CIPS L4M1 Dumps

How to respond to this question:

- Include as many of the stages as you can, but it’s not vital to remember them all. You should aim to remember at least 8 of the 13 steps.

- The steps are; Define Business Need, Market Analysis + Make vs Buy, Develop Strategy and Plan, Pre-Procurement Market Testing, Develop Documents and Specification, Supplier Selection, Issue Tender, Bid Evaluation, Contract Award and Implementation, Warehouse Logistics, Contract performance and Improvement, Supplier Relationship Management and Asset Management

Essay Plan:

Introduction - Explain what the CIPS Procurement and Supply Cycle is- a tool to be used by procurement professionals which tracks a procurement exercise from inception to close. It’s helpful as it ensures procurement exercises are done correctly and steps are completed in the right order.

- Describe (briefly) what happens at each stage of the cycle, giving examples. You should put each stage into a separate paragraph. It’s also a good idea to name the stages in chronological order. Some ideas of things you could mention include:

1) Define Business Need and Develop Specification - Identify what the need is, what type of purchase, put together a business case and outline the requirements

2) Market Analysis and Make vs Buy Decision – analyse the market using market segmentation (e.g. by buyer, product, geography etc) or use Porter’s 5 Forces (buyer and supplier power, threat of new entrants, threat of substitutions, supplier rivalry). Looks at if what you want to procure is actually available.

3) Develop Strategy / Plan – you could use a STEEPLE and SWOT analysis. Consider if this is the right time to procure. Create timelines and budgets.

4) Pre-Procurement Market Testing - consider stakeholder engagement, supplier engagement, new / upcoming legislation, currency fluctuations, market, competitor actions. Is this the best time to procure? Will it be successful?

5) Develop Documentation / Creation of Contract terms- firm up the requirements and create the formal documents for the tender exercise. This may be a RFQ or ITT. Define the offer. Include KPIs.

6) Supplier Selection – May not be required for rebuys but an important step for new buys. May use a list of pre-approved suppliers or this may be going out to the open market. You can shortlist suppliers by sending out a pre-qualification questionnaire.

7) Issue Tender - Electronically, consider whether to use an open vs closed procurement exercise

8) Bid / Tender Evaluation – Very flexible for companies in the private sector but there are guiding principles for doing this for public procurement; transparency, equal treatment, proportionality. Often considers both price and quality.

9) Contract Award and Implementation- Organisations may have different processes for different values (e.g. large purchases may need senior management approval, but under £500 just needs a manager’s signature). May require post-award negotiation. Contract is drafted and signed.

10) Warehouse Logistics and receipt – includes POs and Invoices. Battle of the Forms. Goods Inwards = receiving and inspecting goods- may use quality control.

11) Contract performance review - ensuring contract obligations are fulfilled includes P2P procedures, database management, budgeting / costs monitoring, reporting and dispute resolution.

12) Supplier Management – will depend on the relationship but includes; contact / meetings with the supplier, motivating / incentivising the supplier, working with them on performance issues, ensuring KPIs are met.

13) Asset Management / End of Life- considers TCO, ongoing maintenance and costs, insurance and warrantees and disposal of the item once it has reached the end of its life.

Conclusion – The CIPS Procurement Cycle is cycle rather than process as it is a continuous loop and needs constantly emerge. It never ends. New buys are more likely to follow all the stages of the cycle, rebuys may skip steps

Tutor Notes:

- Often steps 11 and 12 are confused or merged together but they are different. It’s possible to have great contract management and a poor supplier relationship i.e. the contract is working effectively and the supplier is delivering in line with the contract BUT the relationship may be fraught with tension and the buyer and supplier don’t like each other.

- To get a high score I would include examples of all of the stages, but remember you only have 45 minutes to answer the question, so balance detail with timing so you don’t overwrite

- The procurement cycle is on p. 70 or you can download it here: Procurement Supply Cycle | CIPS

How to approach the question

- This question is worth 25 marks so you can imagine what the mark scheme will look like. There are 5 Rights so there will be 5 points for each Right. Naming the Right will be one point, then you have 4 points for a description and example. You should therefore aim to have 4-5 sentences per Right.

- I would recommend using headings for this type of essay- clearly putting your essay into 5 sections for each right. This makes it easy for the examiner to mark.

Proposed Essay structure

- Introduction – what is meant by the 5 Rights

- Price

- Quality

- Quantity

- Time

- Place

- Conclusion – why it’s important, all rights are equally as important

Example Essay

Procurement revolves around achieving the delicate balance of acquiring goods and/ or services at the right price, quality, quantity, time, and place. This essay explains why these "Five Rights of Procurement" are important and explains how using this metric can help procurement to make smart choices when they purchase goods or services.

Price:

Firstly, it is important that procurement do not simply seek to find the cheapest option. The First Right is about finding the product/ service at an affordable price that doesn't compromise on quality. Let's say a company is buying office furniture. They might go for a supplier that offers a good balance between cost and quality, ensuring they get good value for their money. Considerations here may include Total Cost of Ownership, the Price Iceberg, and Whole Life Costing. The company therefore may seek to get the best price, but in relation to how long the furniture will last. A cheap chair that will break after one year may not be the best price compared to another chair which will last 10 years.

Quality:

The second right, quality, looks at legal compliance and fitness for purpose. Quality adherence aligns with specifications as well as legislation such as the UK Sale of Goods Act 1979. This helps ensure that items meet their commonly intended purpose and maintains satisfactory condition. Buyers deploy both reactive measures like Quality Control and proactive approaches like Quality Assurance to uphold the stipulated quality. This commitment not only ensures legal compliance but also underpins customer satisfaction, brand reputation, and ethical sourcing policies. An example of quality is an organisation buying a washing machine that conforms to ISO standard 97.060 and has a 2-year warrantee.

