CIPS Exam GuidanceUnit content guide Advanced diploma in purchasing and supply The units that make up the award are: • Management in the purchasing function • Risk management and supply chain vulnerability • Improving supply chain performance Plus a choice of two optional units: • • • • • • Marketing for purchasers Storage and distribution Operations management in the supply chain The machinery of government Contracting in the public sector Sustainable procurement Revised content
September 2009 The content (including references, names and acronyms) are correct at the time of publication, June 2009. Copyright CIPS © Advanced diploma in purchasing and supply Introduction The Chartered Institute of Purchasing & Supply qualifications ladder has six levels of awards. For details of the entry requirements for each level, please refer to www. cips. org The CIPS Advanced diploma in purchasing and supply is a Level 5 higher level qualification.
It has been accredited by the Office of Qualifications and Examinations Regulator (Ofqual) and appears on the National Database of Accredited Qualifications (NDAQ). Please refer to www. accreditedqualifications. org. uk The Level 5 Advanced diploma in purchasing and supply consists of three compulsory units. Additionally you must choose two optional units from a choice of six including Sustainable procurement optional unit, launched in September 2009 with first assessment in November 2009. A measure of the amount of input time required to achieve the qualification. This includes lectures, tutorials and practicals, as well as supervised study in, for example, learning centres and workshops. ” You will find that study centres vary on the exact format for delivery of the Assessment for each unit is by study programme. Additionally CIPS examination with the exception of the would recommend that you also Improving supply chain performance commit 80 hours per unit of selfwhen there is a choice for students in study, including wider reading of the the UK.
If your study centre has been subject areas and revision to give approved you can choose either a yourself the best chance of closed book examination or a worksuccessful completion of the award. based assessment. Below is a list of the units, their NDAQ If you wish to study for this award it is reference numbers and CIPS reference expected that you will undertake 50 code which is used to identify the unit guided learning hours per unit, ie a for examination purposes. total of 250 guided hours. The definition of guided learning hours is:
LEVEL 5 – ADVANCED DIPLOMA IN PURCHASING AND SUPPLY NDAQ QUALIFICATION NUMBER 100/6113/7 Management in the purchasing function Risk management and supply chain vulnerability Improving supply chain performance Plus choose two options Marketing for purchasers Storage and distribution Operations management in the supply chain The machinery of government Contracting in the public sector Sustainable procurement K/500/1713 M/500/1714 T/500/1715 F/500/1717 J/500/1718 L/500/1719 D/500/5371 H/500/5372 CIPS ref code L5-01 CIPS ref code L5-02 CIPS ref code L5-03 CIPS ref code L5-10 CIPS ref code L5-11 CIPS ref code L5-12 CIPS ref code L5-13 CIPS ref code L5-14 CIPS ref code L5-15 1 Advanced diploma in purchasing and supply Glossary of terms Assessment Assessment is the way in which CIPS will measure whether or not a student is able to demonstrate their knowledge, understanding and ability to apply their learning in any given situation. An assessment could be an examination, assignment or project. Business essentials These are commonly occurring themes through the CIPS qualifications, that do not warrant a unit in their own right, but that are important holistically to the learning undertaken within CIPS qualifications. They are areas of importance, nnovation and some emerging themes, such as: • Quality management • International issues • Business finance • Information management • External factors. Command words Command words are generally verbs that are used to indicate the level of learning undertaken. They tend to be hierarchical in nature. For example, at Level 3, a command word will be ‘demonstrate’ or ‘explain’, whereas a command word at Level 6 will be ‘synthesise’, or ‘critically evaluate’. These words reflect the level of complexity of your learning and ultimately your assessment at that level. Compulsory units These are units that you must take either through CIPS or an alternative awarding body that constitute necessary knowledge and understanding to fulfil learning requirements for CIPS qualifications.
