CIPS Exam Report for Learner Community:

Transcription

1 CIPS Exam Report for Learner Community: Qualification: Advanced certificate in procurement and supply operations Unit: AD3 - Improving the competitiveness of supply chains Exam series: November 2015 Question 1 Learning Outcome 1 Using examples from the case study, demonstrate how Unilever has added value for the organisation by the use of effective supply chain management This question was based on learning outcome 1.2 and required examples of how effective supply chain management had added value for Unilever. This was a very broad question and there were many examples within the case of how value was being added Answers could have addressed a wide range of examples from the case study which is generally very positive regarding the use of supply chain management to add value. The CIPS scheme suggests a number of areas that contribute to added value, that are evidenced within the case study. Including the following: Innovation use of technology Reduced costs Reduced time to market Variety reduction Targeted use of inventory Creating innovation within their supply chain consolidation Reduced risks and supply chain vulnerability Revised organisation structures more efficient with cross-functional working Improved relationships both with suppliers and customers Outsourcing of non-core activities Sourcing from low cost countries Case study examples that candidates may use that directly relate to Unilever, which provide added value within the supply chain, include the following: November 2015_(AD3)_EXAM_REPORT_LEARNER_COMMUNITY_(PAR)_FV 1/7

2 Unilever s Path to growth initiative Focus on leading brands and Unilever removing unprofitable business and brands Marketing support and expertise being applied by Unilever Re-structuring the complex supply chain management framework that existed for Unilever The establishment of a dedicated supply chain division within Unilever led by two vice presidents The development of electronic communication systems The fostering of healthy relationships between Unilever and its suppliers Sourcing consolidation and focus by some divisions of Unilever The development of e-procurement with Ariba platforms Partnerships by Unilever with external consultants (AT Kearney) to reduce costs and identify supply chain improvements Other relevant examples from the case study, that demonstrate how Unilever has added value by the use of effective supply chain management, were also rewarded. Good answers supported the discussion of the case with reference to the concept of added value with many answers using Porters Value Chain as a framework. The question did not state the number of examples required so answers that covered many examples in less depth were considered as well as answers that covered fewer examples in more depth however many answers covered between 4 and 5 examples. Overall, this was the best answered question of the paper by many candidates. With many answers achieving a pass grade or better. Answers that did not attract high marks were either very brief, covered either the theory of values adding with little or no application to the case or described the case without linking the points to adding value. In both the latter cases, candidates are reminded that the unit is designed to test the knowledge of the concepts and the application of these to the scenario provided so both elements need to be demonstrated to score high marks. November 2015_(AD3)_EXAM_REPORT_LEARNER_COMMUNITY_(PAR)_FV 2/7

3 Question 2 Learning Outcome 2 Unilever has identified five focus areas for its World Class Supply Management Initiative. (see Table 1) Explain ONE key performance indicator (KPI) that Unilever could develop to assess performance in each of these FIVE focus areas. This question was based on learning outcome 2.2 and required an explanation of one KPI for each of the five focus areas mentioned in the case in table 1 on page 5 of the case study. Answers could have identified potential KPIs at any level within the Unilever supply chain - strategic, tactical, or operational and a broad range of KPI s were accepted. Some examples are as follows: Processes (global procurement) measures such as the processing time for purchase requirements, the time taken to replenish stock, the efficiency and effectiveness of the operations of the supply chain function e.g. stock turnover, wastage rates etc. People (supply chain executives) measures of performance could include contributions to savings, measures of work done e.g. contracts issued. Other measure could include staff satisfaction surveys, nice place to work awards, KPI could also address skills and training, diversity and inclusion, and social responsibility objectives. Suppliers (supplier involvement) wide range measures of supplier performance which could include quality, delivery, price comparisons, service levels and contributions to innovation and development. Unilever could use a wide range of these KPIs including for the benchmarking of supplier performance. Technology (e-procurement and information technology) measures could include costs of processing individual orders, improvements in terms of speed of response and quality of information provided, and the robustness of the technologies used (e.g. information security). Marks were awarded as follows: one mark for identifying the KPI, one mark for relating to the appropriate category and up to three marks for the explanation as all of these elements were asked for in the question. There were some excellent answers to this question that scored very high marks and suggested KPI s which clearly focused on each of the areas. However this question caused several candidates problems leading to low marks being awarded and generally this question was the lowest scoring question on the paper. The main issue with the low scoring answers were based on not providing November 2015_(AD3)_EXAM_REPORT_LEARNER_COMMUNITY_(PAR)_FV 3/7