Quantity:

The third right, quantity, is a strategic consideration about how much of an item to order. It is connected to efficient inventory management. One tool that procurement can use to ensure they order the right quantity of a product is Economic Order Quantity (EOQ) – this serves as a tool for finding the equilibrium between stock-holding costs and avoiding stockouts. Market conditions, supply chain dynamics (e.g. JIT / Lean manufacturing), and organizational policies collectively play a pivotal role in determining the right quantity. For example a confectionary manufacturer will need to order the right number of eggs to make cakes- they will need to consider how many eggs they will need in order to make the cakes, but also take into consideration that they may not need them all at onceand that eggs can expire. The use of an MRP system is helpful when determining quantities of products to order.

Time:

Time is about getting things when we need them. In the above example, an egg delivery timing for a confectionary manufacturer will be pivotal to making the cakes on time. Other considerations about time include changing market forces and customer demand. The use of forecasting is therefore extremely useful; particularly if there are peaks in demand for a product, such as toys at Christmas. Moreover, organizations need to avoid bottlenecks and production stoppages, so time (including lead time and delivery time) is an important consideration when making orders.

Place:

Lastly, place is about getting things to the right location. Minimizing environmental impact, reducing risks during transit, and optimizing warehousing practices contribute to achieving the right place. This is particularly important for perishable items such as food, and for items which require specific storage conditions such as chemicals. This involves good planning in terms of logistics, minimizing any impact on the environment during transport and a consideration for safety.

In conclusion, the Five Rights of Procurement provide a structured framework for organizations to optimize their sourcing practices. All rights are equally as important and it is the relationship between the Rights which is key. While price, quality, quantity, time, and place form the foundation, evolving models acknowledge additional elements like the Right Relationship with the Supplier. Embracing these principles not only ensures operational efficiency but also promotes sustainability and ethical conduct throughout the procurement process, contributing to long-term success in a globalized and dynamic marketplace.

Tutor Notes

- The 5 Rights is a big topic in CIPS so do learn them off by heart. It’s p. 20 in the study guide.

- The conclusion mentions that additional ‘rights’ are starting to be introduced into the matrix, this is true and isn’t mentioned in this study guide. I believe this starts to come up in Level 5. Just something to be aware of- some people are now talking about other Rights such as finding the right supplier and the right relationship. It’s good to know, but not essential for this essay. Neither is knowing the ISO standard for washing machines – that’s certainly not in the book. You can sprinkle in your own knowledge to essays like this, as it demonstrates you’re able to apply the theory to real life. Why I remember the ISO for washing machines is a different story….

- You could also have mentioned the following topics;

o price – using the right currency and incoterm, aggregation of spend, negotiating prices

o quality – conformance and performance specs

o quantity – fulfilling retail orders, large order quantities leading to discount

o time – additional costs of a stockout, impact on relationships and reputation

o place – additional costs if delivery fails

- This is the type of question you can easily over-write. It’s a huge topic and you could easily spend too long on it and not have enough time to answer other questions. So be careful with your timings. You don’t need to mention everything above.

- Another way this type of question can come up is as a scenario. E.g. XYZ is a manufacturer of cakes and needs to order eggs. Discuss how XYZ can ensure the 5 Rights of Procurement when ordering Eggs.

How to approach this question

- I’d use clear headings with numbers for this one. It asks you for a definition and 5 factors. Number them. Makes it easy for you to write and easy for the examiner to mark.

- Don’t go over 5 – you won’t get any extra points for this. So spend your time giving examples and explaining the 5 well, rather than naming more than 5.

Example Essay

As the new Head of Procurement at Alpha Ltd, Sarah faces the urgent task of replacing a critical piece of machinery in the company's Birmingham factory. Recognizing the complexity of the decision, Sarah contemplates utilizing the Whole Life Costing approach to ensure a comprehensive evaluation that goes beyond initial expenses. This essay explores the concept of Whole Life Costing and delves into five essential factors Sarah should consider when procuring new machinery.

Definition:

Whole Life Costing (WLC) is a procurement approach that considers the total cost associated with an asset throughout its entire lifecycle. Unlike traditional procurement methods that focus primarily on the initial purchase price, WLC evaluates all costs incurred from acquisition to disposal. This includes operational, maintenance, and disposal costs, providing a holistic perspective on the true financial impact of an asset over time.

Factors to Consider in Machinery Procurement

1) Initial Purchase Price:

While WLC looks beyond the initial cost, the purchase price remains a critical factor. Sarah should balance the upfront expense with the long-term costs to ensure the initial investment aligns with the overall financial strategy.

2) Operational Costs:

Sarah needs to analyze the ongoing operational costs associated with the new machinery. This includes energy consumption, routine maintenance, and potential repair expenses. Opting for energy-efficient and reliable equipment can contribute to substantial operational savings over the machine's lifespan, even though this may result in a higher up-front purchase price

3) Training and Integration:

The cost of training employees to operate and maintain the new machinery is a significant consideration. Sarah should assess how easily the equipment integrates into existing workflows and whether additional training programs are required, impacting both immediate and long-term costs.

4) Downtime and Productivity:

Evaluating the potential downtime and its impact on productivity is crucial. Sarah should assess the reliability and historical performance of the machinery to gauge its potential contribution to sustained production levels and minimized disruptions, impacting the overall operational efficiency.

5) Technology Upgrades and Adaptability:

Sarah should consider the machinery's adaptability to technological advancements and potential upgrades. Investing in equipment that allows for seamless integration with future technologies ensures that Alpha Ltd remains competitive and resilient in a rapidly evolving industry landscape.

In conclusion, adopting a Whole Life Costing approach empowers Sarah to make informed decisions that align with Alpha Ltd's strategic goals. By considering factors beyond the initial purchase price, such as operational costs, training, downtime, and technology adaptability, Sarah ensures that the replacement machinery not only meets immediate production needs but proves to be a cost-effective and efficient asset throughout its entire lifecycle. The WLC approach safeguards against unforeseen financial burdens, fostering sustainable and informed procurement practices in the dynamic manufacturing environment.

Tutor Notes

- Whole Life Costing is on p.28

- Total Life Cycle Costs, Total Cost of Ownership and Life Cycle Costs are all practically the same thing. The book says they’re slightly different, but don’t get yourself bogged down in trying to remember the differences. Honestly, in the real world, people use this language interchangeably.

