SUSTAINABLE PROCUREMENT: EXAM ANALYSIS & ANSWER FINDER

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Louisa Bennett
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1 SUSTAINABLE PROCUREMENT: EXAM ANALYSIS & ANSWER FINDER Here we analyse the latest exam sittings: what topics were set, where the key pitfalls and easy marks were, what the examiner said and where you can find material for an answer, in your Course Book. The full text of past exams, marking schemes and Senior Assessors reports can be accessed by members at: CONTENTS Exemplar Paper November 2009 May

2 THE EXEMPLAR PAPER Section A: case study and two compulsory questions ( each) A manufacturer of office equipment is facing a range of competitive challenges. The P & S manager has formulated an improvement plan for: the development and incorporation of a sustainable procurement policy; assessment and development of the current supply chain; and implementation of a sustainable sourcing process for new projects. Q1 Reasons for introduction of SP; importance of aligning and incorporating SP policy into organisational objectives See Chapter 5, Section 1 for the first requirement. The case study provided plenty of data on the problems faced by the company which could be reduced or eliminated by SP (eg reputational damage re workforce practices; low customer satisfaction; environmental damage clean-up costs and local community concerns); and areas where SP might be beneficial (eg customer demand for energy saving and recycling, security of supply through closer supplier relations). See Chapter 4, Section 4 and Chapter 6, Section 1 for the second requirement, focusing on issues such as: mission statement and core values; CSR policy (currently lacking); creation of SP policy/objectives; balanced scorecard measures; implications for structure and resources; need for stakeholder buy-in and change management. Comments: The main challenges here would be (a) giving equal emphasis to the two requirements and (b) contextualising your answer to the case study data. 2

3 Q2 Key considerations for the development and introduction of a sustainable sourcing process See Chapters 6 and 7. You could work through the stages of the sourcing process: identification of requirement, sourcing plan (with Triple Bottom Line criteria), market analysis, prequalification, RFQ/ITT, evaluation of offers and supplier selection, and creation of contract/relationship showing how SP elements could be built in at each stage. Comments: Although the focus was on sourcing process, better answers would recognise the need also to develop current suppliers (and purchasing staff) to achieve the necessary standards. Section B (two questions, each) Q3 Key external factors affecting the implementation of SP across an organisation or industry of your choice See Chapter 3 for general points but remember to contextualise to your specified organisation (according to industrial sector, size, profit/nfp, position in the supply chain, customer base, existing CSR policy, price sensitivity etc) or sector (different factors impacting the public, private and third sectors). Comments: Consider using a suitable analysis model (eg PESTLE or Triple Bottom Line) to structure your answer. Q4(a) Analyse potential conflicts when introducing and 15 marks implementing sustainable procurement See Chapter 15. You might use an analysis tool such as SWOT or Force Field to structure your analysis. Learning Outcome 4.2 helpfully sets out a number of specific conflicts which you could explore. Q4(b) How conflicts analysed for part (a) might be managed 10 marks See Chapter 15 remembering to address the specific conflicts you raised in part (a). Comments: Better answers will recognise that managing these conflicts is about getting the balance right between the need for improved social and environmental standards [and] continuing to incentivise and support developing suppliers and meet the organisation s financial targets. 3

4 Q5(a) Five current and emerging global trends which could drive organisations towards SP. See Chapter 2. You might discuss demographic trends, global skills base, globalisation of business, depletion of fossil fuels (and rising energy costs), availability of natural resources, CSR and EPR, and innovation. Q5(b) Assess key future challenges for purchasing professionals in relation to SP See Chapter 16. Your answer might focus on: growing demand and declining natural resources; stakeholder attitudes and priorities; end-to-end SCM; risk management and supplier development; and incorporating SP as business as usual. 10 marks 15 marks Comments: For part (b), although it was not explicitly stated in the question, the examiner hoped to see candidates consider how the selected challenges affect at least two organisation types (MNEs, SMEs, public or third sector organisations). A useful point to bear in mind. If asked about purchasing professionals or organisations, don t just generalise: show awareness of sectoral/industry/organisational differences. Q6 How effective SP improvement targets can be developed and applied within an organisation and its supply chain See Chapter 7, Section 3. You might cover areas such as: prioritisation of suppliers/products (eg Kraljic); supplier/supply chain audit, assessment and evaluation; benchmarking and gap analysis; setting SMART objectives and KPIs (for purchasing and supply chain); stakeholder mapping and communication; cost management; and problem-solving/escalation processes. Comments: There s a lot to cover here, and the temptation may be to offer breadth rather than depth of discussion. However answers which are bullet pointed or purely descriptive and fail to include sufficient depth of detail will be awarded no more than a bare pass grade. General pitfalls A number of the questions were broad in scope. While this can be seen as a positive thing allowing you to draw demonstrate big picture knowledge it can also place pressure on your answer planning skills, and your ability to draw on broad areas of knowledge. You needed to be systematic and accurate in your reading of questions, in order to get past quite complex phrases (eg development and introduction of a sustainable sourcing process ; developed and applied within both an organisation and its supply chain ) to determine exactly what was being required. Note that such phrases are not just padding. They actually set multiple requirements: development and introduction (two separate stages of a process); developed and applied in organisation and supply chain. 4

