Revision and Reflection

Diploma in Procurement and Supply

CIPS Level 4
L4M8 Procurement and Supply in Practice

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Let’s start by looking at the learning outcomes as these are what you will be assessed against.
Measure your confidence to enable you to determine which areas you feel are your strongest,
which areas may require more attention, and more importantly, any areas you feel concerned
about.

Confident Fairly Unconfident Actions I need

Procurement and Supply in Practice confident, need to to take prior
may need allocate more to the exam
Constructed response 3 hour exam some more time/get some
revision support
LO1 Demonstrate the application of the
procurement cycle

1.1 Apply the key stages of the procurement

cycle to the practical procurement and
supply environment
 The practical application of the CIPS
Procurement Cycle:
 Defining business need
 Market analysis and testing
 Supplier evaluation
 Tendering processes
 Supplier and stakeholder
management

LO2 Demonstrate the application of the key

stages of the sourcing process

2.1 Apply the key stages of the sourcing

process to the practical procurement and
supply environment

 Stages of the sourcing process:

 Defining business need
 Creation of contract terms
 Supplier selection
 Contract award
 Contract or supplier
management

LO3 Demonstrate the application of whole

life asset management

3.1 Apply whole life asset management to

the practical procurement and supply
environment
 Include all costs – purchase price
through to disposal and end-of-life

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  Hidden costs – global sourcing, risks
associated with extended supply
chain
 Only develop for larger purchases
 Ensure senior management support
 Cross functional support – ensure
access to data
 Team working – reduce data
collection time
 Decommissioning
 Removal or disposal processes
 Legal aspects – waste management

LO4 Demonstrate the application of ethical

and responsible sourcing within an
organisation

4.1 Apply ethical and responsible sourcing to

the practical procurement and supply
environment
 Bribery, Corruption, Fraud, Human
Rights, Modern Slavery
 Application of the CIPS Code of
Conduct
 Ethical codes of practice
 Environmental factors
 Supporting information on ethical
practices in supplier quotations and
tenders
 Supplier monitoring and KPIs
 The triple bottom line - profit,
people and planet
 Adopt sustainable practices,
standards and specifications in the
supply chain
 Consider the social impact of the
organisation’s behaviours
 Expand reporting frameworks to
include ecological and social
performance

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Once we have some understanding of our confidence levels we can consider timelines to cover the
actions required to ensure we are fully prepared for the exam. See example below:

4 weeks prior to the exam

Monday Tuesday Wednesday Thursday Friday Saturday Sunday Success
Rate
a.m. a.m. a.m. a.m. a.m. a.m. Block out Pleased with
Spend lunch Spend lunch Spend lunch Spend lunch Spend lunch 9-10.30 No option to progress,
hour reading hour reading hour reading hour reading hour reading complete study nearly
first draft first draft first draft first draft first draft draft revision finished study
revision notes revision notes revision notes revision notes revision notes guide
notes
p.m. p.m. p.m. p.m. p.m. p.m. Block out no
option to
study

3 weeks prior to the exam

Monday Tuesday Wednesday Thursday Friday Saturday Sunday Success
Rate
a.m. a.m. a.m. a.m. a.m. a.m. Block out no Being
Spend lunch Lunch time - Lunch time - Lunch time - Lunch time - option to disciplined
hour reading Start making Work on mind Work on mind Work on study and making
first draft mind maps maps for each maps for each mind maps good
revision notes for each LO LO LO for each LO progress

p.m. p.m. p.m. p.m. p.m. p.m. Block out no Didn’t get the
Got 2 hours Possible 3 option to 3 hours
6-8 to work hours tbc study
on mind
maps
2 weeks prior to the exam
Monday Tuesday Wednesday Thursday Friday Saturday Sunday Success
Rate
a.m. a.m. a.m. a.m. a.m. a.m. Block out no Really
Complete Compare Compare mind Compare Compare Had a go at option to pleased with
final mind mind maps maps with LO mind maps mind maps LO 3.3 and study progress and
map at lunch with LO and and check with LO and with LO and changed overall
time check confidence check check approach feeling fairly
confidence confidence confidence confident

p.m. p.m. p.m. p.m. p.m. p.m. Block out no Really good
Compare Compare Compare mind Compare Struggling LO option to session with
mind maps mind maps maps with LO mind maps 3.3 meeting study Lisa feel more
with LO and with LO and and check with LO and with Lisa confident
check check confidence 1 check tonight about
confidence 1 confidence 1 hour confidence 1 systems
hour hour hour now