- Other factors you could have chosen to talk about include commissioning costs and disposal costs

- Don’t worry if you feel CIPS breezed through this as a topic, they did. It’s explained much better in L4M7. You can read more about it here: Whole Life Costing - What is Whole Life Costing | CIPS and here Whole-Life Cost: What it Means, How it Works (investopedia.com)

1) A definition of Value for Money: ensuring a purchase is cost effective. This may be that the purchase achieves the 5 Rights of Procurement or that the purchase achieves the 4Es: Economy, Efficiency, Effectiveness and Equity. – this is only worth 5 points, so don’t spend too long on this

2) 4 techniques Bob can use to achieve VFM: this is the bulk of your essay. Each of the 4 will be worth 5 points, so remember to give a thoroughExplanation:and example. Pick 4 from the list below: complete a value analysis to eliminate non-essential features, minimise variety/ consolidate demand, avoid over specification, pro-active sourcing, whole life costing methodologies, eliminate / reduce inventory, use electronic systems, international sourcing, sustainability / environmental policies, currency/ exchange rate considerations, negotiating good payment terms, packaging, warrantees.

Example Essay:

"Value for money" (VFM) is a concept that refers to obtaining the best possible return on investment or benefits relative to the cost incurred. It involves assessing whether the goods, services, or activities provided offer an optimal balance between their cost and the quality, benefits, or outcomes they deliver. Value for money is not solely about choosing the cheapest option; instead, it considers the overall efficiency, effectiveness, and long-term value derived from an expenditure. For Bob, the Procurement Manager at ABC Ltd there are four key ways that he can achieve this for all future purchases.

Value Engineering

This is looking at the components of a product and evaluating the value of each component individually. You can then eliminate any components that do not add value to the end product. To do this Bob would choose a product to review and determine whether any parts of this can be omitted (thus saving the company money) or could be replaced by components that are of a higher quality at the same price (thus providing added value to the customer). For example, Bob could complete a Value Engineering exercise on the new mobile phone prototype ABC plan to release next year. His findings may discover a way to provide a higher quality camera at no additional cost or that some components don’t add value and can be eliminated.

Consolidate demand

Bob can achieve value for money by consolidating demand at ABC ltd. This would mean rather than each individual person/ department ordering what they want when they need it, Bob creates a centralised process for ordering items in bulk for the departments to share. For example, if each department require stationary to be ordered, Bob can consolidate this demand and create one big order each quarter. This will likely result in cost savings for ABC as suppliers often offer discounts for large orders. Moreover, consolidating demand will allow for saving in time (one person does the task once, rather than lots of people doing the same task and duplicating work).

International sourcing

Bob may find there is value for money in changing suppliers and looking at international sourcing. Often other countries outside of the UK can offer the same products at a lower cost. An example of this is manufactured goods from China. By looking at international supply chains, Bob may be able to make cost-savings for ABC. He should be sure that when using this technique there is no compromise on quality.

Whole Life Costing methodology

This is a technique Bob can use for procuring capital expenditure items for ABC. This involves looking at the costs of the item throughout its lifecycle and not just the initial purchase price. For example, if Bob needs to buy a new delivery truck he should consider not only the price of the truck, but also the costs of insurance for the truck, how expensive it is to buy replacement parts such as tyres and the cost of disposing of the truck once it reaches the end of its life. By considering these factors Bob will ensure that he buys the truck that represents the best value for money long term.

In conclusion Bob should ensure he uses these four techniques for all items he and his team procures in the future. This will ensure ABC Ltd are always achieving value for money, and thus remain competitive in the marketplace.

Tutor Notes

- This case study is really short, and the ones you’ll receive in the exam are often longer and give you more guidance on what they’re expecting you to write. With case study questions, you have to make your entire answer about Bob. So don’t bring in examples from your own experience, rather, focus on giving examples for Bob.

- A good rule of thumb for case study questions is make sure you reference the case study once per paragraph.

- Value for Money is a really broad topic and you can pretty much argue anything that procurement does is helping to achieve value for money. There’s a large table of stuff that’s considered VFM on p.38 but that table isn’t exhaustive. So feel free to come up with your own ideas for this type of essay.

Some additional tidbits of information on VFM:

- The ‘academic’ definition of Value for Money is ‘the optimum combination of whole life cost and the quality necessary to meet the customer’s requirement’

- Value for Money is an important strategic objective for most organisations but particularly in the public sector. This is because the public sector is financed by public money (taxes), so they must demonstrate that the organisation is using this money wisely. This might be an interesting fact to put into an essay on VFM.

- Value can often be hard to quantify, particularly in the service industry. E.g. in customer service it can be difficult to quantify the value of having knowledgeable and polite employees delivering the service.

How to approach this question

- There are three questions within this question. The purpose could be your introduction, and then take two big sections in the main body of your essay for the elements and how to evaluate it.

Example Essay

A Corporate Social Responsibility (CSR) policy serves as a formal commitment by a company to conduct its business in a socially responsible and sustainable manner. The purpose of a CSR policy is to outline the organization's dedication to ethical practices, environmental stewardship, and social contributions. It reflects a company's commitment to going beyond mere profit generation and actively engaging in initiatives that benefit society and the environment.

Elements of a CSR Policy:

1. Ethical Business Practices:

· Clearly articulated principles on fair business dealings, anti-corruption measures, and adherence to ethical standards in all operations.

2. Environmental Sustainability:

· Commitments to minimize environmental impact through sustainable practices, energy efficiency, waste reduction, and responsible sourcing of materials.

3. Social Responsibility:

· Efforts to contribute positively to the community, which may include support for education, healthcare, poverty alleviation, or other social initiatives.

4. Labor Practices:

· Fair and ethical treatment of employees, including non-discrimination, fair wages, safe working conditions, and respect for workers' rights.

5. Supply Chain Responsibility:

· A commitment to ensuring that suppliers and partners adhere to similar ethical and CSR standards, promoting responsible practices throughout the entire supply chain.

6. Transparency and Accountability:

· Open disclosure of CSR initiatives, performance, and impacts, demonstrating a commitment to transparency and being accountable for CSR goals.