5 Easy marks There were good marks to be obtained from relatively straightforward questions on mainstream syllabus topics such as: importance of strategic alignment; drivers for SP; external factors affecting implementation; conflicts; global trends; future challenges; and target-setting. 5

6 THE NOVEMBER 2009 EXAM Section A: case study and two compulsory questions ( each) The CEO of a chain of high street supermarkets has called for improved organisational sustainability. Q1(a) Barriers that procurement might encounter when implementing SP See Chapter 14 but remember to contextualise. The case study provides data to support discussion of barriers such as: cost (limited budget, value brand, cost of organic produce); stakeholder attitudes (varying views among senior managers and contractors, customer attitudes); policies (lack of centralised policy); and economic/organisational stability (economic climate). You might categorise barriers as internal and external, to structure your answer further. Q1(b) How barriers could be successfully overcome See Chapter 14. Depending on the barriers you raised in part (a), solutions might include: stakeholder communication, community/customer education, supplier development, policy development, whole life costing, payback calculations, sustainability branding/marketing and so on. 10 marks 15 marks Comments: Some candidates lost marks by addressing solutions in their answer to part (a) and therefore having little to add in part (b). Read the whole question before you start your answer! Q2 How to incorporate sustainability considerations into outsourced contracts; recommendations for ongoing contract management See Chapter 9, Section 4; Chapter 10, Sections 4 and 5; and Chapter 12, Section 1. The outsourced contracts are for cleaning and waste management (services), so relevant approaches include: review of existing contracts; SLA development; whole life costing; and KPI-setting (for areas such as recycling, water/energy use, waste management, eco-labelling and sustainable labour practices). Ongoing contract management might include: monitoring and reviews; contract flexibility; relationship management; and continuous improvement agreements. Comments: Note that there are two main requirements for this question. In such a case, and unless otherwise stated, you should place equal emphasis on the two parts of the question with equal marks available. 6

7 Section B (two questions, each) Q3 Main considerations for incorporation of appropriate SP criteria into purchase specifications See Chapter 9. In process terms SP criteria can be incorporated into specifications by: identifying criteria and priorities; challenging customer/user requirements; using performance rather than conformance specifications; or using standards specification. In content terms: eg maximising re-use and recycling; minimising environmental impact; maximising energy/water efficiency; responsible testing; end-of-life disposal; labour practices and so on. Comments: A number of the weaker answers covered the whole sourcing process rather than focusing on the specification stage. Watch out for question key phrases like sustainable procurement, sourcing process, purchase specification and sustainability policy. They look superficially similar, if you are reading quickly: slow down, read carefully, and focus on the specific topic being addressed by the question. Q4 Activities involved in development and implementation of SP policy See Chapters 7 and 8. You could structure your answer around the stages of policy development: obtaining commitment (business case for SP); stakeholder communication (overcoming resistance); SMART objective-setting (eg use of SP checklists for sourcing decisions); responsibility allocation (SP champions); people development; policy implementation; and ongoing management and review (eg using TBL assessment). Comments: Better answers followed a structured policy development process, supported by good sustainability examples. The point about using a structured process as a framework is that it helps your answer planning and time management: 7 stages means that you only need about 3 4 marks worth of discussion per stage. 7

8 Q5 Compare/contrast key organisational drivers for SP in the public, private and third sectors, using examples See Chapter 5, Sections 2, 3 and 4. Some internal and external drivers will be common to all sectors: eg demographics, government policy, legislation, resource availability, innovation and stakeholders (external); and performance improvement, risk management, CSR policy, internal stakeholders (internal). However, the relative priority of these will vary across sectors, and there are also sector-specific drivers, such as: brand value, competitive advantage and ROI (private); accountability and Agenda 21 (public); and sustainability as a raison d etre (third). Comments: Note that comparison (similarities) and contrast (differences) were both required, as was the use of examples, in order to gain the available marks. Better answers were also well balanced across the three sectors. Q6(a) Relevance of standards/legislation relating to sustainable sourcing: (i) environmental, (ii) social and (iii) economic. See Chapter 11, Section 3, 4 and 5. You were expected to cite examples from each of the three areas, and explain their impact on organisations and their sourcing processes (in order to demonstrate their relevance ). Q6(b) Potential advantages/disadvantages of using sustainability standards in the sourcing process You may have been able to draw on your knowledge of standard specification from your wider purchasing studies. Advantages include: consistency, meeting expectations, interchangeability and comparability, best practice promotion, competition and consumer choice. Disadvantages include: additional cost and/or lead time, possible exclusion of otherwise suitable (or smaller) suppliers, design/process compromises, and loss of differentiation in the market. 15 marks 10 marks Comments: You were expected to place equal emphasis on the three areas given in part (a), and on the advantages/disadvantages in part (b). Unless otherwise stated, multiple requirements should generally be given equal emphasis with equal marks available. 8

