[2024年07月03日] 合格率取得する秘訣はL4M1認定試験エンジンPDF [Q18-Q34]

[2024年07月03日] 合格率取得する秘訣はL4M1認定試験エンジンPDF

L4M1試験問題集合格できるには更新された2024年07月テスト問題集

質問 # 18
Explain, with examples, the advantages of a Procurement Department using electronic systems (25 marks)

正解：

解説：
See the solution inExplanation partbelow.
Explanation:
- Mention of some of the following benefits with at least one example provided against each; cost savings, time savings, more efficient, higher levels of transparency, easier to access historical records to inform upon decision making, mitigates risks such as fraudulent spending, easier to track spend against budgets, ensures compliance with regulations, provides 'real-time' information, paperless communications (so more environmentally friendly), assists in Supply Chain Management and integration with supply partners.
- I'd suggest 5 is a good amount to aim for
Example Essay
Procurement stands to gain numerous benefits from the adoption of electronic systems. These electronic tools and systems bring efficiency, accuracy, transparency, and cost-effectiveness to the procurement process. Here are several compelling reasons why procurement should leverage electronic systems:
Cost savings - the use of electronic tools saves organisations money. Although there is an initial cost outlay, over time the systems will save the organisation money. For example the use of e-procurement tools can save money by accessing a wider pool of suppliers. For example, when using an e-sourcing portal, a tender may reach a larger number of suppliers- this makes the tender more competitive thus driving down prices.
Compared to traditional methods such as phoning suppliers for prices, the use of electronic portals encourages suppliers to 'sharpen their pencils' and provide the best prices in order to win work. Money is also saved as communication is digital (so there is no costs for paper and postage).
Time savings - electronic tools automate a lot of processes which saves time. An example of this is e-requisitioning tools where orders can be placed automatically by a piece oftechnology when quantities of a material reach a certain level. For example, in a cake manufacturing organisation they may use an MRP system which calculates how many eggs are required per day. The machine knows that when the company only have 50 eggs left, a new order needs to be issued to the supplier. The MRP system (e-requisitioning system) therefore saves time as the Procurement department doesn't have to manually pick up the phone to place the order with the supplier- it is done automatically.
Access to higher levels of information - e-Procurement gives you centralised access to all your data. You can access the system to look at historical purchases with ease compared to having to dig through folders and filing cabinets. For example, an electronic PO system will hold details of all historical POs, this means if someone has a question about a PO that was raised 4 months ago, finding the information is much easier and quicker. Some systems may also be able to provide analytical data such as changes to spend over time, or which suppliers a buyer spends the most money with. This higher level of information can help inform upon future decision making. For example, if the organisation wishes to consolidate its supplier base it would look through historical data provided by the electronic system to find out which suppliers are used the least and remove these from the 'pre-approved supplier list'. This level of data might not be available in manual systems.
Better budget tracking - using electronic systems allows for real-time information to be collected which allows Procurement Managers to see where spend is compared to forecasts and budgets. An example of this is in the use of Pre-Payment Cards - rather than giving staff members petty cash to make transactions and having to chase this up and collect receipts and change, a pre-payment card usually comes with an online portal where a manager can see what has been purchased and the remaining budget on that card for the month. A manager may be able to see for example that a member of staff has spend £300 of their allotted £500 monthly allowance.
Higher levels of transparency and control - using E-procurement tools allows an organisation to track who is ordering what. For example, an e-requisitioning tool may allow Procurement Assistants to make purchases up to £500 but set an automatic escalation if they try to buy something of higher value. This allows for Management to have greater levels of visibility and more control over spending. Another example of transparency and control is in the use of e-sourcing tools to run a competitive tender exercise. All communication between the buyer and suppliers is tracked on the system and award letters can be sent via the system too. This reduces the risk of information being lost.
Environmental benefits- the use of e-procurement tools means that there is less paperwork involved. For example, rather than creating a physical PO which needs to be signed by a manager, an electronic system can allow a manager to sign-off the purchase by clicking a button. This means there is no requirement for the document to be printed. This saves paper and thus has a positive on the environment. Using electronic systems may help an organisation achieve their environmental targets.
In conclusion there are numerous benefits for procurement to adopt e-procurement tools. Depending on the sector and requirements of each individualised company, some advantages may be more pertinent than others, but it is undeniable that technology is helping to shape the industry into a value adding function of organisations.
Tutor Notes
- With an essay like this you could use subheadings and number the advantages if you like. It's a good idea to do one advantage per paragraph and using formatting really helps the examiner to read your essay.
- study guide p.108

質問 # 19
Describe regulation that govern the Public Sectors and explain how this may impact upon procurement activities (25 marks).