If you have undertaken equivalent learning or have equivalent related experience to the compulsory units from somewhere else you may either be exempt from learning, or gain accreditation for prior learning or experience. Entry level This is the point at which you will enter the CIPS qualifications ladder. This entry will be based upon prerequisite knowledge, understanding and experience. Exemptions Students who have successfully completed certain post-school studies may apply for exemptions from equivalent courses in their programme of study. To earn an exemption from either levels of qualifications or option units within qualifications you should contact CIPS or see www. cips. rg Please note that gaining an exemption, does not mean that you gain an exit award at that level, rather that you bypass that level of learning because of equivalent learning and achievement gained elsewhere. 2 Exit award An exit award is in essence a qualification. CIPS has six exit awards in total • Introductory certificate in purchasing and supply • Certificate in purchasing and supply • Foundation diploma in purchasing and supply • Advanced diploma in purchasing and supply • Graduate diploma in purchasing and supply • Executive diploma in purchasing and supply. For each qualification you study, you will receive a certificate of achievement confirming your exit award.
Indicative content The knowledge required in order to fulfil the learning objectives and achieve the learning outcomes – in other words what you need to know. Integrative units Integrative units are intended to help students see connections between all aspects of their learning within a particular level of qualification. For the purpose of CIPS qualifications, awards at levels 3 and 6 will have an integrative unit. Learning objectives Determines the level of learning you must undertake in order to achieve the learning outcomes. Level The level determines the complexity of learning, the depth of learning and the comparison of learning with other qualifications. CIPS has qualifications at levels 2 to 7.
The levels are as follows: • Level 2 Introductory Level – this is for somebody new to the purchasing and supply profession and often in a junior capacity • Level 3 Junior technical – also potentially new to learning • Level 4 Operational/junior manager/new to the profession • Level 5 Manager/specialist role • Level 6 Senior managers/specialist professional • Level 7 Postgraduate strategic leader The levels are determined by Ofqual, who are the Government regulator for education, and enable a clear understanding nationally of the level of a person’s learning and ability in that field. 3 National Qualifications Framework This framework is a government framework, where qualifications that are approved by Government, as being fit for purpose, and meeting the quality criteria, are listed. Qualifications listed within this framework are monitored against a variety of measures to ensure quality of qualification, associated procedures and delivery. Ofqual Ofqual is the Government regulator for professional bodies such as CIPS, and act as the caretaker of qualifications included in the National Qualifications Framework Optional units These are units where you have choice and opportunity to specialise in an area of interest.
There is an opportunity to select two optional units at advanced diploma and two optional units at graduate diploma. . Qualifications ladder This ladder represents the hierarchical nature of CIPS qualifications. The ladder has six steps within it. It starts with an Introductory Certificate through to the Graduate Diploma. Each step of the ladder is represented by qualification with an ‘exit award’. Statements of practice A goal for attainment, which indicates what you need to know and be able to do to complete your studies in a particular subject area. Each unit has six to seven learning outcomes which outline what you will achieve as a result of your learning in that particular unit.
Student Member who is studying a CIPS qualification. Unit A segment of learning within the CIPS qualifications, which has a value in terms of hours of learning. Each unit is individual, has its own title, rationale and content. A unit will also have an assessment attached to it in order to demonstrate achievement and conclusion of the learning. Weightings Weightings are allocated to each unit, to determine how the learning can be sensibly split. Each unit has a content weighting of 100%. Within each unit, each subject area is given a weighting eg 20% or 25%. This weighting indicates the level of input and learning required by the deliverer and the learner in order to complete the subject area.
However, the weightings do not necessarily reflect the marks that may be allocated to a question in that subject area of the unit. 4 Advanced diploma in purchasing and supply Acronym guide AIDA • Attention, interest, desire, action AIDA is an acronym used in marketing that describes a common sequence of actions which need to happen when a person is trying to sell a product or service. ABC Analysis • Stock categorisation method Application of Pareto’s Law of the 80/20 rule: ABC classifications are determined in ascending rank order of all products according to the product classification as a percentage of the total purchasing spend. Ranking can also be by volume, value, weight etc. BBS •
Business balanced scorecard Kaplan and Norton (1996) developed balanced scorecard approach to measure performance in organisations adopting a holistic and balanced view looking at performance against four perspectives financial, customer, internal business and earning and growth. BCP • Business continuity planning A methodology used to create a plan for how an organisation will resume partially or completely interrupted critical functions within a predetermined time after a disaster or disruption. BPR • Business process reengineering The fundamental re-thinking and radical re-design of business processes. To achieve dramatic improvements in critical, contemporary measures of performance such as cost, quality, service and speed.