4 any specific KPI s. Several answers discussed SMART which could have been mentioned in an answer (although not required) and did not suggest any specific KPI s. Some answers totally missed the point and discussed what Unilever had done so far to improve efficiency (e.g. closing factories )without suggesting any specific KPI s. Also several candidates missed this answer out completely. Question 3 Learning Outcome 3 The case study states that Unilever s buying of corrugated packaging materials was consolidated to reduce the number of suppliers in Europe. Explain TWO benefits and THREE potential risks for Unilever of such a rationalisation of the supply base and reducing the number of suppliers used. This question was based on learning outcome 3.3 and required the explanation of risks and benefits to Unilever caused by reducing the number of suppliers used. Many candidates recognised that although the case study does not state that Unilever have adopted a single sourced approach, the number of suppliers has reduced which brings with both risks and benefits. There are benefits and risks from this form of consolidation including: Advantages include: Increased leverage for Unilever with the remaining suppliers, which may be beneficial when negotiating Reduced unit costs for Unilever based on consolidation of volume, and aggregation of demand Reduced transaction costs for Unilever due to lower number of suppliers Improved relationships with opportunities for development of partnership/strategic relationships with the remaining supply base Mutual dependency between suppliers and Unilever who develop trust Commitment and co-investment by suppliers and Unilever Set up costs are reduced as production lines for Unilever s suppliers do not have to be duplicated Potential risks of supplier consolidation include: Over-reliance by Unilever on a single supplier or small number of suppliers Supply chain vulnerability ( e.g. natural disasters in one production region) Loss of competitive position in the market Potential loss of market knowledge by Unilever due to closed relationship November 2015_(AD3)_EXAM_REPORT_LEARNER_COMMUNITY_(PAR)_FV 4/7

5 Supplier complacency reduced service to Unilever Failure of Unilever s suppliers to innovate due to closed relationship Increased risks due to failure of suppliers production stoppages, loss of market share Answers that provided additional examples for both the advantages and potential risks of supply based consolidation and supplier reduction were also rewarded. Marks were awarded as follows: Up to two marks for identification and one mark for the description of the benefit or risk, and up to two marks for an explanation of the benefit or risk, and contextualisation to the case. There were some good answers to this question which provided an explanation of the risks and benefits and clearly related their answer to the factors in the case. However, many answers provided a good answer to either risks or benefits and then provided a rather brief explanation of the other. Overall most candidates identified the two benefits and three risks that could be identified and then went into greater detail of applying to the case study to achieve higher marks. However, some answers were very generic and did not apply the risks and benefits to the case. There were also cases of unexplained bullet points being provided. In both cases these approaches did not gain high marks. Question 4 Learning Outcome 4 Explain FIVE examples of developments in technology, from the case study, that were applied by Unilever in order to achieve improvements in its supply chain. In each explanation you should include a description of the development in technology and the benefits it is intended to achieve. This question was based on learning outcome 4.3 and required an explanation of five developments in technology that were applied by Unilever to achieve improvements. The important element here was the requirement to cover the description of the development as well as the benefits that it was intended to achieve. This question was very broad as there were many technology systems discussed within the case including: e-procurement this reduces transaction time and paper-based systems November 2015_(AD3)_EXAM_REPORT_LEARNER_COMMUNITY_(PAR)_FV 5/7

6 e-tendering this allows a wide range of suppliers to be engaged, regardless of geography e-commerce Ariba e-commerce platform benefits as e-procurement, with the support of a major software company Internet usage there are numerous potential benefits including access to wide range of information and data Web based applications this allows systems and processes to run using standard protocols across the organisation e-auctions secure and transparent system for awarding contracts ERP systems organisation-wide system to improve planning and scheduling Unilever Information Programme this is an in-house system for Unilever which provides comprehensive information to all employees Data warehousing this provides the opportunity to analyse and assess information to establish patterns of behaviour, demand etc. RFID Radio Frequency Identification Systems these systems enable the very precise tracking of stock within the organisation. CPFR activities planning and forecasting of demand this is another in-house system which should enable reduced wastage and improve availability. Use of video conferencing and s to coordinate the improvement projects. However whilst there were many examples of systems used in the case, in providing an answer the elements of description of the system and the benefits needed to be covered, as these were asked for in the question and reflected in the mark allocation as one mark awarded for identification of the system/technology, up to two marks awarded for the description of the system /technology and two marks for the benefits of the use of the system / technology. This question was generally well answered with most answers able to identify five different systems/ technology and describe some of the benefits to Unilever when improving their supply chain. However many answers would have been able to achieve higher marks had more of a description of the technology been provided in the answer. A good example of this was RFID, where many answers did not expand on the information provided in the case in terms of describing what RFID was and how it benefited Unilever but not how it worked. This meant that many answers score low marks on the description element of the question. There were some brief answers to this question as well as answers that failed to identify five systems perhaps indicating a lack of time. November 2015_(AD3)_EXAM_REPORT_LEARNER_COMMUNITY_(PAR)_FV 6/7

7 Overall comments Whilst there were some very good answers there were still a number of answers that appeared to not understand the aim of the type of assessment used. The idea of the pre seen case study is to allow candidates time to prepare for the assessment which is testing both knowledge of the concepts and issues contained in the syllabus as well as the ability to apply these concepts within the context of the case scenario provided. Some answers are still providing a description of the case (often copying out large sections verbatim) without addressing the question asked or providing copies verbatim of pages of the study guide without applying them to the case. Both of these approaches tend to score low marks and could be addressed in the preparation stage as well as in the exam itself. November 2015_(AD3)_EXAM_REPORT_LEARNER_COMMUNITY_(PAR)_FV 7/7