正解：

解説：
See the solution inExplanation partbelow.
Explanation:
How to approach this question
- You do need to know some legislation for public sector here. This may be difficult if you don't work in the Public Sector. If you're struggling with this, you could also talk about general legislation that governs all types of organisations such as the Equalities Act and Modern Slavery Act.
- This is also a tough question if you're not British. CIPS is a UK based organisation and the syllabus therefore only talks about British legislation. If you're in a different country you could talk about the legislation in your own country, providing the question doesn't specifically mention UK Law.
- Either way I would recommend knowing a couple of pieces of British Legislation. You don't need to be an expert but just state what they are and what the purpose is should be enough to get you a pass.
Example essay
The public sector, which encompasses various governmental and state-owned enterprises, plays a pivotal role in the governance and provision of essential services. This sector operates under a strict framework of regulations and policies, ensuring that its operations are fair, transparent, and accountable. Among the most critical aspects of these operations is procurement, the process through which the public sector acquires goods, services, and works. This essay will explain key regulations governing the public sector, focusing on the Public Contracts Regulations (PCR) 2015, Late Payment Regulations 2016, Equalities Act2010, and Public Services (Social Value) Act 2012, and explores how these regulations impact procurement activities.
The Public Contracts Regulations (PCR) 2015
The PCR 2015 plays a foundational role in public sector procurement in the UK. It sets out the procedures for procuring contracts, aiming to ensure fairness and transparency in the process. The regulations mandate that all procurement processes must be conducted in a manner that prevents discrimination and allows equal access to potential contractors, regardless of their size or location. For example, the open tendering process under PCR
2015 has enabled a more diverse range of companies, including small and medium-sized enterprises, to participate in government contracts, enhancing competition and innovation. The four 'pillars' of the PCR are derived from EU Procurement Directives and are: non-discrimination, free movement of goods, equality of treatment and transparency.
Late Payment Regulations 2013
The Late Payment Regulations 2013 address a critical aspect of procurement: the timely payment for goods and services. This regulation ensures that public sector organizations pay their suppliers within a stipulated time frame, significantly impacting the financial stability of these suppliers. For instance, the regulation has been particularly beneficial for small businesses that rely on prompt payments to maintain cash flow. The introduction of these regulations has improved the trust between public sector entities and their suppliers, leading to more efficient procurement processes.
Equalities Act 2010
The Equalities Act 2010 is another crucial piece of legislation impacting public sector procurement. This Act prohibits discrimination in the workplace and in the provision of services, extending its influence to the procurement process. Public sector entities must ensure that their procurement decisions do not discriminate against any group and that they promote equality. For instance, when a public sector organization issues a tender, it must ensure that the selection criteria do not unfairly disadvantage any potential supplier based on irrelevant characteristics. This approach not only fosters a more inclusive procurement environment but also helps to tap into a wider talent and supplier pool, enhancing the quality and effectiveness of public services.
Public Services (Social Value) Act 2012
The Public Services (Social Value) Act 2012 marks a significant shift in how procurement is approached in the public sector. This Act requires public sector organizations to consider how the services they procure can improve the economic, social, and environmental well-being of their area. This means that when a public sector entity procures goods or services, it must consider factors beyond just the price and quality. For example, a local government might prioritize suppliers who can demonstrate a commitment to environmental sustainability or who offer employment opportunities to local residents. This approach to procurement encourages a more holistic view of value for money, factoring in the wider impact of procurement decisions on society.
Public Accountability and Freedom of Information Requests
In addition to these specific regulations, the concept of public accountability and the mechanism of Freedom of Information requests play a crucial role in the public sector, especially in procurement activities. Public accountability ensures that entities are answerable to the public and their actions are transparent. Freedom of Information requests enable individuals and organizations to access information held by public authorities, which includes details of procurement decisions and contracts. This transparency is critical in ensuring that procurement activities are conducted ethically and responsibly, deterring corruption and mismanagement.
In conclusion, the regulation of the public sector, particularly in the realm of procurement, are complex.
Regulations such as the PCR 2015, Late Payment Regulations 2016, Equalities Act 2010, and the Public Services (Social Value) Act 2012, along with the principles of public accountability and transparency, ensure that procurement activities are conducted in a fair, transparent, and socially responsible manner. These regulations not only safeguard the interests of suppliers, especially smaller businesses, but also ensure that the public sector remains a model of integrity and efficiency and that taxpayers' money is well spent.
Tutor Notes
- Okay this is important: The PCR 2015 regulations are being rescinded in 2024. They're based on EU Law and the UK has left the EU. I know we left a while ago now but it's taken us a long time to address the issue and figure out what we want to do about it. There was also a pandemic that got in the way of people making any decisions in parliament that weren't to do with Covid. The PCR 2015 will be replaced in late 2024 with new 'British' rather than European rules.
- At the time of writing this (December 2023) we don't 100% know what the new rules are going to look like and if you're taking this exam from November 2024 onwards, I recommend doing a bit of research into the new regulations.
- Now the complicated bit- the CIPS syllabus is valid from 2024-2028 and doesn't address that legislation is changing. I therefore don't really know what they're going to expect when students are taking this exam and the study guide information is out of date. If you're not working in the Public Sector, how are you to know the legislation has changed?
- My advice is this- briefly learn PCR 2015- the four pillars in particular, and when the new legislation comes out, have a quick google and see if these pillars are still the same. The regs aren't going to change THAT much - things like transparency and equal treatment are still going to be really important, but there may be some slight language changes. Plus, if you're able to mention in an essay that there's new legislation, it's going to make you sound super clever.
- LO 4.2 p.211

質問 # 20
What is meant by Stakeholder Mapping? Describe a tool that can be used by a Procurement Professional to map the stakeholders at their organisation (25 points)

正解：

解説：
See the solution inExplanation partbelow.
Explanation:
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

質問 # 21
Describe 3 stages of the sourcing cycle that occur in the post-contract award stage (25 marks)