7. Stakeholder Engagement:

· A pledge to engage with and consider the interests of various stakeholders, including employees, customers, communities, and shareholders, in decision-making processes.

Evaluating a Supplier's CSR Policy:

Assessing a potential supplier's CSR policy involves a comprehensive examination of key factors to ensure alignment with ethical and responsible business practices:

1. Policy Content:

· Review the content of the CSR policy to ensure it covers a broad spectrum of social, environmental, and ethical aspects. A comprehensive policy reflects a commitment to holistic CSR practices.

2. Alignment with Industry Standards:

· Check if the CSR policy aligns with industry-specific standards and best practices. Adherence to recognized standards, such as the Global Reporting Initiative (GRI) or ISO 26000, indicates a commitment to global CSR norms.

3. Performance Metrics:

· Evaluate whether the supplier includes measurable performance metrics in their CSR policy. Clear objectives and key performance indicators (KPIs) demonstrate a commitment to continual improvement and accountability.

4. Stakeholder Engagement:

· Assess how the supplier engages with stakeholders. A robust CSR policy should involve stakeholders in decision-making processes and demonstrate an understanding of their concerns.

5. Supply Chain Responsibility:

· Check if the supplier extends CSR principles to its supply chain. This involves ensuring that suppliers and partners adhere to ethical, environmental, and social standards, contributing to a responsible and sustainable supply chain.

6. Transparency and Reporting:

· Look for transparency in reporting. A supplier that openly communicates about its CSR initiatives, achievements, and challenges indicates a commitment to accountability and transparency.

7. Continuous Improvement:

· Evaluate if the supplier emphasizes a commitment to continuous improvement in its CSR policy. This indicates a dynamic approach to addressing emerging challenges and staying ahead of evolving CSR expectations.

By thoroughly examining these aspects, a buyer can gain insights into a potential supplier's commitment to corporate social responsibility and make informed decisions that align with their own CSR objectives and values.

Tutor Notes

- Students often ask if they can use bullet points in their essays. Many tutors say no, but the answer is actually more nuanced than that. I’ve purposefully written the above in bullet points to show you how it can be done effectively. Bullet points are fine, providing you’re using full sentences and it makes sense as a stylistic choice. It’s not a good option if you’re just going to list things without context. Then it can be hard to follow. I’ve personally used bullet points in essays and done really well. There’s no rule against it. You’ve just got to make sure you’re doing it ‘right’.

- CSR policies are only briefly mentioned in LO 2.4 but it does come up as quite a big topic in other parts of the syllabus so is worth knowing. You could mention some examples of big companies and what their stance on CSR is. A good one to look at is The Body Shop.

- The study guide references Carroll’s Pyramid – this would be great to include in your essay Carroll's CSR Pyramid explained: Theory, Examples and Criticism (toolshero.com) p.112

Essay Plan:

Definition of Stakeholder- someone who has a ‘stake’ or interest in the company. A person or organisation who influences and can be influenced by the company.

Categories of stakeholders:

1) Internal Stakeholders- these people work inside the company e.g. employees, managers etc

2) Connected- these people work with the company e.g. suppliers, mortgage lenders

3) External Stakeholders – these people are outside of the company e.g. the government, professional bodies, the local community.

Example Essay:

A stakeholder is an individual, group, or entity that has a vested interest or concern in the activities, decisions, or outcomes of an organization or project. Stakeholders are those who can be affected by or can affect the organization, and they play a crucial role in influencing its success, sustainability, and reputation. Understanding and managing stakeholder relationships is a fundamental aspect of effective organizational governance and decision-making and there are several different types of stakeholders.

Firstly, internal stakeholders are those individuals or groups directly connected to the daily operations and management of the organization. Internal stakeholders are key to success and are arguably more vested in the company succeeding. They may depend on the company for their income / livelihood. Anyone who contributes to the company's internal functions can be considered an internal stakeholder for example:

This category includes

1) Employees: With a direct influence on the organization's success, employees are critical internal stakeholders. Their engagement, satisfaction, and productivity impact the overall performance.

2) Management and Executives: The leadership team has a significant influence on the organization's strategic direction and decision-making. Their decisions can shape the company's future.

Secondly, connected stakeholders are those individuals or groups whose interests are tied to the organization but may not be directly involved in its day-to-day operations. Connected stakeholders work alongside the organisation and often have a contractual relationship with the organisation. For example, banks, mortgage lenders, and suppliers. These stakeholders have an interest in the business succeeding, but not as much as internal stakeholders. It is important to keep these stakeholders satisfied as the organisation does depend on them to some extent. For example, it is important that the organisation has a good relationship with their bank / mortgage provider/ supplier as failing to pay what they owe may result in the stakeholders taking legal action against the organisation.

This category includes:

1) Shareholders/Investors: Holding financial stakes in the organization, shareholders seek a return on their investment and have a vested interest in the company's financial performance.

2) Suppliers and Partners: External entities providing goods, services, or collaboration. Their relationship with the organization impacts the quality and efficiency of its operations.

Lastly external stakeholders are entities outside the organization that can influence or be influenced by its actions. This category includes anyone who is affected by the company but who does not contribute to internal operations. They have less power to influence decisions than internal and connected stakeholders. External stakeholders include the government, professional bodies, pressure groups and the local community. They have quite diverse objectives and have varying ability to influence the organisation. For example, the government may be able to influence the organisation by passing legislation that regulates the industry but they do not have the power to get involved in the day-to-day affairs of the company. Pressure groups may have varying degrees of success in influencing the organisation depending on the subject matter. This category includes:

1) Customers: With a direct impact on the organization's revenue, customers are vital external stakeholders. Their satisfaction and loyalty are crucial for the company's success.

2) Government and Regulatory Bodies: External entities overseeing industry regulations. Compliance with these regulations is crucial for the organization's reputation and legal standing.

In conclusion, stakeholders are diverse entities with a vested interest in an organization's activities. The three categories—internal, connected and external —encompass various groups that significantly influence and are influenced by the organization. Recognizing and addressing the needs and concerns of stakeholders are vital for sustainable and responsible business practices.