CAD • Computer aided design The use of a wide range of computer based tools that assist engineers, architects and other design professionals in their design activities. CAM • Computer aided manufacturing This is a software process that can directly convert an object (product drawing) into code so that a machine, such as a lathe or milling machine can manufacture the product. COSHH • Control of substances hazardous to health Legislation that requires employers to control exposure to hazardous substances to prevent ill health. CSR • Corporate social responsibility CSR means the commitment to a systematic consideration of the environmental, social and cultural aspects of an organisation’s operations.
This includes the key issues of sustainability, human rights, labour and community relations, as well as supplier and customer relations beyond legal obligations; the objective being to create long-term business value and contribute to improving the social conditions of people affected by an organisation’s operations. DAGMAR • Defining advertising goals for measured advertising results A model of marketing communications developed for the measurement of advertising effectiveness. 5 Advanced diploma in purchasing and supply Acronym guide ECR • Efficient consumer response The link to make category management an operational reality. Supplier and buyers working together to ensure total consumer satisfaction.
EDI • Electronic data interchange The exchange of documents/information between computers using telephone lines. EFT • Electronic funds transfer Financial or value transactions carried out between parties by means of computer systems. It can also refer to financial information about transactions being passed. EPOS • Electronic point of sale A system that allows the flow of inventory/products from warehouse to point of sale in the shortest time. ERP – Enterprise resource planning Refers to any software that enables companies or organisations to integrate various functions and programs so that they are all interconnected and have the ability to ‘talk’ to each other.
EU • European Union The European Union was created in 1992 following the signing of the Maastricht Treaty replacing the European Economic Community and other constituent organisations which were originally established in 1957. Its aim is to create an environment for the free movement of goods, services, labour and capital across the member states. There is also an emphasis on the abolition of trusts and cartels and the development of joint and reciprocal policies on labour, social welfare, agriculture, transport and international trade. FMEA • Failure modes effects analysis Is an easy to use and yet powerful pro-active engineering quality method that helps you to identify and counter weak points in the early conception phase of products and processes. The structured approach makes it easy to use and even for non-specialists it is a valuable tool.
The benefits obtained encompass by and large the investments in time and resources to execute the analysis. ICT • Information, communications technology This is a broad subject concerned with technology and other aspects of managing and processing information, especially in large organisations. iDEF • ICAM DEFinition language iDEF is the shortened version of ICAM DEFinition Language. It was an initiative by the US Airforce during the 70s/80s to modernise their technology, specifically the use of computers in manufacturing. ICAM stands for Integrated Computer-Aided Manufacturing and the aim was to make the manufacturing process quicker and more efficient. ISO • International rganisation for standardisation The ISO is not one organisation, but a network of national standards institutes across 150 countries. International standards are created through consensus agreements by each of the national delegations. This provides a common technological language between suppliers and buyers facilitating trade and the transfer of technologies amongst those countries involved. 6 JIT • Just in time Originally a concept imported from Japan, based on the idea that only sufficient quantities should be manufactured or be made available to satisfy customers’ immediate needs. Relies on an efficient supply chain for its success. KPI • Key performance indicator Also known as key success indicators.
They are financial and non-financial metrics used to reflect the critical success factors of an organisation or contract. They are used in business intelligence to assess the present state of business or a contract and to prescribe the next course of action. MRP • Material requirement planning A product-oriented computerised technique aimed at minimising inventory and maintaining delivery schedules. MRPII • Manufacturing resource planning MRPII is concerned with almost any resource entering into production, including manpower, machines and money in addition to materials. This is why the word ‘resource’ is usually substituted for ‘requirement’ when referring to MRPII.
MSP • Managing successful programmes Managing Successful Programmes comprises a set of principles and processes for use when managing a programme. It is founded on best practice although it is not prescriptive. It is very flexible and designed to be adapted to meet the needs of local circumstances. NAO • National Audit Office The National Audit Office is totally independent of Government and has statutory authority to report to Parliament on the economy, efficiency and effectiveness with which government departments and other public bodies use their resources. NHS • National Health Service Founded in 1948, this organisation provides the majority of healthcare in the UK. NHS services are largely “free at the point of delivery,” paid for by taxes.