正解：

解説：
See the solution inExplanation partbelow.
Explanation:
How to approach the question
Your answer should provide details on 3 of the following:
- Contract Award and Implementation
- Warehouse Logistics
- Contract performance and Improvement
- Supplier Relationship Management
- Asset Management
Because the question is only asking for 3 stages, you're going to have to go much more into detail for each stage, giving lots of information about why each stage is important and examples. You could consider thinking of an example procurement you have done recently and explaining the stages for that. Or you could take a hypothetical procurement too. Either will get you the same marks. Pick the three that you can write the most about.
Essay Plan
Introduction - explain that sourcing of goods and the role of Procurement doesn't end once a contract is signed. There is ongoing management and processes which must be carried out to ensure success.
Paragraph 1 - Contract Performance and Improvement
This is about ensuring contract obligations are fulfilled. Contract administration includes P2P procedures, database management, budgeting / costs monitoring, reporting and dispute resolution
Procurement's role may be in managing contract performance through the use of SLAs and / or KPIs. This can be done via reporting, using a Supplier Scorecard and meeting regularly to discuss.
It's important KPIs are measured and that there are consequences for failing to meet them. An example of consequences could be using a Performance Improvement Plan.
Contract Management also includes updating the contract where required - e.g. issuing variations to contract and updating the change control log
Another important aspect of this is ensuring the costs remain within scope of the budget
Contract performance can be compared if you have several suppliers delivering the same goods- could use a Factor Rating Method.
Performance could be measured against several criteria such as on time deliveries, response time of supplier, number of complaints.
Paragraph 2 - Supplier Relationship Management
There is a difference between managing the contract and managing the supplier relationship. It's possible to have excellent contract performance and a terrible relationship. However, the two are generally linked- where there is a good relationship, the contract often performs well.
The supplier management approach depends on where the relationship falls on the relationship spectrum (e.g.
transactional or collaborative)
This involves; maintaining regular contact with the supplier, motivating the supplier, working collaboratively with them (e.g. on performance issues or resolving any disputes)
Incentivising the supplier leads to collaboration and mutual support
To assess or rank suppliers you could use a vendor rating method or supplier evaluation forms
Supplier relationship management may involve investing in the supplier- e.g. through training or technology sharing Paragraph 3 - Asset Management
Includes creating a post contract 'lessons-learned'
Assessments should be carried out to determine if business requirements have changed, whether the agreement is still required and fit for purpose, what can be learnt from the process and how improvements can be incorporated next time.
This is the final stage of the Procurement Cycle and takes us back to the start of cycle, which begins again when the item needs to be reprocured
Whole life costing should be considered at this stage: this is the total cost of ownership over the life of an asset. The concept is also known as life-cycle cost (LCC) or lifetime cost, and is commonly referred to as
"cradle to grave" or "womb to tomb" costs.
Generally used on large purchases such as machinery and vehicles. Full Asset Management may not necessary for direct cost items such as raw materials incorporated into final goods.
Considerations may include; costs of running the asset, how long it will perform, insurance, maintenance, opportunity costs, disposing of the asset.
Also consider environmental and social impacts of the procurement.
Conclusion - it is important that procurement are involved at every stage of the cycle, not just in the pre-award stages. Procurement can add value at every stage.
Tutor Notes
- Depending on the examples you choose to use, you could talk about how the type of item procured could impact on the different stages. For example, high risk purchases may require more contract management than low risk purchases, and capital expenditure items such as new machinery may require more attention to the Asset Management stage.
- You could also think about how procurement adds value at each of the stages.
- Study guide p. 79

質問 # 22
What is an electronic system? Describe the following: e-requisitioning, e-catalogues, e-sourcing, e-payment technologies (25 marks)

正解：

解説：
See the solution inExplanation partbelow.
Explanation:
How to approach this question:
- Your response will need 5 definitions. For 25 points that means 5 points per section so think about the level of detail you'll need to include. It would be 5 points for electronic system (i.e. your introduction and conclusion), and then do a paragraph on each of the technologies. In the description you could talk about why it's used and the advantages, and give some examples if you know any.
- Definition of electronic system - a system which uses some form of technology and automates a procurement process than would otherwise have been completed manually.
- E-Requisitioning - a way of ordering goods or services. Includes the use of integrated ordering systems such as: ERP/ ERP II / MRP / MRP II
- E-Catalogue- an electronic display of what goods can be ordered. A simple example of this may be a supplier displaying the goods they offer on their website and the prices to purchase the goods.
- E-Sourcing - this involves the early stages of the tender process- using an electronic portal to find a supplier and / or conduct a tender exercise.
- E-Payment - the P2P part of the cycle (procure to pay) - may involve electronic POs and Invoices, BACS, CHAPS and SWIFT payment systems, and the use of Purchasing Cards Example essay:
Electronic systems, commonly refered to as E-procurement, is the business-to-business or business-to-consumer purchase of goods or services, typically using the Internet or other information/ networking systems such as ERP systems. It has developed in the past 20 years as technology has improved and replaces time-consuming manual processes and is now considered the 'norm'. Electronic systems and e-procurement can be used throughout the entire supply chain- not just between a single buyer and supplier.
Examples of electronic systems including the following:
E-requisitioning
This is often used in manufacturing organisations to order raw materials. An electronic 'bill of materials' is created and stock levels are automatically updated. As materials get used and a pre-determined level is reached, this triggers a new order which is placed via an e-requisitioning system such as MRP. It is a technological version of the traditional kan-ban (2 bin) system. E-requisition tools are often cloud-based. It helps buyers simplify the buying process, track orders and provides higher levels of visibility on spend. The main disadvantage to this technology is that it requires technology interfacing between the buyer and suppler, which may be expensive.
E-catalogues
This is a digital or online version of a catalogue- a document that details what you can buy and at what price.
There are two main types - buy side catalogues and sell side catalogues. A buy-side catalogue is an internal system used by a buyer which hosts a list of pre-approved suppliers from whom purchases can be made. It may include details of commonly bought items and the prices. The use of this reduces maverick spending and ensures consistency in purchases (e.g. whenever lightbulbs need to be ordered, the same lightbulbs are ordered so the office lighting is consistent). A sell-side catalogue is provided by a supplier and details what they offer- it often includes prices, any discounts for bulk buying and may also let buyers know of availability (e.g. the website may say only two items remaining). This may be as simple as a price list on their website, available for anyone to view.
E-sourcing
This is a tool that helps a buyer find the most suitable supplier. Examples include e-tendering websites where a buyer can host a competition to find a supplier. E-auctions are also a type of e-sourcing tool. The tool (often a website) hosts all of the tendering documents and allows for buyers and suppliers to communicate during the tender process (for example if there are any clarifications needed on the specification). Using this tool allows for transparency and equal treatment, but also saves time in completing the tender exercise. PQQs can be automated and some e-sourcing tools include the use of Artificial Intelligence which can 'read' tender submissions and automatically exclude suppliers who do not fulfil the required criteria.
E-payment technologies
These are methods to pay for goods and services that replace the need for cash and cheques. Examples include online bank transfers, electronic Purchase Orders and Invoices and the use of Pre-Payment cards. These act like credit cards for employees to use when they need to buy supplies. For example, if you have a maintenance team that frequently need to purchase low-value items like screws and paint, you could issue the team with a Pre-Payment card with a certain limit (e.g. £500/ month) so they can buy what they need. The company will then automatically be sent a monthly invoice for all of the purchases. This saves time from having to issue the maintenance team with petty cash for the purchases and allows for greater visibility over spend (e.g. how many screws are typically bought per year?). Another typical use is for staff travel.
In conclusion, procurement teams benefit significantly from leveraging electronic tools, including e-requisitioning, e-catalogues, e-sourcing, and e-payment technologies. The adoption of these electronic tools brings about various advantages that enhance efficiency, transparency, cost-effectiveness, and overall effectiveness in the procurement process. Moreover E-procurement tools has helped develop the procurement function into a professional and respected function and allows for a more pro-active rather than reactive approach to purchasing.
Tutor Notes:
- Fun Fact! In the public sector, it is mandated that electronic systems are used in procurement (Public Contract Regulations 2015) as this helps to achieve the objectives of transparency and equal treatment. Where manual systems are used, it is easy to manipulate the tender process. For example, a buyer could read some tender submissions before the deadline for submission and no one would know, but with an electronic system this is impossible as it locks evaluators out until the deadline has passed and all bidders have submitted their responses. (note PCR 2015 is being replaced in 2024- details are still TBC but the above fun fact will still remain in the new legislation- they're definitely still going to make it compulsory).
- You could also mention the names of systems if you know any. For example, e-sourcing tools include MyTenders.com and Delta E-Sourcing. PO / Invoice systems include Sage, Xero and QuickBooks.
- The question doesn't ask for advantages of using these technologies but you could mention this in your answer. Just be sure that this isn't the focus of your response- the question asks specifically for you to DESCRIBE the systems so detailedExplanation:s and examples are where you will secure the most points.
- p.108

