling ISO14023/25, EnvironmentalManagements systems ISO14001, Social AccountabilitySA8000).

1.4 Evaluate the internalfactors influencingsustainable procurementin the context of differentorganisations and sectors,including the public,private, third sectors andtheir tiers:• Performance improvement

(eg competitiveness,profitability, growthpotential)

• Organisation strategy,policies and procedures

• Corporate socialresponsibility (CSR) policy

• People development policy• Risk management (eg

securing supply)• Management attitudes • Internal stakeholder

positions and attitudes• Availability of sustainable

resources in the areas oflabour, materials andprocesses (eg populationdemographics, skill levelsin the supply chain, newmaterials, products andprocesses – textiles,plastics, farming).

• Brand reputation (eg use ofchild labour – clothingindustry, CO2 emissions –aviation, automotive andtravel industries)

• Product and service designcriteria and impact on theenvironment

• Internal capacity andcapability (eg moreefficiency through wastereduction – Ohno’s 7wastes).

1.5 Identify which externaland internal factors willdrive sustainableprocurement within anorganisation and compareand contrast their relativeimportance across public,private, third sectors andtheir tiers• External and internal

drivers• Characteristics of the

different sectors in thecontext of sustainableprocurement

• Key drivers for differentsectors, industries andbusinesses

• Sustainable procurementdrivers as distinct fromeffects.

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2.0 OPERATIONALIMPLEMENTATION OFSUSTAINABLEPROCUREMENT POLICY(Weighting 20%)

2.1 Evaluate the area ofsustainable procurementaligned withorganisational strategy andthe operational impact ofits implementation acrossthe procurement functionand the other functionswithin the organisation• Incorporation of

sustainable procurementprinciples into missionstatements and core values

• ‘Balanced scorecard’approach for consistencyacross the organisation• Financial • Customer • Internal business• Innovation and learning

• Corporate socialresponsibility (CSR)statement

• Implications fororganisation structure andresources

• Common targets andobjectives

• Realistic timescales• Benefits and trade-offs for

the business (egreputation).

2.2 Examine the stages in thedevelopment of asustainable procurementpolicy and policydeployment guidelines• Obtaining commitment• Communication to

stakeholders• Setting targets and

objectives• Clear responsibilities• People development• Implementation• Ongoing

management/review• Flexible approach to

respond to new or differentdrivers.

2.3 Explain how to implementthe practical steps forintroducing a sustainableprocurement programme• Key stages in the

development of animplementation plan

• The ‘Flexible Framework’approach

• Procurement professionalsas agents for changewithin the organisation

• Procurement professionalsas ‘key players’ in theinterface with the externalenvironment

• Management ofstakeholders and gettingbuy-in

• Maintaining commitmentto sustainable procurementprinciples

• Planning for continuousimprovement.

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3.0 OPERATING ASUSTAINABLEPROCUREMENTAPPROACH(Weighting 30%)

3.1 Explain and analyse theprocess of developing andapplying sustainableprocurement to purchasespecifications for productsand services in thecontext of differentorganisations and sectors• Sustainability of customer

requirements• Classification of materials

components and servicesusing the Kraljic Model

• Innovation and sustainabledesign

• Sustainable materials andprocesses

• Service level agreements• Impact of the end product

or service.

3.2 Using a purchasing andsupply managementmodel, identify andevaluate the mainconsiderations forsustainable sourcing ateach stage of the sourcingprocess for differentorganisations and sectors• A review of the stages in

the sourcing processincluding: identification ofrequirement, sourcing plan,marketplace analysis, pre-qualification, evaluationand short-listing ofsuppliers, preparation ofenquiry/tender document,receiving and evaluation ofoffers, supplier selectionand creation of contract orrelationship

• Models: Office ofGovernment Commerce(OGC) procurementprocess, CIPS procurementcycle, Ministry of Defenceacquisition operatingframework (AOF), thesupply chain operationsreference (SCOR)

• Economic considerations• Financial• Operational• Technological

• Social and ethicalconsiderations• CSR• Skills base• Workforce practices

• Environmentalconsiderations• Location• Impact on the

environment• Standards and Legislation

• Kyoto Protocol• International Labour

Organisation (ILO)standards

• EU Directives2004/17/EC and2004/18/EC on publicprocurement

• ISO14001environmentalstandards

• ISO15686 whole-lifecosting standards

• Finance and Tax laws(eg Sarbanes Oxley)

• ‘Fair Trade’ standards.