Tutor Notes

- The above essay is pretty short and to the point and would pass. If you want to beef out the essay you can include some of the following information for a higher score:

- Stakeholders can be harmed by, or benefit from the organisation (can affect and be affected by the organisation). For example a stakeholder can be harmed if the organisation becomes involved in illegal or immoral practices- e.g. the local community can suffer if the organisation begins to pollute the local rivers. The local community can also benefit from the organisation through increased employment levels.

- CSR argues organisations should respect the rights of stakeholder groups

- Stakeholders are important because they may have direct or indirect influence on decisions

- The public sector has a wider and more complex range of stakeholders as they’re managed on behalf of society as a whole. They’re more likely to take a rage of stakeholder views into account when making decisions. However, these stakeholders are less powerful – i.e. they can’t threaten market sanctions, to withdraw funding, or to quit the business etc.

- The essay doesn’t specifically ask you to Map Stakeholders, but you could throw in a cheeky mention of Mendelow’s Stakeholder Matrix, perhaps in the conclusion. Don’t spend time describing it though- you won’t get more than 1 point for mentioning it. You’d be better off spending your time giving lots and lots of examples of different types of stakeholders.

- Study guide p. 58

Bottom of Form

Top of Form

- This is an open question. You could really talk about anything. Here’s some ideas of content:

Example Essay

The public and private sectors, while both essential to a nation's economy, operate under different paradigms, primarily due to their distinct drivers, stakeholders, regulations, procurement aims, and supplier relationships.

Drivers

The most fundamental difference lies in their drivers. Private sector organizations are primarily profit-driven; their existence hinges on their ability to generate profits. This profit influences their strategies, operations, and overall objectives. Conversely, public sector organizations are not driven by profit. Funded by taxpayer money, their primary objective is to deliver services effectively and efficiently to the public. Their success is measured not in financial terms, but in how well they meet the service levels required by the citizens who finance them through taxes.

Stakeholders

The range and influence of stakeholders in the two sectors also differ markedly. In the public sector, the stakeholder base is much broader, encompassing every member of society who interacts with or benefits from public services like healthcare, policing, and road maintenance. However, these stakeholders typically have less power to influence policy or practices. In contrast, stakeholders in the private sector, such as shareholders and customers, often have a more significant influence on company policies and practices. The private sector's narrower stakeholder base allows for more direct impact and influence from these groups.

Regulations

Regulations in the public sector are generally more stringent than in the private sector. Public sector entities, governed by regulations like PCR 2015, must demonstrate sound procurement practices and are accountable to society at large. This contrasts with the private sector, where companies have more latitude in choosing suppliers and are not obliged to justify their decisions publicly. The private sector faces fewer regulatory constraints, allowing for more flexibility in business decisions.

Procurement Aims

Procurement in the public sector is guided by the principles of efficiency, economy, and effectiveness, often summarized as the '3 Es'. The focus is on achieving value for money, considering both quality and price. In contrast, private sector procurement is more diverse in its aims, reflecting the organization's specific goals, which could range from profit maximization to innovation or sustainability. The private sector's procurement decisions are more closely aligned with the organization's unique values and objectives.

Supplier Relationships

Finally, the nature of supplier relationships differs significantly between the two sectors. The public sector is mandated to maintain a certain distance from its suppliers, ensuring equal treatment and open competition, as dictated by regulations like the PCR. This contrasts with the private sector, where companies are free to develop closer, more strategic relationships with preferred suppliers. The private sector can engage in practices like partnerships and Early Supplier Involvement, which are typically not permissible in the public sector due to the need for impartiality and fairness.

In summary, while both sectors aim to deliver services or products effectively, the public sector's focus on service delivery for the public good, stringent regulations, broad stakeholder base, and specific procurement principles, sets it apart from the private sector's profit-driven, flexible, and more narrowly focused approach.

Tutor Notes

- At Level 4 the questions are usually explain or describe, so don’t worry too much about doing an in depth ‘compare and contrast’ style of answer. They don’t expect that level of detail here. Simply saying Public Sector does X and Private Sector does Y is all you need.

- I have mentioned PCR 2015 – if you’re taking this exam in 2025 you may need to update this reference with the new regulations.

- LO 4.3 p.220 / p. 226

How to approach this question

- The first question can be a simple introduction with a bit of extra detail. The main ‘meat’ to your essay is going to be explaining the three sectors, their characteristics and example businesses.

- Aim for three well explained characteristics as a minimum

Example essay

An industry sector refers to a broad category or grouping of businesses and economic activities that share similar characteristics and functions in the production and distribution of goods and services. These sectors are often classified into three main categories: Primary, Secondary, and Tertiary. Here are the main characteristics and types of businesses you will find in each of these industry sectors:

1.Primary Sector:

•Characteristics: The primary sector involves activities related to the extraction and production of raw materials and natural resources directly from the environment. This sector relies on nature and weather patterns: businesses in the primary sector are highly dependent on natural factors such as climate, weather, soil quality, and geographic location. These factors can significantly impact the productivity and profitability of primary sector activities. Extreme weather such as floods can severely impact this sector. Moreover there is a seasonality to this sector and many activities in the primary sector require a significant amount of manual labour, particularly in agriculture, fishing, and forestry. However, modern technology has also been integrated into some primary sector activities to increase efficiency.

•Types of Businesses: a. Agriculture: This includes farming, crop cultivation, livestock raising, and forestry. b. Mining and Extraction. c. Fishing and Aquaculture: Forestry and Logging: Includes the harvesting of timber and related activities.

2.Secondary Sector:

•Characteristic: The secondary sector focuses on the transformation of raw materials and intermediate goods into finished products. The main characteristic of the sector is that it requires high levels of machinery and industrial techniques. There is a reliance on technology. Secondly, the secondary sector adds significant value to the products compared to their raw material form. This value addition is achieved through processing, assembly, and quality control processes. The third main characteristic is standardisation: Manufacturing processes often involve standardization of components and processes to ensure consistency and quality in the final products. Standardization helps in economies of scale.

