Question 1:

Tasks

Compose a report that is to be considered by your Board of Directors, which evaluates:

(a) The opportunities for the procurement and supply function to create savings or efficiencies or other sources of added value

(b) How the profile of the function can be improved

(c) How collaboration can be created with stakeholders to increase early engagement in the procurement process

(d) The need for organizational policies and procedures to implement effective procurement and supply

Guidance

Your report should consist of approximately 1,500 words and should include a title, your candidate number, contents page, executive summary, references and a bibliography. Any source materials such as web sites, reports, articles, market data, journals or texts should be referred to in your references or bibliography.

The following content from the Practitioner syllabus can be used to answer this assessment (overleaf):

• The different terms that relate to procurement and supply, supply chain management and logistics

• The roles and benefits of procurement and supply in organisations

• How effective procurement impacts on profitability or creating savings and efficiencies for the organisation

• The typical proportion of costs accounted for by the procurements of goods and services

• Internal and external customers and their priorities for procurement and supply

• The inputs that internal and external stakeholders can make in procurement and supply

• The conflicts of interest that can exist in the work of procurement and supply and how to deal with them

• The different objectives of a procurement and supply function

• Achieving the triple bottom line benefits of sustainability (economy, environment, social development) through purchased goods and services and promoting responsible procurement through effective procurement and supply

• The documentation typically used in procurement and supply

• The use of documented policies and procedures for the work of procurement and supply

• The need for approvals in the administration of requisitions, orders and invoices

• The use and roles of ethical codes in procurement and supply The principles of corporate governance that applies to procurement and supply

• The use and purposes of financial budgets that impact on procurement and supply

• The relationship between achieving compliance with processes and the achievement of outcomes that bring added value
This assessment helps you achieve the following capabilities:

• Advocate the roles of procurement and supply, supply chain management and logistics to colleagues and across the organisation

• Communicate the roles and benefits of effective procurement and supply to colleagues and across the organisation

• Evaluate how effective procurement can contribute to improving profitability or creating savings and efficiencies for the organisation

• Assess the typical proportion of costs and budgets accounted for by the procurements of goods and services

• Consult with stakeholders that input into procurement and supply decisions to ensure the achievement of value for money outcomes in the work of procurement and supply

• Deal effectively with conflict that may arise with stakeholders to ensure the objectives of procurement and supply are prioritised

• Promote commitment amongst colleagues and stakeholders to achieving the objectives sought by a procurement and supply function

• Monitor that purchased goods and services comply with the standards set for achieving sustainable outcomes and take appropriate actions to address any issues

• Advise colleagues and personnel across the organisation of the use of different documents used in procurement and supply explaining their relevance, importance and benefits

• Advise stakeholders and internal customers on the interpretation of procedures for procurement and supply explaining their relevance, importance and benefits

• Ensure that internal customers or stakeholders obtain approvals for the commitments to requisitions, orders and invoices

• Monitor the work of stakeholders to ensure that the codes of ethics in procurement and supply are upheld and report deviations from agreed standards

• Explain the main principles of corporate governance that applies to the organisation's procurement and supply function

• Advise stakeholders on the impact of expenditures with suppliers on the creation and management of financial budgets

• Assess the importance of compliance with organisational processes and simultaneously identify opportunities for achieving added value solutions with suppliers, internal customers or stakeholders

Question 2:

You are required to select an example of a category of procurement of a product, service or works bought by your organisation.

You are required to:

(a) Research the market of your chosen category and review its size, scope and extent of competition

(b) Summarise the demand and supply factors that impact on the chosen category of procurement

(c) Explain the current pricing mechanism applied to the category and assess the factors that impact on the pricing of the category

Guidance

This section of your work should consist of approximately 1,500 words and should include a title, your candidate number, contents page, executive summary, references and a bibliography. Any source materials such as web sites, company reports, indices, market data, articles, journals or texts should be referred to in your references or bibliography.

Syllabus Coverage

The following content from the Practitioner syllabus can be used to answer this assessment:

• How markets can be defined in terms of size, scope and stages of development

• The levels of industry competition such as perfect competition, imperfect competition, oligopoly, duopoly and monopolies

• How demand and supply factors impact on organisations in the supply chain

• The impact of market change can have on organisations

• Analytical tools to explain the impact of the external environment on organisations in supply chains

• How macro economic factors such as interest rates, inflation, exchange rates and the level of economic activity (GDP/ GNP) impacts on organisations

• The use of portfolio matrices to assess categories of expenditures and perceptions of the organisation by suppliers

• The main types of pricing arrangements in commercial agreements

• The breakdown between direct and indirect costs

• Types of published data that can provide information on costs and prices

• Published reports and indices on markets

• The comparison of quoted prices to historical data

• The link between costs, prices, margins and mark ups

• Negotiating improved prices/ Estimating whole life costs

This assessment helps you achieve the following capabilities:

• Identify the types of markets served by the organisation, its suppliers and customers so that decision making can improve the performance of the organisation

• Analyse the competitive forces and trends that influence markets that the organisation, its suppliers and customers operate in and appreciate the balance of power in commercial relationships

• Assess the impact of changing demand and supply factors on the organisation, its suppliers and customers

• Evaluate the impact of market change on the pricing and availability of products and services to make decisions to improve performance

• Assess the impact of interest rates, inflation, exchange rates and the level of economic activity (GDP/ GNP) on pricing and availability of products and services

• Apply portfolio analysis techniques to assess relationships in supply chains and develop plans for their improvement

• Monitor pricing arrangements in commercial agreements to ensure effective price and cost management for the organisation with its supply chain

• Use relevant sources of information to estimate the breakdown of costs between direct and indirect costs for purchased goods and services to ensure the effective management of costs and prices

• Research market data and use to estimate current and future prices and costs for purchased goods and services

• Use published sources of information to agree variations in pricing for purchased goods and services to ensure the effective management of costs and prices

• Compare historical prices with newly quoted prices and evaluate the reasons for any significant discrepancies to negotiate competitive prices

• Analyze the whole life costs of purchased goods or services and take actions to reduce or avoid on¬going costs