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3.3 Evaluate the benefits andrisks of sustainablewhole-life contractmanagement forpurchasing and supplycontracts• A review of contract

management factorsincluding objectives anddelivery plans ongoingcontract and relationshipmanagement, receipt ofproducts and services,asset management andpost-contract ‘lessons’management

• Allowing for newsustainable procurementdevelopments and targetswithin contract andrelationship management

• Linking the benefits toorganisationalperformance and success(eg whole-life costing andreturn on investment)

• The benefits of continuousimprovement insustainable contractmanagement for thesupply chain

• The risks andcontingencies associatedwith a sustainableprocurement approach towhole-life contractmanagement • Long term supplier

relationships• ‘Preferred’ suppliers• Public Private

Partnerships (PPPs)• Private Finance

Initiatives (PFIs).

3.4 Apply effective tools forthe implementation,measurement andmonitoring of sustainableprocurement within anorganisation and evaluatethe similarities anddifferences compared toother organisations andsectors• Supplier and supply chain

audit, assessment andevaluation (eg green audit,Oxfam supplierquestionnaire)

• Key performance indicators(KPIs)

• Total cost of ownership• Cost management• Product life-cycle analysis• Stakeholder mapping and

communication• Source planning• Supply chain mapping.

3.5 Identify and applyappropriate supplierdevelopment tools andprocesses in order to bothintroduce and improvesustainable procurementwithin the local and globalsupply chains• Prioritisation of suppliers

and products• Clear sustainability

objectives, targets andrequirements

• Gap analysis• Problem-solving and

escalation• Supply chain

communication andco-operation

• Achievable deadlines• Monitoring improvements.

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4.0 SUSTAINABLEPROCUREMENTCHALLENGES(Weighting 30%)

4.1 Evaluate the barriers toachieving sustainableprocurement withindifferent organisationsand sectors in both theglobal and local context• Cost issues such as raw

materials, process costs,recycling and re-use,budget and fundingrestrictions

• Attitudes of keystakeholders includingcustomers, shareholders,employees, donors,suppliers, buyers and thegeneral public

• Policies at international,European Union,government, organisationand department levels

• External cultural factorssuch as nationality, religionand ethics

• Internal managementculture within sectors,industries andorganisations

• Level of economic stability:growth or decline, inflationlevels and trends, creditrestrictions andprotectionism.

4.2 Using appropriate tools,analyse the potentialconflicts in achievingsustainable procurementfor different sectors andindustries and suggesthow these can bemanaged• Tools: Force field analysis,

SWOT• Economic performance

versus social andenvironmentalresponsibility

• Sourcing from developedcountries versusdeveloping countries

• Local versus internationalsourcing

• Environmentally friendlyproducts and processesversus product legislation

• Lowest achievable priceversus ethicalconsiderations.

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4.3 Evaluate the potentialtrade-offs in theachievement of sustainableprocurement within thecontext of an organisation• Common international

supplier standards leading tomore competition

• Component and servicestandardisation allowing lessopportunity for product andbrand differentiation

• Paying or investing more foran enhanced reputation

• Investment in the short-termto protect long-term supplyof products and services.

4.4 Explore the futurechallenges for thepurchasing profession in thearea of sustainableprocurement within a globalmarket place• Sustainable procurement

and end-to-end supply chainactivity

• Stakeholder priorities• National and global

challenges to successfulsustainable procurement

• Supplier development• Managing for risk and

vulnerability in the supplychain

• Making sustainableprocurement ‘business asusual’.

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Email: [email protected] • Web: www.cips.org

ED21/PP/V4/02/06/09


Documents

Unit content guide 5 Unit Content Guide.pdf · CIPS qualifications, awards at levels 3 and 6 will have an integrative unit. Learning objectives Determines the level of learning you