•Types of Businesses: a. Manufacturing: This sector includes factories and plants that produce tangible goods such as automobiles, electronics, textiles, and machinery. b. Construction: Involves the building and construction of structures like buildings, bridges, and infrastructure. c. Utilities: Companies providing essential services like electricity, gas, and water supply fall into this category.

3.Tertiary Sector:

•Characteristic: The tertiary sector is also known as the service sector and involves businesses that offer various services to consumers and other businesses. The main defining characteristic of this sector is Intangibility: Services are intangible and cannot be touched or held. They are often experienced directly by consumers through interactions with service providers or through the use of technology. Secondly, High Human Involvement: The tertiary sector relies heavily on a skilled and often highly educated workforce to deliver services effectively. This can include professionals such as doctors, lawyers, teachers, and customer service representatives. Lastly, Customization: Many services are customized to meet the specific needs and preferences of individual clients or customers. This personalization is a key characteristic of the tertiary sector. For example Legal Advice will always be different depending on the specific needs of the client.

•Types of Businesses: a. Retail and Wholesale: Businesses engaged in the sale of goods to consumers or to other businesses. b. Healthcare and Education: This includes hospitals, clinics, schools, colleges, and universities. c. Financial Services: Banks, insurance companies, and investment firms are part of this sector. d. Hospitality and Tourism: Hotels, restaurants, travel agencies, and entertainment venues fall into this category. e. Professional Services: Legal, accounting, consulting, and IT services are part of the tertiary sector.

These industry sectors represent the different stages of economic activity, with the primary sector providing raw materials, the secondary sector processing and manufacturinggoods, and the tertiary sector offering services and distribution. Together, these sectors form the backbone of an economy, contributing to its growth and development

Tutor Notes

- I've gone overboard on naming the types of organisation in the different sectors. You don't have to remember all of these. 3 examples is sufficient to get good marks. I've just named them all so you can see what could be considered a right answer.

- Some people are talking about Quaternary and Quinary Sectors. CIPS is not one of those people, so don’t worry if you come across those terms in any further reading. But FYI

1.

•Quaternary Sector: This sector involves knowledge-based activities, including research and development, information technology, and data analysis.

•Quinary Sector: The quinary sector comprises high-level decision-making and leadership roles in areas such as government, academia, healthcare, and top-level corporate management.

- LO 4.1 p.196

How to approach this question:

- Define stakeholder mapping – completing an analysis of the stakeholders of an organisation and dividing them into categories depending on certain characteristics. This is often represented visually on a graph or matrix.

- Describe a Stakeholder mapping tool – the most common tool is Mendelow’s Stakeholder Matrix so I would recommend using this one. It is explained in detail in the study guide. However, the question is open so you could choose to describe another tool such as Edgar’s Stakeholder Position Analysis if you so wished. You wouldn’t be wrong choosing this, but honestly, I’d just go for Mendelow. You can’t go wrong with Mendelow. Because the Matrix has 4 sections you can imagine you’d get 5 points for the definition of stakeholder mapping, and 5 points for each of the quadrants of the matrix.

Essay Plan:

Introduction - The reason why stakeholder mapping is important is because interests and expectations of stakeholder groups will be different and possibly conflicting. Mapping this allows an organisation to see the variety and decide on an appropriate management style for each stakeholder group.

Paragraph 1 - Mendelow’s Power / Interest Matrix maps stakeholders based on their influencing power and the strength of their motivation to use that power. It uses a 2x2 grid and defines power as high or low and interest and high or low. It then provides four strategies for managing the stakeholders based on which quadrant of the grid the stakeholder falls into. These 4 categories are:

Paragraph 2 - Keep satisfied – high power but low interest. If the stakeholder becomes dissatisfied or concerned their interest may peak. Examples include regulatory bodies, shareholders, senior management. The best approach is to keep them up to date so they are informed of what is going on, but do not burden them with information they do not need.

Paragraph 3 - Manage Closely – AKA Key players – includes major customers, key suppliers, partners, senior management. These stakeholders need to know everything that is going on and approve of what is going on. The recommended strategy is early involvement and participation, and integrating their goals with yours. This group requires regular communication and meetings. You should take their opinions on board.

Paragraph 4- Monitor – minimum effort required – this is the low priority group as they have low power and low interest. Includes small volume suppliers and other organisational functions with no direct interest in your activities. This group does not need to receive regular communication.

Paragraph 5 - Keep informed - high interest, but low power. If they’re not kept in the loop and understand the need for decisions, they may lobby together to protect their interest if they feel threatened. Employee groups, suppliers and community groups may be in this category. This group should receive regular communication.

Conclusion - Mendelow created the matrix in 1991 and it is still used today. It is a popular management tool due to its simplicity. It’s important to notes that stakeholders can move through the matrix- it isn’t stagnant. For example, at the beginning of a project a manager in another department may be classed as ‘low priority’ because they are seen to have no interest and no power in the project. However, as the project progresses the manager may become interested. They will then transfer into the keep informed category. Therefore, the matrix should be redone regularly throughout the lifetime of a project to capture any movements. The matrix should also be redone for each individual project – it cannot be assumed that a stakeholder who had interest in one project would be interested in another.

Tutor Notes

- The above essay plan is basically the entire essay, I got carried away. The only thing you’d need to add into that is an example of a stakeholder for each of the sections! (e.g. the CEO is high power, but low interest stakeholder for the procurement department. He/ She doesn’t care about the day to day operations but should be kept informed of any big news). For your examples you could use your own place of work.

- At level 4 you don’t have to analyse the model, you just have to be able to memorise it and repeat it. Mendelow comes up again at Level 5 and 6 in a bit more detail. If you want to score super bonus points you could mention in your conclusion that the main disadvantage of Mendelow’s Matrix is that it doesn’t take into consideration the stakeholder’s position on the project – whether they’re for it or against it. Therefore, it doesn’t provide the full picture or provide much help on how to manage stakeholders. E.g. two stakeholders might both be in ‘manage closely’ section, but one is for the project and the other against – they’d need to be handled very differently!