質問 # 23
Describe the main differences between the three economic sectors: public, private and third. Your answer may make reference to the following: funding, ownership, shares, objectives and administration (25 marks)

正解：

解説：
See the solution inExplanation partbelow.
Explanation:
How to approach this question
- Sometimes CIPS give you a steer on how to answer the question. My advice is to follow it. The question says you MAY make reference to the following, but I'd use those hints as a guide for content- a paragraph on each and you're done!
- When you've got a 'may make reference to' hint - this means you can completely ignore it and do your own thing and bring in your own ideas. May means it's optional, so you wouldn't be penalised for this. However, you have to consider the examiner's mark scheme- it will detail options of stuff you can write for funding, ownership etc. Then there will be a line at the bottom saying something like 'accept other options such as x and y'. This leaves it up to the examiner to decide whether what you've said is relevant. I'd personally not leave it up to chance you get a lenient examiner. If you write what's definitely going to be on their mark scheme, you're more likely to get more points.
Example Essay
The modern economy is a complex tapestry of various sectors, each with its own distinct characteristics and functions. The three prominent sectors are the public sector, the private sector, and the third sector. These sectors differ significantly in terms of their funding mechanisms, ownership structures, objectives, the concept of shares, and their administration.
Firstly, the public sector is predominantly funded by the government through taxation, grants, and other forms of public revenue. Its very existence hinges on the provision of essential services and the fulfilment of societal needs. These organizations are owned by the government, be it at the federal, state, or local level. Unlike the private sector, the concept of shares doesn't apply in the public sector. Instead, the government allocates budgets to various departments and agencies for public services and projects. The primary objectives of the public sector revolve around the welfare of the citizens, including the provision ofeducation, healthcare, defence, and infrastructure. It is characterized by bureaucratic administration, with decision-making processes subject to governmental regulations and oversight. A prime example is public schools and healthcare systems, which are funded and operated by the government with the primary objective of ensuring universal access to education and healthcare services.
In contrast, the private sector operates on a starkly different paradigm. It is primarily funded by private capital, investment, and profit-seeking activities. Private individuals and corporations own these entities, with ownership shares often represented by stocks. Shareholders invest capital in exchange for ownership stakes and the potential for dividends. The central objective in the private sector is profit maximization, driven by competition in the market. Companies in the private sector are administered by management teams and boards of directors, with decisions guided by market forces. Apple and ExxonMobil are examples of private sector entities, privately owned and publicly traded, with profit motives at their core. Shareholders invest in these companies with the expectation of financial returns.
Lastly, the third sector, often referred to as the nonprofit or voluntary sector, represents a unique economic sphere. It relies on a combination of funding sources, including donations, grants, and earned income, but not taxation. Third sector organizations are not owned by individuals or shareholders; instead, they are governed by boards of directors or trustees. Unlike the private sectors, shares are not applicable in the third sector. These organizations do not seek to distribute profits to owners. The primary objective of the third sector is to serve a social or community purpose, such as addressing societal issues, promoting social change, and providing services that benefit the public. Administration in this sector is overseen by non-profit boards, and it heavily relies on volunteers, philanthropy, and community engagement. For example, the Red Cross operates with the objective of providing humanitarian aid and disaster relief, relying on donations and volunteers to fulfil its mission. Any profits that are made are reinvested into the organisation to further its mission.
In conclusion, the public, private, and third sectors represent diverse economic domains, each with its own funding mechanisms, ownership structures, objectives, and administrative models. These sectors play essential and complementary roles in society, contributing to economic development, public welfare, and social progress. Together, they form the foundation of a balanced and dynamic economic landscape.
Tutor Notes
- I've structured this essay with a paragraph on each sector, but you could have done a paragraph on each theme, thus having 5 paragraphs instead of 3. Either approach works.
- You've got 5 things and 3 sectors, that equals 15 marks. If you give an example of each and a strong intro and conclusion, that's full marks.
- See LO 4.1 p. 203 - there's a cute table with this information on.