1 week prior to the exam (final preparations)

Monday Tuesday Wednesday Thursday Friday Saturday Sunday Success
Rate
a.m. a.m. a.m. a.m. a.m. a.m. Block out no  great
Practice Practice Practice Practice Practice Final check option to progress had
questions at questions at questions at questions at questions at study all day
lunch time lunch time lunch time lunch time lunch time Saturday!

p.m. p.m. p.m. p.m. p.m. p.m. Still got 2 Flick through
Revise mind Revise mind Revise mind Revise mind Revise mind Revise mind days before mind maps
maps 1 hour maps 1 hour maps 1 hour maps 1 hour maps 1 hour maps 1 hour exam, catch- for final 2
up Monday days
lunch/evening

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Blank template for you to populate if this approach works for you:

4 weeks prior to the exam

Monday Tuesday Wednesday Thursday Friday Saturday Sunday Success
Rate
a.m. a.m. a.m. a.m. a.m. a.m. a.m.

p.m. p.m. p.m. p.m. p.m. p.m. p.m.

3 weeks prior to the exam

Monday Tuesday Wednesday Thursday Friday Saturday Sunday Success
Rate
a.m. a.m. a.m. a.m. a.m. a.m. a.m.

p.m. p.m. p.m. p.m. p.m. p.m. p.m.

2 weeks prior to the exam

Monday Tuesday Wednesday Thursday Friday Saturday Sunday Success
Rate
a.m. a.m. a.m. a.m. a.m. a.m. a.m.

p.m. p.m. p.m. p.m. p.m. p.m. p.m.

1 week prior to the exam (final preparations)

Monday Tuesday Wednesday Thursday Friday Saturday Sunday Success
Rate
a.m. a.m. a.m. a.m. a.m. a.m. a.m.

p.m. p.m. p.m. p.m. p.m. p.m. p.m.

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Let’s now take a look at some of the questions from the study guide designed to make you reflect
on your learning. Did you attempt to respond to any of the questions in order to test your
understanding? If not, this is an opportunity to have a go and see how confident you feel now you
are further into your studies. If you find you struggle grasping a concept, seek support from a
tutor (via your Programme Lead), a colleague or mentor.

Procurement and Supply in Practice

Question – L4M8 Chapter 1 Answer

Which products or services should not be

considered for outsourcing, according to Carter’s
Outsource Matrix?

Question – L4M8 Chapter 1 Answer

When benchmarking, what other factors, apart

from price, should be considered to find the total
cost of acquisition?

Question – L4M8 Chapter 2 Answer

Which contract term contains details of when a

product or service should be delivered, and
explains the potential loss of business?

Question – L4M8 Chapter 2 Answer

What are the reasons that a contract can legally

be terminated?

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Question – L4M8 Chapter 3

What are the eight elements of whole life asset

management?

Question – L4M8 Chapter 3

What advantages could there be to holding

excessive inventory?

Question – L4M8 Chapter 4

Why is it important to have adequate

procedures in place within an organisation in
relation to bribery?

Question – L4M8 Chapter 4

What are the five recognised types of modern

slavery?

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For the purpose of practising for exam questions, it is useful to have a go at the ‘end of chapter’
questions from the study guide. Responding to these questions can be fairly quick and a useful
revision opportunity as you get near to the actual exam date.

L4M8 Chapter 1
1. Identify FIVE stages of the procurement cycle.
2. Define outsourcing and explain the advantages and disadvantages.
3. Explain FOUR ways in which a buyer could appraise a potential supplier.
4. Describe the difference between internal and external stakeholders and discuss how they
could be managed effectively.

L4M8 Chapter 2
1. Explain, with examples, the difference between implied and express terms within a contract.
2. Describe, including the formula, the purpose of the current ratio.
3. Explain what is meant by ‘The Battle of the Forms’.
4. List the types of relationship that feature within the relationship spectrum.

L4M1 Chapter 3
1. Explain how whole life asset-management can add value to an organisation and how cross-
functional teamwork contributes towards that.
2. Define bribery in the supply chain.
3. Evaluate the advantages and disadvantages of leasing an asset.
4. Describe how cross-functional support can value within procurement.
5. List the FOUR leadership styles.
6. Explain the difference between primary and secondary data.

L4M1 Chapter 4
1. Describe FOUR types of power that can be used within procurement.
2. Evaluate why a procurement professional should select a supplier who promotes ethical and
responsible sourcing over one who does not.
3. Explain the importance of monitoring suppliers after the contract has been awarded.
4. Describe, with examples, the concept of the 3Ps/triple bottom line theory.

