CIPS Exam Report for Learner Community:

Qualification: Advanced diploma in procurement and supply

Unit: AD4 - Category management in P&S
Exam series: November 2014

Question 1 – Learning Outcome 1

1 (a) Discuss FOUR sources of added value that category management might achieve
for an organisation. (12 Marks)
1 (b) Compare account management with category management for the
procurement function. (13 Marks)
(25 marks)

1(a), Candidates were expected to discuss four sources of added value that a category manager
might achieve for an organisation, up to 3 marks were available for each correctly discussed source.
Markers were looking for a good understanding of the each area discussed and the depth of that
discussion.
The sources discussed were varied and in general covered the following sources: Reduced costs
through greater economy of scale, supplier reduction, use of category management, increased
quality of products, innovation and improved specifications from suppliers, reduced delivery
timescales, increased reliability in both supply & products. Areas that were not covered or not widely
covered were: the increase use of agile procurement techniques, increased supplier relationship
management; quicker/improved time to market, more sustainability in the supply market or
increased use of sustainable products leading to an increased brand awareness/enhancement, risk
reduction.
The majority of candidates decided to use 1 or 2 paragraphs per source which often meant that the
answers were not in depth and had a lack of content.
1(b), Candidates were expected to compare the roles of an account management with category
management. We were looking for candidates to identify that account management generally
related to a suppliers mechanism for managing and growing strategic customer accounts and for
category management, the buyers process of segmentation and managing strategic supplier
accounts. The key word on both sides is strategic, therefore we were looking for answers to include
comparisons on increasing business, reduction or sharing of risk, more collaborative working,

Nov2013 (AD4) EXAM REPORT LEARNER COMMUNITY FV 5/5

Leading global excellence in procurement and supply

supplier bringing innovation to the customer, long term strategic relationships, increased
performance. There was confusion as to the role of account management in that some candidates
interpreted it as Account Management within a finance function. Comparisons tended to be one
sided in the favour of category management.
It is important to correctly read the question and understand what is required, it may help
candidates if they were to write notes, possibly in a table format before writing the answers so that
these can be referred to when undertaking a comparative question.

Issues found.
Answers in general tended to be short and did not always have a deep understanding of the subject,
as this was a discussion style question. We would have expected an introduction, how savings could
be applied and the benefits received.
Uncertainty in the definition of Account Management in relation to Category Management within a
Procurement Function.
Comparisons being only a paragraph in length with the majority being focused on one component.

Question 2 – Learning Outcome 2

2 (a) Propose THREE tools of analysis that could be used to assess the supply
markets in the category management process. (18 Marks)
2 (b) Justify the use of financial data on potential suppliers in the category
management process. (7 Marks) (25 marks)
2 (a), Where candidates did answer the question correctly the answers were of a generally good
standard. Good answers included: Porters Five Forces, SWOT, STEEPLE & RFI. When candidates used
Porter’s 5 Forces there was good use of the combination of a diagram followed by an in depth
answer of each of the forces and where/how they were applied to the category management
process. Where candidates used RFI there were good explanation of the process and the information
that would be delivered. The use of SWOT & STEEPLE were varied the cases of good answers.
Candidates not only explained the meaning of each letter but how it related to the CM process (i.e.
SWOT S – Strengths the company is a marker leader within a particular field and it would be very
difficult for new entries to gain any market leverage and for a CM to negotiate better
costs/efficiencies) these answers scored higher marks compared to answers where only the meaning
was given i.e. in SWOT S – Strengths company is strong in the market. Although the marks for good
answers tended to be in the range of 10 to 16 higher marks could have been achieved if the lower
end answers were more in depth rather than being one or two paragraphs.