質問 # 24
Explain, with examples, the three different ways one can categorise procurement spend: direct vs indirect, capital expenditure vs operational expenditure and stock vs non-stock items. (25 points)

正解：

解説：
See the solution inExplanation partbelow.
Explanation:
The knowledge to remember:
A table with text on it Description automatically generated



Essay Plan :
Remember to include examples for each of the six categories of spend. This is specifically asked for in the question so it's important to include as many examples as you can. To do this you could take an example organisation such as a cake manufacturer and explain which of their purchases would fall into each category and why.
Introduction - explain why procurement categorises spend
- Direct - these are items that are incorporated into the final goods (the cakes) so would include raw materials such as flour, eggs, sugar etc
- Indirect - these are items that the company needs, but don't go into the end product. For example, cleaning products and MRO supplies for the machines
- Capital Expenditure- these are large one-off purchases, such as buying a new piece of equipment such as a giant oven to cook the cakes.
- Operational Expenditure - these are purchases that are required to ensure the business can function day-to-day. They may include PPE for the workers in the factory and cleaning equipment
- Stock items - these are items procured in advance and held in inventory until they are needed. In a cake manufacturing factory this could be PPE for staff such as hairnets and gloves. The organisation will buy these in bulk and keep them in a stock cupboard, using these as and when they are required
- Non- stock items - items that are not stored and used right away. An example would be eggs- these will need to be put directly into the cakes as they would go off if bought in advance.
Conclusion - the categories are not mutually exclusive - an item can be direct and operational, or indirect and stock. Different companies may use different systems to classify items of spend.
Example Introduction and Conclusion
Introduction
Procurement categorizes spend to efficiently manage resources and make strategic decisions. Three primary ways of categorizing procurement spend include distinguishing between direct and indirect spend, classifying expenditures as capital or operational, and categorizing items as stock or non-stock. These distinctions aid organizations in optimizing their procurement strategies for better resource allocation.
Conclusion:
In conclusion, categorizing procurement spend into direct vs. indirect, capital vs. operational, and stock vs.
non-stock items is essential for strategic resource management. While these categories provide a structured framework, they are not mutually exclusive, as an item can fall into multiple categories. For example, an item may be both direct and operational or indirect and stock. The flexibility of these categories allows organizations to tailor their procurement strategies based on their specific needs, ensuring efficient resource allocation and effective supply chain management. Different companies may adopt varying categorization approaches depending on their industry, size, and operational requirements.
Tutor notes:
- Because you've got 6 categories of spend to talk about you're only going to need 3-4 sentences for each.
Providing you've said the category, explained what it is and given one example, you'll absolutely fly through this type of question
- You could also mention that it is useful to use categories of spend as this helps with budgeting. Different categories may also have different processes to follow for procuring the item (this could form part of your introduction or conclusion).
- This subject is LO 1.3.2 it's quite spread out in the text book but the main info is on p.49
- Note- different companies/ industries classify items of spend differently. Particularly packaging and salaries.
Some say they're direct costs and some say they're indirect costs. Honestly, it's a hotly debated subject and I don't think there is a right or wrong. I'd just avoid those two examples if you can and stick to ones that aren't as contentious like eggs and PPE.

質問 # 25
Explain what is meant by Corporate Governance and why having Corporate Governance structures is important. Discuss 2 obstacles which may impede an organisation achieving high levels of Corporate Governance. (25 points)

正解：

解説：
See the solution inExplanation partbelow.
Explanation:
- Firstly start with a definition of Corporate Governance - this means the rules, policies, processes and organisational structures that ensure an organisation adheres to accepted ethical standards, good practices, the law and regulations. It's the systems put in place which directs and controls organisations to do 'the right thing'.
- Then move on to discuss why having this is important - I'd maybe think of 3-4 examples here such as:
protects the interest of shareholders, reduces risk, moral obligations, legal obligations
- The last part of your essay should talk about the 2 obstacles - describe two from the following list: lack of executive support, poor stakeholder co-operation, lack of clarity and / or resources, having poor IT systems, lack of co-ordination of procurement responsibilities. Because you're only talking about 2 here, you'll need to go into detail about them. So pick 2 you know well. Don't be tempted to talk about more than 2. You won't get extra marks.
Example Essay:
Corporate governance refers to the system of rules, practices, processes, and structures by which a company is directed and controlled. It encompasses the relationships among a company's management, its board of directors, shareholders, and other stakeholders. The primary objective of corporate governance is to ensure that the company operates in an ethical, transparent, and accountable manner, safeguarding the interests of shareholders and promoting long-term value creation. Corporate governance can be defined internally (by shareholders/ managers) or externally (by governments and international standard-setting bodies such as ISO) and is important for all organisations Corporate governance is needed because you can't assume everyone will act ethically- rules and procedures need to be written down and the organisation needs to have recourse for dealing with behaviour that falls outside of what is accepted. Procurement's role in Corporate Governance includes control over finance and expenditure, ensuring the supply chain is 'clean' (i.e. not involved in unethical business practices such as child labour) and risk management.
Why having a corporate governance structure is important:
1) The procurement department has a 'stewardship' role - it controls large sums of organisation's funds. There are many opportunities to commit fraud, make unethical or biased decisions so it's important that there are corporate governance structures in place to prevent this. It protects the organisation from individuals with bad intent, scandal, and legal repercussions.
2) Strong Corporate Governance is required to successfully manage a supply chain. It's important to ensure good relationships- suppliers need to see you as a 'good customer'. If your organisation is seen to be unethical or underhand, suppliers may not want to work with you.
3) Financial impact - where corporate governance isn't implemented, there may be financial costs for the organisation. For example, in the Public Sector if a supplier successfully challenges a tender award, the buyer may have to award the value of the tender - so there's financial impact on a company if corporate governance isn't followed.
Obstacle 1 - lack of senior management support
Unless there is buy-in from the senior leadership team it will not be possible for departments such as Procurement to implement sound Corporate Governance procedures. Corporate Governance needs to be directed from the top of an organisation to ensure all departments and staff give importance to this. If Senior Leadership are seen not to care about implementing or following Corporate Governance, other staff won't care either. They need to lead by example to ensure the whole organisation 'buys into' the processes.
Obstacle 2 - Poor IT infrastructure.
For Corporate Governance to be effective, an effective IT system must be implemented. For example, to avoid fraud it's not just necessary to have a written anti-fraud policy, there must be ways of checking that fraud isn't being committed. The way to do this is to have an effective IT system which can flag anomaly payments and procurement activities outside of what is considered 'normal'. Therefore, having a poor IT infrastructure is a barrier to effective Corporate Governance.
In conclusion, corporate governance is essential for building trust among stakeholders and contributing to the overall success and sustainability of a company. Effective governance structures and practices instil confidence in investors, enhance the company's reputation, and foster a culture of responsibility and accountability throughout the organization. Good corporate governance is a cornerstone of sound business management and contributes to the long-term prosperity of the company.
Tutor Notes
- Corporate Governance became a big thing in the 70s and 80s following high profile scandals and the collapse of several companies. Investors were concerned about what companies were doing which led to increased control on the powers of directors and greater transparency of corporate actions.
- Examples of Corporate Governance. Enron is a good real life example you could use: Impact of Bad Corporate Governance - Corporate Fraud and Corruption: A Holistic Approach to Preventing Financial Crises (ebrary.net)
- This is a really good real-life example of Public Sector procurement gone wrong: Flawed nuclear tender sees
£100m payout to firms - BBC News
- Adding in some real life examples will take your essay from a Merit result (50-70%) to a Distinction (70% +)
- Another way this topic can come up as a question is describing the elements of corporate governance, or asking what a procurement manager should do when corporate governance is broken/ not followed.
- LO 3.1 p.117