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Quick revision checks of important information to remember across the
whole of Module 8 – Procurement and Supply in Practice

Make or buy decisions are about whether a product or service should be made Page 5
within the organisation or bought-in from an external supplier

There are three types of procurements/buys: Page 14

 A new buy
 A re-buy
 A modified re-buy

There are four forms that a requisition can take: Page 18

 Verbal
 Handwritten
 Email
 Automated

Porter’s Five Forces are as follows: Page 27

 Competitive rivalry
 Threat of new entrants
 Threat of substitution
 Power of buyers
 Power of suppliers

The price of a product or service is directly related to supply and demand. Page 28

Push methods/systems are strategies based on forecasts. Page 30

Pull methods/systems are strategies that react to needs.

The Ansoff matrix has four strategies that an organisation can adopt in order to Page 33
grow the business.
 Market penetration
 Product development
 Market development
 Diversification

Benchmarking can be internal or external. Page 44

There are seven stages in the tendering process. Page 48

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The four types of tendering process are: Page 49
Open
Restricted
Negotiated
Competitive dialogue

KPIs and SLAs help with effective supplier management. Page 59

Sourcing can be localised, regional, national or global. Page 67

A contract has to include the following: Page 68

 intention
 capacity
 offer
 consideration
 acceptance

Express terms are terms that are agreed between the parties negotiating the Page 73
contract.

When negotiating price, tactics include the following: Page 74

 Take it or leave it
 Good cop, bad cop
 Salami
 One last thing
 Russian front
 Mother Hubbard
 Log rolling

Warranties are a secondary contract term. Page 75

Retention of title only applies to products. Page 77

There are three types of contractual breach: Page 79

 Material
 Anticipatory
 Fundamental

Within contracts, damages are terms that can apply if a contractual breach happens. Page 80

To be valid, an exclusion clause must pass a two-part common law test, as follows: Page 81
1. It must be incorporated into the contract.
2. It must be constructed in a clear and precise way.

There are five ways to terminate a contract: Page 82

 Breach
 Performance
 Prior agreement
 Rescission
 Completion

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Attending trade shows is an excellent way for procurement professionals to meet Page 87
potential suppliers.

A supplier in a strong financial position exposes the buying organisation to less risk. Page 88

Balance sheets show current assets and current liabilities. Page 90

The current ratio shows whether an organisation can pay its short-term debts.

The quick ratio shows whether an organisation can meet its immediate creditor’s
requirements.

Profit is the amount of money left after all expenses have been paid.

These are the two most common types of organisational structure: Page 92
 Flat
 Hierarchical

A CSR policy promotes sustainability and good ethical conduct. Page 94

The reputation of a selected and potential supplier can add or remove value within Page 97
the supply chain.

Force majeure includes the following: Page 101

 Flooding
 Earthquakes
 Hurricanes
 Tsunamis
 War
 Terrorism

Working with engineers, designers and technical staff can help a buyer to ensure Page 102
that the specification offered meets the need that was defined.

There are two main purposes of import duties: Page 104

 To give local, or own-grown, produce an economic advantage
 To raise revenue for the country’s government

Part of dealing with international freight is agreeing Incoterms®. Page 105

The weighted scoring system helps to make a decision based on the criteria set out Page 109
at the beginning of the RFQ or tender process.

A battle of the forms happens when a buying and a supplying organisation are Page 110
negotiating contractual terms and each organisation’s response is based on its own
terms.

The procurement professional should ensure that there are clear objectives set to Page 112
show what is required from the new supplier.

The transition between suppliers is an ideal time to improve how things are done – Page 113

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potential for innovation and opportunities.

Contract and supplier management are not the same. Page 117

Relationships form a key part of procurement and must be managed. Page 120

MBO is based on everyone working towards the same goals, with the aim of Page 124
achieving the desired strategic result.

Contracts can be changed by an amendment or an addendum. Page 129

The possible outcomes of potential supplier or contract failure can be plotted on a Page 130
risk register.

Value is perceived differently by different stakeholders. Page 135

The purchase of a new asset does not always signify development. It could be a Page 137
reaction to decreased demand to save costs or to ensure the continued existence of
the organisation.

Insuring assets can save an organisation money. If there is an unexpected crisis, the Page 140
insurance company will provide a financial pay out as compensation.

