CIPS Exam Report for Learner Community:

Qualification: Diploma in Procurement and Supply

Unit: Contexts of Procurement and Supply
Exam series: July 2014

Question 1 – Learning Outcome 1

Explain the interests of FIVE connected or external stakeholders that a procurement (25 marks)
function might need to consider.

LO 1.4 Differentiate the stakeholders that a procurement or supply chain function might have.

This was a 25 mark question requiring an explanation of the interests of five connected or external
stakeholders in a procurement or supply chain function. Therefore, five marks were allocated to each
stakeholder.

Answers could have explained the interests of connected stakeholders, such as suppliers, customers,
shareholders or financiers, or external stakeholders such as the government, pressure groups or the
community. To gain high marks, answers had to identify five relevant stakeholders, explain the nature of the
interests of each one and to explain their interest related to the procurement or supply chain function.
As an example, answers might have referred to shareholders as a connected stakeholder. They are the owners
of the company and their interests are for the company to maximise its profits so that they receive a high
level of dividend and an increase in the value of their shares. The interest in the procurement function is that
it will want to achieve value for money in the sourcing process to reduce costs, or by finding higher quality
inputs which might increase sales revenue.

There were some excellent answers which identified five relevant stakeholders and went on to explain their
interests related to the procurement or supply chain function. Such answers were rewarded by a high mark,
often higher than 20/25.
Some answers, however, although correctly identifying five relevant stakeholders and explaining the nature of
their interests, did not go on to fully explain the interests that procurement or the supply chain function may
need to consider. Such answers were awarded a mark of a pass or marginal credit standard.
A significant number of answers incorrectly identified internal stakeholders.

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A few answers were very brief, being less than 200 words in total and lacking depth of detail. They simply
identified five stakeholders and provided a very short explanation of their interests. The marks awarded for
such answers were low, often not reaching the pass mark standard.

Question 2 – Learning Outcome 2

(a) Outline the potential impact of complex compliance requirements on the achievement (10 marks)
of positive outcomes in the sourcing process.

(b) Describe FIVE ways in which contract management might add value after the contract (15 marks)
award stage of the sourcing process.

Q2(a) LO 2.4 Analyse the relationship between achieving compliance with processes and the achievement of
outcomes.
Q2(b) LO 2.2 Analyse the main stages of a sourcing process.

Part (a) of this question tested candidates' knowledge of the link between complex compliance requirements
and the achievement of positive outcomes in the sourcing process.
Stronger answers demonstrated a knowledge of the stages of the sourcing process and given examples of
complex compliance requirements. They would have to stated that such compliance requirements lead to
organisations becoming rigid, inflexible and inwardly focused. They become resistant to change and incapable
of adapting to changes in customer demand. Initiative and innovation are stifled and organisations tend to
become bureaucratic.

In general terms, this question was not answered well. There were a few very good answers, which followed
the above criteria. Many candidates, however, missed the point of the question. Some simply described the
stages of a sourcing process, for which few marks were awarded. Other answers simply described different
types of specification, without addressing the question set and again low marks were awarded for this
approach. A small number of candidates did not attempt to answer this question.

Part (b) of the question required a description of any five ways in which contract management might add
value in a sourcing process. As it was a 15 mark question, three marks were allocated to each way described.
Stronger answers would have described methods such as the buyer and supplier working together to achieve
cost savings and continuous improvement, the buyer measuring supplier performance, a reduced risk of
misunderstanding and disagreement and an increased likelihood of supplier innovation.

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In general terms, this part of the question was answered well, with many candidates describing five relevant
actions to add value, following the award of a contract. Such answers were rewarded by a high mark, often of
a credit pass, or even a distinction pass standard.
There were a small number of answers which did not address the question set. Some described the five
'rights' of purchasing, while others referred to stages in the sourcing process prior to the award of a contract.
Such answers achieved low marks and in some cases no marks, because the question specified 'after the
contract award stage of the sourcing process'.
In general terms, this part of the question was answered well, with many candidates describing five relevant
actions to add value, following the award of a contract. Such answers were rewarded by a high mark, often of
a credit pass, or even a distinction pass standard.

Question 3 – Learning Outcome 3

(a) Explain the term 'Enterprise Resource Planning'. (5 marks)

(b) Describe FOUR of the main functions of an IT based inventory management system. (20 marks)

Q3(a) LO 3.4 Explain the common IT systems that can be used by a procurement or supply chain function.
Q3(b) LO 3.4 Explain the common IT systems that can be used by a procurement or supply chain function.

Part (a) of this question tested candidates' knowledge of Enterprise Resource Planning (ERP). The strongest
answers stated that ERP systems consolidate materials, manufacturing, logistics, supply chain, sales and
marketing, finance and HR planning into a single integrated management system. It is a single database which
offers real time information for solving a range of business problems. Examples, such as SAP, could have been
mentioned.
There were a few very good answers to the question, where candidates scored the maximum mark of 5/5 or
4/5 if the answer was not quite comprehensive enough. Other candidates were familiar with the term ERP,
but focussed on the production and inventory control elements, without mentioning the other resources of
an organisation that should be included in a holistic management system. A few candidates answered the
question in terms of Materials Requirement Planning, for which few marks were awarded.

Part (b) of the question was worth 20 marks. As four functions of an IT based inventory management system
had to be described, 5 marks were allocated to each function.
Answers to part (b) of the question were generally good, with many candidates being awarded marks of at
least a pass standard and often higher.

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The strongest answers described functions such as managing and forecasting the demand for inventory,
controlling stock levels, capturing goods inwards information accurately, ensuring that stocks are replenished
in accordance with procurement policies and recording stock movements and locations.

Some answers, however, lacked depth of detail, with only two or three lines of script for each function. Such
answers were often not awarded a mark of a pass standard. Some candidates misunderstood the question
and attempted to answer it by describing four IT systems, such as MRP I, MRP II, DRP and ERP, which resulted
in few, if any marks being awarded.

Question 4 – Learning Outcome 4

Describe FIVE possible 'drivers' or influencing factors of procurement activities in third (25 marks)
sector organisations.

LO 4.4 Analyse the impact of the not for profit or third sector on procurement or supply chain roles.

This was a 25 mark question. As it asked for a description of five drivers or influencing factors, five marks were
allocated to each.
Stronger answers to this question would have provided a detailed description of five relevant drivers, or
influencing factors of procurement activities in third sector organisations. These might have included
regulatory bodies, such as the Charities Commission, the management of reputation, with examples, ethical
issues, such as treating suppliers fairly, the limited resources available from donors and public bodies and the
values of stakeholders which are often directly related to the mission and purpose of the organisation.
Answers to this question were of a mixed standard. There were a few of a high standard, which were awarded
marks of a distinction pass standard.
Some answers, however, lacked depth of detail and were very short and these were usually awarded a mark
of a pass standard. A few candidates missed the point of the question and described drivers that were
particularly applicable to purchasing in the private sector (e.g. shareholder returns), or the public sector (e.g.
compliance with EU regulations). As the question specifically asked for drivers of procurement in third sector
organisations, such answers were awarded few marks.
A few candidates misunderstood the question and interpreted the third sector as the tertiary sector and
described purchasing activities in banking, retailing and transport. Such answers were awarded few, if any,
marks. Also, a few candidates, on seeing the word FIVE in the question, attempted to answer it by describing
the five 'rights' of purchasing and marks were only awarded for any relevant points made.

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