質問 # 26
Sarah has recently been hired as the new Head of Procurement at Alpha Ltd, a manufacturer of small electronics such as hairdryers and alarm clocks. Alpha Ltd has a large factory based in Birmingham where many of the products are manufactured. One of the large pieces of machinery in the factory has recently broken and Sarah has been charged with replacing it as quickly as possible. Sarah is considering using the Whole Life Costing approach to this procurement. What is meant by Whole Life Costing? (5 points). Discuss
5 factors that Sarah should consider when buying new machinery (20 points).

正解：

解説：
See the solution inExplanation partbelow.
Explanation:
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)

質問 # 27
What is the purpose of a CSR policy? What elements should it contain and how can a buyer evaluate a potential suppliers CSR policy? (25 points)

正解：

解説：
See the solution inExplanation partbelow.
Explanation:
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

質問 # 28
Describe the main characteristics of, and differences between, procuring goods, services and construction works (25 points)

正解：

解説：
See the solution inExplanation partbelow.
Explanation:
- there are a lot of components to this question so I would take a good 5 minutes to write out some bullet points on the characteristics of each one, and on some differences. Then from your notes make this into an essay. The mark scheme isn't 100% clear on how many characteristics and differences you need to name, so try and keep an equal split between the two areas. You would probably need 2-3 characteristics of each, and 3 differences for a good score.
- Characteristics of goods: tangible, homogeneous, items tend not to perish quickly, can be stored
- Characteristics of services: intangible, heterogenous, inseparable (produced and consumed at the same time), no transfer of ownership, perish upon use (i.e. cannot be stored)
- Characteristics of construction work: project-based procurement, includes procuring both goods and services, complex procurement which has its own set of regulations (CDM2015).
- Differences between these
1) goods are not usually outsourced and services can be.
2) Complexity of the supply chain (goods and construction may have a complex supply chains, but service contracts usually only involve 2 parties).
3) Timescales - construction work has a designated timescale but procurement of goods could be a one off or long-term contract, services is usually a long-term contract.
Example Essay
Introduction:
Procurement is a multifaceted field, and understanding the nuances between procuring goods, services, and construction works is pivotal for effective management. This essay explores the main characteristics that differentiate these categories.
Tangible / Intangible:
Goods are tangible items that can be physically seen and touched. For instance, raw materials like wheat and sugar in a manufacturing organization are tangible goods. On the other hand, services are intangible-though the results can be observed, the service itself cannot be touched. An example is a cleaning contract for a factory; while the effects of the cleaning are visible, the service itself remains intangible. Construction is usually a mixture of tangible and intangible procurement; the tangible is the construction materials such as bricks and windows, and the intangible aspect is the labour to complete the project.
Heterogeneous / Homogeneous:
Goods are generally homogeneous, meaning they are always the same. For example, steel purchased for manufacturing purposes will always be the same. In contrast, services areheterogeneous, varying each time they are rendered. Customer service, for instance, is inherently different each time due to the dynamic nature of customer interactions. Construction could be either heterogeneous or homogeneous depending on the project - is it a one off unique building, or is it a large housing estate of same-build properties?
Transfer of Ownership:
When goods are procured, there is a transfer of ownership. The product becomes the property of the buyer upon delivery and payment. In contrast, services do not involve a transfer of ownership as there is no physical entity to transfer. In construction the transfer of ownership is extremely complex and varies depending on the project. Usually the buyer will retain ownership of the land throughout the project, but on some occasions the construction company may take ownership for insurance purposes.
Storable (Separable/ Inseparable):
Goods are storable, allowing for purchase on one day and use on another. For example a factory can buy in plastic to be used to manufacture toys and this is stored in inventory until the time comes to make the toys.
However, services are consumed at the point of purchase, making them inseparable. The service is bought and utilized simultaneously. Services cannot be stored. This is the same for construction.
Ability to Outsource:
Goods are rarely outsourced, as they are typically purchased directly from suppliers. Services, on the other hand, can be easily outsourced-examples include outsourcing finance, cleaning, or security services.
Construction works are commonly outsourced, with external companies hired to execute projects.
Complexity of the Supply Chain:
Service contracts often involve a simple two-party relationship between the buyer and the supplier. Goods and construction, however, may have complex supply chains. For example, procuring a pen involves a supply chain with various steps, including the raw material supplier, manufacturer, and possibly a wholesaler.
Construction works often feature a tiered supply chain with subcontractors playing crucial roles.
Construction as a Hybrid:
Construction procurement represents a hybrid, incorporating elements of both goods and services. It involves hiring a service, such as a bricklayer for laying bricks, while also procuring the tangible goods-bricks.
Separating goods from services in construction is challenging, as they are often intertwined, and both aspects are paid for simultaneously.
Conclusion:
In conclusion, distinguishing between the procurement of goods, services, and construction works is essential for effective supply chain management. The tangible or intangible nature, heterogeneity, transfer of ownership, storability, outsourcing potential, and supply chain complexities offer a comprehensive framework for understanding the unique characteristics of each category. Recognizing these distinctions empowers organizations to tailor their procurement strategies to the specific challenges and dynamics associated with goods, services, and construction works.
Tutor Notes
- What a characteristic is can also be a difference. So for example you can say tangible is a characteristic of goods but tangibility is also the main difference between goods and services. So don't worry too much about which order to write stuff in, or doing clear sections for this type of essay. It all comes out in the wash.
- Other differences in procuring these include:
- Costs: procuring goods such as stationary for an office will be low-cost so may not require approval, but a service contract may require management sign off. Procuring construction projects tend to be huge sums of money
- Where the budget comes from: goods and services may be operational expenditure and construction works capital expenditure.
- The level of risk involved in the procurement: goods tends to be quite low risk and construction high risk.
- Types of contract involved: procuring goods may be very simple and just require a PO, services is more complex so may require a formal contract or Deed of Appointment. Construction projects will require a contract due to the high value and high risk of the purchase
- Legislation - Goods = Sale of Goods Act, Construction - CDM Regulations 2015. Construction is much more heavily regulated than services or goods. Note CDM regulations isn't part of CIPS. It's occasionally referenced in various modules but you don't have to really know what it is. Just know it's the main legislation governing the construction industry. Construction - Construction Design and Management Regulations 2015 (hse.gov.uk)
- Study guide LO 1.3.1 p. 40, but mainly p. 52 for services. NOTE the title of this learning outcome includes construction and it is hardly mentioned in the study guide. Most of the above information on construction comes from my own knowledge rather than the book.