Employing well over one million people, the NHS is the largest employer in Europe and one of the largest employers in the world. OGC • Office of Government Commerce OGC is an independent office of the Treasury. Together with its executive agency OGC buying solutions, OGC works with public sector organisations to gain the best possible value for money from procurement in support of the Government’s efficiency target. OGC supports initiatives that encourage better supplier relations, sustainable procurement, the benefits of utilising smaller suppliers and the potential of eprocurement, and represents the UK at the European Union (EU). OGC also supports major programme and project management, which involves complex procurement. 7
OPC • Operations planning and control The activities undertaken that ensure all required resources within an organisation are managed effectively to produce products/services right through to the delivery of the product/service to the customer. OPT • Optimised product technology This is a computer-based technique and tool originated by Eliyahu Goldratt. In principle, it aids production scheduling systems to fulfil the pace of production during the most heavily loaded resources such as bottle-necks. PAC • Public Accounts Committee The Committee of Members of Parliament appointed to examine and report on the accounts of government departments and other public bodies. The accounts are audited by the Comptroller and Auditor General, whose reports on the accounts form the basis for the Committee’s examination of departmental Accounting Officers and subsequent reports.
PARETO A principle which states that ‘in any series of elements to be controlled, a selected small factor in terms of the number of elements almost always accounts for a large factor in terms of effort’ see also ABC analysis. (Source: adapted from The official dictionary of purchasing & supply by HK Compton and DA Jessop). PASA • Purchasing and Supply Agency (NHS) The NHS Purchasing and Supply Agency is an executive agency of the Department of Health, established in 2000. The role of the agency is to act as a centre of expertise, knowledge and excellence in purchasing and supply matters for the health service. The Agency is an active participant in the ongoing modernisation of purchasing and supply in the health service, and contracts on a national basis for products and services which are strategically critical to the NHS.
It also acts in cases where aggregated purchasing power will yield greater economic savings than those achieved by contracting on a local or regional basis. PDCA PDCA stands for Plan-do-check-act and is a four-step problem-solving process typically used in quality control. Also known as the Deming cycle. PESTLE • Political, economic, social, technological, legal, environmental An analytical tool that aids organisations developing strategies by helping them understand the external environment in which they operate now and in the future. PFI • Private finance initiative An agreement that promotes partnership between both private and public sectors which enables the utilisation of a wide variety of assets and services in the private sector.
The objective is to improve the quality and quantity of public sector capital products and also to provide more efficient public services. PPP • Public private partnership Any alliance between public bodies, local authorities or central government and private companies to produce capital projects or deliver public services. 8 PRINCE2 • Projects in a controlled environment A process based approach for project management providing an easily tailored and scalable method for the management of all types of projects. Each process is defined with its key inputs and outputs together with the specific objectives to be achieved and activities to be carried out. PRINCE2 is Crown copyright.
SLA • Service level agreement A service level agreement is a document which defines the relationship between two parties: the provider and the recipient. This is clearly an extremely important item of documentation for both parties. If used properly it should: • Identify and define the customer’s needs • Provide a framework for understanding • Simplify complex issues • Reduce areas of conflict • Encourage dialogue in the event of disputes • Eliminate unrealistic expectations. SMART • Specific, measurable, achievable, relevant, time framed Is a mnemonic used in project management at the project objective setting stage. It is a way of evaluating if the objectives that are being set are appropriate for the individual project.
SMEs • Small and medium sized enterprises A small firm is an independent business, managed by its owner or part-owners and with less than 50 employees. A medium sized company must meet thresholds for annual turnover and have fewer than 250 employees. SWOT • Strengths, weaknesses, opportunities, threats This is a strategic planning tool used to evaluate the strengths, weaknesses, opportunities and threats involved in a project or in a business venture or in any other situation requiring a decision. . TQM • Total quality management Is a set of systematic activities carried out by the entire organisation to effectively and efficiently achieve company objectives so as to provide products and services with a level of quality that satisfies customers, at the appropriate time and price.