- Study guide p. 65

How to approach this question

- This question is testing to see if you know the 4 procurement procedures allowed in the Public Sector which are: open, restricted, competitive dialogue, competitive dialogue with negotiation. The Public Sector is limited in how it can procure due to the Public Contract Regulations, so things like Early Supplier Involvement isn’t an option.

- The question doesn’t specifically say it has to be these four, but these are the ones in the book. Because of the vagueness you could say something like running a competition and awarding via a Framework instead. Talking about Public Private Partnerships could also be appropriate but that is outside of the scope of this module (and Level! It comes up in Level 5). These answers would be accepted.

- Also note that it doesn’t say the UK in the question, so if you answered this about your own country, that would be fine.

Example Essay

Each country’s government has its own regulations relating to how goods, services and works can be procured. The UK’s procurement rules is currently dictated by the Public Procurement Regulations 2015 which is based off EU Procurement Directives. This piece of legislation will likely be superseded in Autumn 2023 due to the UK leaving the EU. Until this point, the PCR allows UK public sector organisations to procure in the following ways: open, restricted, competitive dialogue, competitive dialogue with negotiation

Open Procedure: This is the most straightforward and transparent method. A local government issues an open tender for office supplies. Any company that provides these supplies can submit a bid. The government then evaluates all bids based on price, quality, and delivery terms to select the supplier. Any interested supplier can submit a tender. The process is open from the outset, and all submissions are evaluated against pre-defined criteria. This procedure is used when you wish to attract a large number of bidders for the opportunity and is often posted online on a platform such as Find A Tender.com so that suppliers can find the opportunity. If it is a large contract it is a requirement for details to be published on OJEU. The disadvantage of using this approach is that you may receive many bids which can be time-consuming.

Restricted Procedure: In this method, the public sector organization invites suppliers to express their interest. After a preliminary selection process, only those who meet the criteria are invited to submit tenders. This is used when the opportunity is more technical, for example a healthcare authority needs specialized medical equipment. The authority would requests expressions of interest from suppliers. After reviewing these, it invites a shortlist of qualified suppliers to submit detailed bids for further evaluation. The benefit of this approach is that unsuitable suppliers are weeded out early, this saving time.

Competitive Dialogue: This is used for complex contracts where the organization cannot define the technical means or legal or financial make-up of a project in advance. A dialogue with selected bidders is conducted to develop one or more suitable solutions, which are then put out to tender. For example, a local council is planning a new public transport system but is unsure of the best solution. It enters into a dialogue with several firms specializing in transport systems to explore various options before requesting final bids based on the developed solutions. Suppliers can be eliminated through the dialogue process based on pre-determined criteria.

Competitive Dialogue with Negotiation: Similar to competitive dialogue, but with an added phase of negotiation. It's used for particularly complex projects where the needs cannot be met without adaptation of readily available solutions. For example: a government department requires a complex IT system that integrates various existing systems. It engages in a competitive dialogue to develop potential solutions and then negotiates with bidders to refine these solutions before finalizing the contract. This procedure allows for negotiations with the winning bidder to readjust requirements if needed.

The approach taken by a public sector organisation will depend on a number of factors, but in particular the complexity of the project and whether there is a pre-determined scope. Other factors to consider include; the time-sensitiveness of the project and how quickly the procurement exercise needs to be completed, the amount of suppliers in the marketplace, and whether suppliers need to be consulted on to create the specification.

Tutor Notes

- These four procedures are outlined on p.212. Post PCR 2015, these procedures may change, or be renamed, depending on what the UK government decide to do. So if you’re taking this exam in November 2024 or later, note that the study guide is now out of date and you should conduct a bit of your own research.

- You could also mention that the value of spend is a factor when public sector organisations are deciding on a procurement route. For really low value stuff, like they need a new sofa for the office, most organisation's requirements are to get three quotes and compare them. That isn't in the study guide, it's just real life (I've worked in this sector so know thisstuff). Each organisation will have it's own thresholds for what procurement route needs to be taken, so I wouldn't comment on that but generally if it's under £10k there's quite a bit of flexibility. Where you reach 'threshold' then things become very serious and there's much more scrutiny.

- Thresholds are not part of the syllabus so don't worry about learning this. But if you're interested have a read here: New public procurement thresholds from 1 January 2024 - BM Insights - Blake Morgan

A basic response would include:

- What a Corporate Governance Framework is - the system of rules, practices and processes which directs and controls a company. Corporate Governance refers to the way in which companies are governed and to what purpose.

- Impact this has on policies and processes – means the procurement department follows regulatory mechanisms (e.g. financial regulations, Codes of Practices), has a checks and balances system (such as auditing), uses e-procurement technologies, vets staff and suppliers, has a clear segregation of duties etc.

This is a very open question and there are so many correct answers. In fact, it’s quite hard to give a wrong answer to this question – as long as your response explains a policy or process that a procurement department can have that ensures they’re following Corporate Governance – that’s right!

A good response may mention:

- Corporate governance is in essence a ‘toolkit’ that allows an organisation to effectively manage itself, ensuring that it’s policies and procedures are compliant with legislation and are ethical. It also ensures that the company meets its objectives.

- The impact Corporate Governance has on the procurement department will be in mandating the ways in which goods and services are procured and in the general ways of working of the procurement department.

- In your response you should mention 5 (ish) different ways Corporate Governance would impact on how procurement do their job. Examples include:

- Ethical Conduct – corporate governance ensures that the company is operating in a legal and ethical way. This influences the processes Procurement will do and the type of suppliers they will engage with. This may also be in their approach to relationships and negotiations- seeking out collaborative relationships with suppliers rather than looking to exploit them. For example, an organisation that does not have a Corporate Governance structure may look to take advantage of suppliers and achieve the lowest cost possible at the expense of the supply chain and local community. An organisation that has strong Corporate Governance would work with suppliers, developing the relationships and thinking long-term about the impact on the local community. The organisation may therefore prioritisestandards such as Fair Trade over price, and this would be reflected in the way tenders are evaluated by the procurement department.