質問 # 29
What is meant by a structured procurement process? (10 marks) Why is this important? (15 marks).

正解：

解説：
See the solution inExplanation partbelow.
Explanation:
- Definition of 'structured procurement process' - when an organisation provides a sequence of actions / steps to take to get the outcome (the procurement of an item). This involves an organisation providing guidelines and instructions of how things should be done. Basically following a step-by-step process.
- Why this is important - Ensures all tasks that need to be done are done, maintains consistency, prevents conflict and suboptimal behaviour, improves efficiency, better managerial control, compliance (with laws and standards), assists with continuous improvement, may result in time/ cost savings, reduces risks such as fraudulent spending.
Example essay:
The first part of the question is worth 10 points, so you could include a few of the following points. It would also be good to include examples:
- Structured procurement involves creating rules on how procurement should be done
- This is in contrast to reactive / maverick spending
- May come about due to company policy, external regulations or through trying to achieve Competitive Advantage
- Examples include an organisation having set procedures for ordering items of different spend- e.g.
Procurement Assistants can purchase items up to £500. Items between £500-£1000 require a manager's approval and anything over £1000 requires a written Business Case in order to procure
- Structures Procurement Processes will usually also include the use of a designated e-procurement tool. E.g.
an organisation may insist that all tenders use a certain online system and that invoices are sent via X system within 30 days.
The second part of the question is worth slightly more points, so spend more time on this. You could put each of the reasons why it is important in a separate paragraph. Also use examples where you can;
- Ensures all tasks that need to be done are done- having structured processes means having a step-by-step guide to how to procure. This means activities are well co-ordinated and there are no gaps, no duplications of effort and no conflicting efforts. It may involve assigning different people in the team different roles e.g.
someone makes the requisition and someone else approves it. It also means that nothing is forgotten.
- Maintains consistency- having standardised processes means each procurement exercise follows the same process. This may include using a standard template for a requisition or ITT. Where there is consistency, this results in time being saved and less mistakes being made as everyone (including supply partners) is familiar with the processes.
- Prevents conflict and suboptimal behaviour- in organisations that use structured procurement processes everyone does the same. This means there is no conflict (e.g. one person doing things one way and another person does it differently and arguing which way is best). It also means no one can do procurement 'wrong' - there are written guides and procedures to follow. This is particularly helpful for new starters.
- Efficiency - time and money can be saved where there are standard procedures as people don't have to plan each procurement activity individually. Structured Procurement Processes may also involve completing bulk orders and co-ordinating activity within the organisation which means less orders are placed over the year and efficiency savings can be made. For example, a factory may create an order of cleaning products once a quarter, compared to ordering products just as and when they are required. This will save time of the procurement department overall throughout the year and allows them to focus on other more value-adding tasks.
- Better managerial control - Managers have more oversight when using structured procurement. There are clear rules as to when managers need to be involved and provide sign-off. This visibility makes it easier for managers to make decisions and allows for early intervention where someone needs assistance. It will reduce maverick spending and fraudulent spending. For example, it is much harder to provide kick-backs to suppliers when there are clear processes and audit trails and managers have visibility over all processes.
- Compliance (with laws and standards) - particularly in the Public Sector there are rules and regulations regarding procurement practices. Using standardised processes allows organisations to demonstrate compliance with appropriate legislation. It also protects them from 'challenge'. This is when a bidder who is unsuccessful challenges the decision to award a contract to someone else. Using a structured procurement process allows the organisation to demonstrate that they procured the item correctly and the challenge is unfounded.
Tutor Notes
- This topic isn't as well explained in the new study guide as it used to be. It's all pretty obvious stuff but the language is slightly different. The guide now talks about 'compliance with processes' and the benefits this brings. Which is exactly the same as why do you follow a structured process. This is on p. 114.
- If you're feeling clever, you could mention the difference between Public and Private Sector- e.g. a private organisation may use standardised processes for efficiency and cost savings, whereas a public sector organisation may use it more for compliance purposes.