TUPE • Transfer of undertakings (protection of employment) Legislation that aims to ensure that an employee whose company is taken over has his existing conditions respected by his new employer. They also apply in some cases for work transferred to contractors. This includes hours of work, pay, pension entitlement and so on. 9 Advanced diploma in purchasing and supply Management in the purchasing function COMPULSORY UNIT UNIT CHARACTERISTICS This unit is designed to enable students to manage their own area of responsibility within an organisation’s internal supply chain, in line with the overall strategic business plan and the operational plan for the purchasing function. Students should be able to implement operational plans for their own area of responsibility to achieve objectives set out in their plan.
In doing so they should be able to employ a range of resources, including human, physical and financial, and manage and delegate tasks effectively. This unit is about managing the expectations of the stakeholders that are directly involved in the student’s own area of responsibility and will provide them with management techniques to help them to involve others, be innovative, consultative, influential and persuasive in order to achieve targets effectively. This unit at level 5 is concerned with the day to day management responsibilities within the purchasing function and wider organisation and appropriate links and understanding of the relevant theories.
STATEMENTS OF PRACTICE On completion of this unit, students will be able to: • Evaluate the challenges facing managers in dynamic and changing organisations • Analyse the characteristics of different organisational structures and cultures • Use a range of techniques to support and implement justifiable management decisions • Formulate plans to effectively manage work groups and teams • Propose processes and systems to enable the successful implementation of change programmes to maximise purchasing efficiency and effectiveness • Assess the impact of current legislation relating to employment and equality upon purchasing and supply activities. 10 LEARNING OBJECTIVES AND INDICATIVE CONTENT 1.
THE CHALLENGES OF MANAGEMENT (Weighting 20%) 1. 1 Define the term management and differentiate management from leadership • Definitions of management: Fayol, Mintzberg, Drucker, Brech and Cole • Management: planning, co-ordinating, controlling and motivating staff • Management styles • Leadership perspectives and styles: Hersey and Blanchard, Tannenbaum and Schmidt, Kotter, Lewin. 1. 2 Identify the key stakeholder groups who impact directly on the purchasing function, analyse their potential impact and explain how to manage their expectations effectively • Stakeholders: employees, customers, shareholders, suppliers, government, lenders, trustees, elected members • Identifying and ulfilling stakeholder/customer needs: good products and service, return on investment, quality, price and measurable outcomes • Working within ethical codes of conduct and practice • Expectations: on time, within budget, meeting terms and conditions. 1. 3 Evaluate the key roles and functions of managers in the purchasing and supply function • Ensuring value for money/quality at the lowest price (purchaser) • Advising and recommending suitable purchasing and supply systems • Building good relationships within the purchasing and supply chain • Management of resources (human, financial, materials, equipment) to be effective in the role • Policy development. 1. Compare and contrast the diverse purchasing management practices of the private and public sectors • Tendering • Recommended suppliers • E-commerce: internet, e-auctions, e-catalogues, electronic data interchange (EDI) • Outsourcing • Authority levels (ie purchase orders) • Relationship building • Payment terms and other contracting arrangements. 11 1. 5 Create a set of rules for ethical behaviour • What are ethics? • CIPS ethical codes • Corporate Social Responsibility (CSR). 1. 6 Propose ways of reporting effectively to senior management and securing top level support and sponsorship for initiatives and implementation of plans • Keeping your stakeholders informed • Building a business case • Report writing: structure, content and making it interesting • Effective meetings • Presenting your plans. 2. 0 ORGANISATION STRUCTURES AND CULTURE (Weighting 20%) 2. Evaluate the importance of organisational structure to the development and performance of organisations • Rationale/background: industrial revolution to modern day • Choice of different structures to aid management • Organisational structures: conflicts between control and empowerment, autonomy and entrepreneurship • Power. 2. 2 Evaluate the nature and scope of organisational structures and the implications of such structures for the purchasing function: • Flat • Functional • Matrix • Geographical • Local • Regional • National • International • Global • Centralised/de-centralised. 2. 3 Assess and evaluate methods of job design for purchasing roles • Identifying responsibilities, associated tasks and priorities • Updating existing roles: via job description and person specification • Training needs analysis • Competency frameworks • Role mapping. 