- Use of Checks and Balance system- Corporate Governance ensures strong financial controls are implemented throughout the organisation. For the procurement department this may result in purchases being made to strict budgets (rather than just spending whatever they want), and business cases being written up and approved before the organisation spends a large amount of money on a single item. Another impact may be in the use of audits. For example, peer reviewing tenders and contract awards to ensue all members of the Procurement Team are following internal processes correctly.

- Anti-fraud prevention mechanisms. An important area of Corporate Governance is ensuring the organisation is free from fraud and corruption. This impacts on Procurement’s policies and processes as it will mean scrutinising tenders and who is being awarded contracts. It may result in high levels of Due Diligence being completed on suppliers before entering into contracts and providing a whistle-blowing service for staff to report issues.

- Security measures- this will be to protect the organisation from risk. It may include the procurement department vetting new staff by completing background checks. It may also involve the segregation of procurement duties so that no individual has too much power. E.g. one person raises the requisition and another person approves the purchase. Security may also be in ways of working such as password protecting documentation and limiting access to confidential information.

- Use of a Purchasing Policy Manual – this provides operational guidance on procurement policies and procedures to all staff members. It may detail things like who has permission to order what, who the Delegated Purchasing Authority (DPA) is and the roles and responsibilities of the team.

An excellent response may also include

- Reasons why Corporate Governance Frameworks impact on procurement policies and practices. This could include reasons of accountability, reputation and risk management, procurement’s links with other departments.

- You could also look at what processes would look like with Corporate Governance compared to without it (with CG = rule driven, autocratic but organisation is protected from risk. Without CG = laissez-faire, everyone does whatever they like, very risky)

- You could also provide further examples, either real life or hypothetical. Investopedia has some great information and examples you could use: Corporate Governance Definition: How It Works (investopedia.com)

How to approach the question

- This is a very open question so your essay could discuss

o the functions of a brand; e.g. advertising, marketing, creating trust, identity

o What is effective branding? Strong image, convincing people to purchase, shared values with customers, offering a solution to a problem.

o The impact for procurement and supply chain isn’t explained in the study guide so tailor this however you like. The best thing to do would be to think about some companies where branding is important, such as luxury goods, cars, or the brand is synonymous with a particular aspect such as Apple being associated with innovative technology. From there you could argue the importance of selecting the right suppliers to work with in order to keep up the brand image. Another example could be an ethical company needing to ensure their supply chain is ‘clean’, so as not to damage their branding. Possibilities are endless with this one.

Example Essay

In the contemporary business landscape, the significance of branding extends far beyond marketing and consumer perception. In procurement and supply operations, an organization's brand plays a pivotal role in shaping relationships with suppliers, determining the quality of goods and services that are procured, and influencing overall supply chain efficiency. This essay delves into the importance of branding in procurement and supply, exploring how a strong brand image can drive competitive advantage, foster trust and collaboration, and impact an organization's bottom line.

Building Competitive Advantage Through Brand Reputation:

The reputation of an organization's brand is a key determinant in attracting and retaining high-quality suppliers. A strong brand often correlates with financial stability, market presence, and business ethics, making such organizations more appealing to work with. This advantage is critical in procurement as it can lead to preferential treatment, such as priority access to scarce resources, better payment terms, and opportunities to collaborate on innovative products. For example, a well-regarded technology company might receive earlyaccess to cutting-edge components from suppliers eager to be associated with a market leader.

Enhancing Supplier Relationships and Negotiations:

Branding extends into the realms of trust and reliability, essential components in building long-term relationships with suppliers. A well-respected brand often implies a history of fair dealings, prompt payments, and mutual respect, which can make suppliers more willing to negotiate favourable terms. This trust can be particularly vital in times of supply chain disruptions or market volatility. Suppliers are more likely to extend credit or expedite orders for trusted partners, which can be invaluable for maintaining uninterrupted operations.

Influencing Quality and Sustainability Standards:

An organization's brand also communicates its commitment to quality and sustainability, which are increasingly crucial in procurement decisions. Suppliers aligning with brands that emphasize high-quality standards are often more diligent in maintaining these standards in their products and services. Additionally, a strong brand committed to sustainability can drive supply chain practices that align with environmental and social governance (ESG) principles. This commitment can lead to long-term cost savings, risk mitigation, and enhanced brand loyalty among environmentally conscious consumers.

Brand Image and Consumer Perception:

The procurement function directly impacts the final product quality, which in turn affects consumer perception of the brand. An organization's ability to procure high-quality, ethically sourced materials can significantly enhance its brand image and appeal to a broader customer base. For instance, a fashion brand's commitment to ethical sourcing and procurement of sustainable materials can bolster its image as an environmentally responsible brand, appealing to a growing demographic of eco-conscious consumers. The reverse is also true, brands associated with child or forced labour where this is found to be in their supply chains can suffer from loss of customers, revenue and reputation as well as potentially even legal consequences.

Internal Branding and Employee Engagement in Procurement:

Internal branding, the way an organization's values and culture are perceived by its employees, plays a crucial role in procurement. Employees who are proud of their organization's brand are more likely to engage deeply with their work, leading to better performance in procurement roles. This engagement can result in more innovative procurement strategies, improved vendor management, and a greater focus on aligning procurement practices with the organization’s overall strategic goals.

Conclusion:

The role of an organization's branding in procurement and supply operations is deeply impactful. A strong brand can create competitive advantages, foster better supplier relationships, influence quality and sustainability standards, enhance consumer perception, and drive employee engagement. In the modern business world, where supply chains are complex and consumer expectations are high, branding is not just a marketing tool but a strategic asset in procurement and supply operations. Organizations that recognize and leverage the power of their brand within these operations are poised to achieve greater efficiency, sustainability, and overall success.

Tutor Notes

- This is a really random section of the study guide and doesn’t really relate to the rest of the content. Branding comes up on p.226 – 228. It therefore can come up as a question, but because it’s such as small part of the syllabus, don’t focus too much effort on this subject.

- If you remember one line from this topic it’s this: “branding is not just a marketing tool but a strategic asset in procurement and supply operations”

- This type of question could come up as a scenario / case study. E.g. How does the branding of X Company impact upon their supply chain.