質問 # 30
Describe what is meant by the 5 Rights of Procurement (25 points)

正解：

解説：
See the solution inExplanation partbelow.
Explanation:
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.

質問 # 31
Describe the CIPS Code of Conduct providing examples of how an organisation can ensure compliance with the standard (25 points)

正解：

解説：
See the solution inExplanation partbelow.
Explanation:
How to approach this question:
- This is the type of question you either know or you don't. You can't really guess it. So do memorise it.
There's not really a shortcut here.
- The CIPS Code of Conduct is an ethical standard and framework which is used profession-wise. The purpose is to standardise ethics across the profession.
- There are 5 aspects to the Code of Conduct: enhance and protect the standing of the profession, promote the eradication of unethical business practices, maintain integrity in all business relationships, enhance proficiency and stature of the profession and ensure full compliance with law and regulations.
Example Essay:
The Chartered Institute of Procurement & Supply (CIPS) Code of Conduct is a comprehensive set of principles and standards that guide the ethical conduct of procurement and supply professionals. Adhering to this code is crucial for maintaining integrity, transparency, and responsible behaviour within the procurement profession. Here's an overview of the CIPS Code of Conduct along with examples of how organizations can ensure compliance with these standards:
1 - Enhance and protect the standing of the profession.
This means don't bring the profession into disrepute by your actions, don't accept gifts or offers of hospitality and to be aware that behaviour outside work reflects one's reputation as a professional. An organisation can implement training programs to educate procurement professionals about the importance of maintaining high standards of professionalism and integrity in their interactions with suppliers and stakeholders.
2 - Promote the eradication of unethical business practices.
This means fostering awareness of human rights, fraud and corruption issues in business relationships, responsibly managing business relationships if unethical practices come to light, undertaking due diligence (in respect to forced labour, fraud, corruption) and continually develop one's own personal knowledge of ethical issues. Promoting the eradication of unethical business practices requires a comprehensive and proactive approach from organizations. This involves having a strong CSR policy, having whistleblowing protection and reporting mechanisms, and conducting due diligence on the supply chain.
3 - Maintain integrity in all business relationships.
An organisation can show compliance with this by; rejecting improper business practices, never using authority for personal gain, declaring conflicts of interest, giving accurate information, not breaching confidentiality, striving for genuine, fair and transparent competition and being truthful about skills and experience. An example of this is for an organisation to sever ties with unethical businesses. One notable example of a retailer terminating a relationship with a supplier due to ethical reasons is the case of H&M and its decision to cut ties with a Chinese yarn producer in Xinjiang province. H&M, a global fashion retailer, announced in early 2021 that it would no longer source cotton from Xinjiang due to concerns over forced labour and human rights abuses associated with cotton production in the region.
4 - Enhance proficiency and stature of the profession.
Activities which would demonstrate compliance with this includes: Continual development of knowledge and skills, fostering the highest standards of competence in staff members at the organisation and optimising the responsible use of resources. For procurement staff, this could involve becoming MCIPS qualified, and even once qualified, completing routine CPD (Continued Professional Development) to ensure their knowledge and skills remain updated and relevant. They should also strive to share their knowledge with the wider organisation.
5 - Ensure full compliance with law and regulations.
An organisation can demonstrate compliance with the standard by proving they: follow the law in all countries they do business in, fulfilling all contractual obligations and following the CIPS guidance on professional practice. Compliance can include aspects of fiduciary responsibility such as paying the correct level of tax and filing returns on time, as well as compliance to legislation such as the Health and Safety at Work Act 1974 and the Equalities Act 2000.
In conclusion, the CIPS Code of Conduct is a voluntary standard for organisations to follow but it sets a high standard for the industry. By following the CIPS Code of Conduct organisations can enhance their reputation and levels of trust among stakeholders, as well as being reassured that following these clear ethical guidelines contribute to a positive workplace culture, boosting employee morale and commitment by fostering a sense of shared values.
Tutor Notes:
- Under the previous syllabus CIPS asked this question a lot. If you memorise one thing from the study guide I'd recommend it be this. Even if it doesn't come up as a stand-alone question, you can work it into more general essays about ethics- so it is useful to know.
- For a top score, try to give deep examples. So where you have said 'responsibly managing business relationships' you could explain what this means in practice- by ensuring fair contract terms are put in place, holding suppliers to account when they do something wrong and not exploiting smaller suppliers. Where you have said 'complete Due Diligence' you could mention that this would be completed before awarding a contract to a supplier and would involve looking at a supplier's history and supply chain to ensure that they have not been involved in any crimes (fraud etc) or unethical behaviour (such as polluting the environment).
The more in depth you go, the more you show the examiner your understanding, and the higher you'll score.
- p. 137 or here: Cips Code of Conduct | CIPS Note the study guide talks on p. 132 about the CIPS Code of Ethics, which is slightly different. The Code of Conduct is the main one to learn.

質問 # 32
Explain the impact that having a Corporate Governance Framework can have on the policies and processes of the procurement department (25 points)

正解：

解説：
See the solution inExplanation partbelow.
Explanation:
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)

質問 # 33
Discuss the importance and role of an organisation's branding in procurement and supply operations (25 marks)

正解：

解説：
See the solution inExplanation partbelow.
Explanation:
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.

質問 # 34
......

L4M1テスト問題練習は2024年最新のに更新された42問あります：https://www.goshiken.com/CIPS/L4M1-mondaishu.html

更新されたプレミアムL4M1試験エンジンPDF：https://drive.google.com/open?id=1cSTdQ56zL207ZLECSyngth0lon-Y9Aaa