2. Define the term ‘culture’ and assess different models of culture which may exist within organisations • Definitions and terms associated with culture • How organisational culture impacts on behaviour, values and assumptions • Organisational influences of company politics, power, bureaucracy, rules and standards of behaviour • Models of cultural strength, masculine/ feminine societies, cultural values and individualism/ collectivism. 12 2. 5 Evaluate methods and formulate plans for managing effectively in international or crosscultural organisations • Stages of planning • Methods: managerial and leadership styles, approaches, communication and media channels • Evaluation process of research (primary and secondary), conducting pilot schemes, gathering feedback from staff and choosing most successful option • Considerations: cultural diversity, existing structures, codes of conduct, differing goals and expectations. 3. 0 MANAGEMENT DECISION MAKING (Weighting 15%) 3. Evaluate and apply a range of tools to make effective management choices and decisions • Problem and decision making process • Pareto analysis, Ishikawa (fishbone) diagram, strengths, weaknesses, opportunities, threats (SWOT), decision making trees, cost/benefit analysis, risk evaluation, paired comparison analysis • Balanced Scorecard (BBS). 3. 2 Explain how to formulate, implement and monitor operational plans for the purchasing and supply function to achieve organisational objectives • Aligning plans with strategic objectives/direction of organisation • Agreeing objectives and targets: reducing defects, improving lead times, reducing costs • SMART principles • Importance of and ways to involve the team in the planning process • Monitoring systems and processes including annual and periodic reviews • Reporting structures. 3. Evaluate the resource requirements for the implementation of operational plans for the purchasing function • People as a resource • Financial resources • Physical resources • Time. 13 4. 0 MANAGING WORK GROUPS AND TEAMS (Weighting 25%) 4. 1 Evaluate the concept of authority, delegation and accountability when managing the purchasing function • Understanding of key concepts: taking ownership, decision making, empowerment and responsibility • Reasons: workload, prioritising, developing individuals and the team, minimising blame and achieving results • Good time management • The delegation process. 4. 2 Assess techniques for building, motivating and managing successful teams within the purchasing and supply function • What is a team/group? Stages of team development: Tuckman and Jensen • Team Roles: Belbin, Schutz, Holland, Cattell • Building a balanced team • Motivational determinants: innate drive, desire, fulfilling need • Satisfying individual and team needs: praise, rewards, recognition, responsibility, promotion, pay • Building relationships through leadership, with trust, fairness, equal opportunities, ethics and respect. 4. 3 Assess the sources of conflict which may arise within the purchasing function • Disagreement about needs, goals, values, priorities and interests • Poor communication • Lack of trust in leadership • Lack of direction • Lack of clarity in role • Scarcity of resources • Interpersonal and hygiene factors. 4. 4 Explain how to build relationships and encourage integration ith other parts of the business • Changing perceptions of purchasing (from process to advisory) • Advocates for the profession/business • Consultancy • Adding value. 14 4. 5 Evaluate techniques to deal with conflict within teams and between individuals in the purchasing and supply functions • Consultation • Mediation • Negotiation • Arbitration • Dispute resolution (including discipline and grievance). 4. 6 Assess the benefits of a systematic approach to recruitment, appraisal, training and development • High calibre of staff • Recognition of achievement • Conducting appraisals/personal development reviews (PDRs) • Identification of development needs • Providing appropriate training to meet individual’s role needs • Retention • Contented workforce • Maintaining high levels of performance. 5. MANAGING CHANGE (Weighting 20%) 5. 1 Evaluate the causes of organisational change and analyse their potential impact on the organisation • Globalisation • Competition • Growth • Diversification • Performance • Technology • Practical analysis using political, economic, social, technological, legal and environmental (PESTLE), SWOT and Lewin’s model: forces for change. 5. 2 Differentiate between the need for fundamental and incremental change in organisations • Sector characteristics and dynamics • Take-overs, mergers and embracing cultural changes • Response to market demand • Quality and continuous improvement • Meeting customer requirements. 5. Formulate plans to overcome human resistance to change and to implement change successfully within the purchasing and supply function • Psychological barriers • Physical barriers • Achieving commitment from staff • Staff involvement • Devolving resp
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