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2 (b), A large number of candidates missed the opportunity to gain better marks, by not explaining
the financial data that could be obtained and from what source most tended to refer to financial
data being obtained from the internet but did not qualify this, candidates who received higher marks
referred to finical data sources such as D&B, Experian or other Credit Rating Agencies. The majority
of candidates identified that the data could be used to ensure continuity of supply, to work out the
liquidity, profit & loss etc. Indirect and direct costs also featured. Reduction of risks was mentioned
by a minority of candidates but tended to be implied re continuity of supply. Answers tended to be
short 1 or 2 paragraphs and light on content. Other areas that could have been cited where financial
data could be used were in re/negotiations, reduction of stock holding, demand management & cost
of production including direct and indirect costs.
Although answers tended to be on the short side marks ranged between 3 and 7 depending on
relevance of the content.
Issues.
A large number candidates answered using the Kraljic model, Pareto and O’Brien’s version of the
Kraljic matrix, which are more related to cost analysis. These tools could have been used providing
the accompanying text explained how it related to supply markets.
Answers were light on relevant content; markers were looking for depth and breadth of the answers.

Question 3 – Learning Outcome 3

Analyse the importance of internal governance in the delivery of successful category

management.
(25 marks)
Markers were looking for candidates answers to cover governance and demonstrate an
understanding of the importance of its aspects not just to provide a description/definition.
Answers that achieved higher marks tended to start with a general description of the governance
structure and how it related to category management, followed by a pictogram of the structure
followed by in depth discussion on the structure and how it related to their own organisations. The
majority of candidates identified the need to have CEO and senior management buy in, an effective
reporting process to ensure the project remained on track, the capability of different people and an
effective communication programme.
Areas that were less covered included the importance of planning/co-ordination to ensure on time
delivery of the project, undertaking stage gate reviews before moving onto the next part of the
project, visibility of milestones and targets and tracking and rectification of issues. Another area that
tended to be poorly covered was the tracking of benefits, this is a key part of delivering/meeting the
expectations of the stakeholders also programme reporting can be used to cover this area.

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A large number of candidates mentioned general procurement governance issues or responded to
the question in a scatter gun approach by mentioning a number of issues which in some cases were
remotely connected to governance.
It is important that answers are well structured and follow a logical sequence, using notes at the
start of a question may help to structure a question.
Where examples are use from the candidates own work place these should be kept relevant to the
question.
In general this was a well answered question usually of 3 to 5 pages long with well written and
structured answers achieving 16 to 20 marks.
Markers were looking for relevant factors and the depth & breadth of the answers.

Question 4 – Learning Outcome 4

Explain how a category manager could gather and use information to manage and
improve supplier performance, following the award of a contract.
(25 marks)
In this question markers were looking for candidates to provide answers in two parts; part one the
identification of how information could be gathered and then in part two how the gathered
information could be used to manage and improve supplier performance. Candidates tackled this in
different ways, some identifying all of the sources and types of information first; then listed how the
information could be used. Candidates that tended to score higher marks chose to identify a source
of information then describe how that information could be used to improve performance.
In most cases, candidate’s answers to the first part were good, with a wide range of sources of
information given, such as feedback from internal and external stakeholders including the number of
complaints/returns received, quality of goods where internal inspection was used, reply’s to
questionnaires, compliance to KPI’s, benchmarking & compliance to CSR. Areas that were less
covered included: scope and terms of the contract, rights and obligations of both parties, risk &
contingency plans, external audits, supplier visits, talking to the supplier certification & independent
ratings. With regard to improving supplier performance, a number of candidates did not expand on
how the information could be used to make a proactive contribution to the contract.
Many answers to this question were a direct uplift from the previous examination structure,
“selecting the right supplier”. Whilst these may have some relevance, these questions did ask for a
discussion on research the category manager could perform after the letting of the contract.
Overall this was a very well answered question with in the majority of scripts received receiving mid
to high marks.

Nov2013 (AD4) EXAM REPORT LEARNER COMMUNITY FV 5/5

Leading global excellence in procurement and supply

Nov2013 (AD4) EXAM REPORT LEARNER COMMUNITY FV 5/5

Leading global excellence in procurement and supply