Cost is attributable to both good and poor quality. Page 141

The longer an asset lasts without deterioration, the higher its value. Page 143

The five approaches to condition performance monitoring are as follows: Page 144
 Do nothing
 Reactive
 Preventative
 Predictive
 Proactive

When an asset reaches end of life at one organisation, if it is sold to another Page 146
company with different objectives and knowledge of how to retrieve it, the asset’s
value can be maintained.

There are three economic sectors: Page 148

 Primary
 Secondary
 Tertiary

There are six cultural dimensions: Page 151

 Individualistic/collectivistic
 Masculine/feminine
 Uncertainty avoidance
 Power distance
 Time perspective
 Indulgence/restraint

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Fixing an exchange rate can reduce risk in the global supply chain. Page 155

Hidden costs are the costs associated with owning, operating and maintaining the Page 158
asset rather than the asset price itself. They include training, maintenance, staff and
storage etc.

GDPR was introduced in 2018 and is legislation for data protection. Page 161

Fixed assets can include land, machinery, animals, buildings and vehicles. Page 165

Cross-functionality is about people with different levels of experience from different Page 168
departments working together to achieve a mutual goal.

According to Belbin, a team is made up of nine different roles: Page 171

 Monitor Evaluator
 Plant
 Specialist
 Implementer
 Shaper
 Completer Finisher
 Co-ordinator
 Teamwork
 Resource Investigator

There are two types of data: Page 174

 Primary
 Secondary

Decommissioning an asset can affect stakeholders. Page 176

Assets cannot be removed from the balance sheet until they have been sold or Page 180
disposed of.

Not removing waste correctly causes damaging, destructive effects on the Page 183
environment and organisations can be fined if rules are broken.

Laws and regulations on waste management differ between countries. Page 185

Responsible and ethical sourcing includes conducting due diligence on: Page 190
 Bribery
 Corruption
 Fraud
 Human rights
 Modern slavery
 Sustainability
 Environmental awareness

The six procedures that the Bribery Act deems important to have in place to show Page 191

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adequate defence against bribery are:
 Proportional procedures
 Top level commitment
 Risk assessment
 Due diligence
 Communication and monitoring and reviewing

The six types of influence styles and associated characteristics defined by Yukl and Page 195
Falbe include the following::
 Assertive
 Ingratiating
 Exchange
 Upward appeal
 Coalition
 Rational persuasion

According to French and Raven there are Five Types of Power: Page 196
 Legitimate
 Reward
 Expert
 Referent
 Coercive

Ownership and possession are different. A person can have possession without Page 197
ownership.

Human rights are the statutory ways in which individuals expect to, and should, be Page 199
treated.

A PQQ (pre-qualification questionnaire) is a document that is sent out to potential Page 206
suppliers to help evaluate their compatibility and suitability with the buying
organisation.

Nolan’s Seven Principles of Public Life are as follows: Page 207

 Leadership
 Honesty
 Openness
 Accountability
 Selflessness
 Integrity
 Objectivity

Suspected conflicts of interest should always be disclosed. Page 211

Breaches of ethical codes of practice can have severe consequences. Page 212

Sea and rail freight cause less pollution than road and air transport. Page 213

Reverse logistics is the reuse of packaging by the delivery company for another Page 216

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delivery or customer.

Even though the prices of environmentally friendly or sustainable organisations’ Page 219
products are higher, demand for ethically sourced products will increase due to the
positive impact these have on the environment.

Quantitative KPIs are not subjective. Page 221

Is it essential that you ensure that suppliers keep up to date with their Page 222
accreditations and membership of ethical bodies and organisations.

The 3Ps are as follows: Page 225

 Profit
 People
 Planet

TBL stands for the triple bottom line. Page 226

JIT systems may have a negative effect on the environment. Page 229

Sustainable procurement is where economic development, social development and Page 230
environmental protection are balanced against business needs.

Ohno’s seven wastes are the following: Page 232

 Transportation
 Inventory
 Motion
 Waiting
 Over-processing
 Over-production
 Defects

Continuous improvement is about enhancing processes, e.g. in order to make an Page 233
organisation more cost effective, to develop better products or to improve
customer service.

Specifications often have to adapt to reflect changing needs. Page 234

Social impact is the effect that an organisation can have on the community, and it Page 236
can be formed from many elements.

Society expects organisations to take responsibility for their waste. Page 237

An economy in a boom phase is growing rapidly. Page 238

Culture is made up of six elements: Page 240

 Stories

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  Symbols
 Power structures
 Organisational structures
 Control systems
 Rituals and routines

Positive organisational behaviour generates a positive social impact. Page 241

Output and outcome are different evaluation methods. Page 245

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