9 General pitfalls There was a high proportion of unstructured 25-mark questions, putting pressure on your answer planning and time management skills particularly since many of the question topics were also broad in scope. Easy marks There were good marks to be obtained from relatively straightforward questions on mainstream syllabus topics such as: barriers to SP; contract management; purchase specifications; development and implementation of SP policy; drivers for SP; and standards/legislation. 9

10 THE MAY 2010 EXAM Section A: case study and two compulsory questions ( each) A third-sector charitable organisation collects and rebuilds unwanted bicycles, for sale to low-income customers and community groups. With its financial security under threat, it decides to focus on increasing supply chain sustainability, with the help of a procurement consultant. Consultant s informal report for the CEO: Q1(a) Recommend supplier sustainability assessment criteria See Chapter 13, Section 3. Criteria could be grouped using the Triple Bottom Line: economic, social and environmental. Remember to contextualise, by suggesting examples relevant to the case study: eg waste management, energy/water efficiency, reduce/re-use/recycle assessment, local sourcing, financial stability. Q1(b) Propose and justify ways of developing a more sustainable supply chain Eg: clear procurement strategy and objectives; supply base/spend analysis; prioritisation and rationalisation, benchmarking and gap analysis, supply chain mapping, target setting, communication and co-operation. See Chapter 12, Section marks 13 marks Comments: In order to satisfy the requirement for an informal report, answers were expected to include some or all of the following: title, introduction, recommendations, conclusions. (Note also that you were in the role of a consultant reporting to the CEO: don t waste time explaining the CEO s business to him from the case data ) Q2 Evaluate key internal/external factors driving the requirement for sustainable procurement at the charity See Chapter 5, Section 4 for ideas, but remember to refer to case study drivers where possible eg (internal) the management review and the need to reflect and protect the brand, or (external) the anticipated reduction in grant funding, lack of negotiated energy costs, and external stakeholder expectations. Comments: Note that to evaluate the drivers, you had to comment on why they are relevant to the charity, how they create impetus for sustainability, and what direction they might drive the charity in (ie what the outcome might be). 10

11 Section B (two questions, each) Q3 Role of procurement in managing introduction of, and ongoing commitment to, SP See Chapter 8, Section 3 on the role of procurement as agents of change (project managers, resource co-ordinators, champions) for SP in an organisation. In the introduction phase, this may include: supply market assessment, supplier sustainability assessment, interface, strategy/policy, and securing buy-in. In ongoing commitment, this might include: progress monitoring and review; training; facilitating policy integration; championing; and reinforcement of SP as business as usual. Comments: The main pitfall here was relying too heavily on procurement s role in supplier management neglecting the full spectrum of its influence and activity. Q4 Potential barriers to SP within an organisation and supply chain; recommend approaches to overcome each barrier See Chapter 14. Key barriers include cost issues and budget restrictions, stakeholder attitudes and culture/policies (eg lowcost targets or labour practices). Some solutions include: wholelife costing, quick wins and business case for sustainability, sustainability reporting, updating/aligning policies, and improving sustainability communication. Comments: The main pitfall here was failing to notice the qualifier within an organisation : some candidates gave too much focus to external barriers. (Key words such as internal and external are essential to interpreting questions correctly for this paper ) Q5 Outline five global trends; analyse their influence on the implementation of SP See Chapter 2. You might discuss demographic trends, global skills base, globalisation of business, depletion of fossil fuels (and rising energy costs), availability of natural resources, CSR and/or innovation. For analysis, the Senior Assessor suggests you ask yourself the following questions: How does this trend drive the introduction of SP? How is the role of the procurement function affected? What might the risks or benefits be? Comments: At this end of the exam, the main pitfall may be time management. Note that a maximum of 5 marks is available for discussing each of the five trends you identify: say, 2 marks for an outline, and 3 for analysis. Better answers provided a clear outline of the five selected trends and gave equal or slightly greater focus to the analysis of their influence on sustainable procurement, using relevant examples. 11

12 Q6 Evaluate potential trade-offs required to achieve SP objectives within an organisation Eg standardisation v differentiation; short-term investment v long-term value; higher-cost local sourcing v reduced carbon footprint and so on: see Chapter 15, Section 5. Comments: You could earn initial straightforward marks by briefly explaining the concept of trade-offs, and citing some key SP objectives (eg minimising environmental impact, achieving whole-life VFM, meeting demand for goods and services through sustainable supply chains). You could then discuss how each tradeoff impacts on the achievement of those objectives, and what compromises are required. General pitfalls All but one of the questions were 25-mark unstructured questions, which put pressure on your answer planning and time management skills. Learn to use what internal structure there is: for example, Outline five global trends and analyse their influence means that you have about 5 marks worth for each trend: 1 2 marks for outlining the trend and 3 4 for analysing its influence. Broken down this way, the tasks don t seem so daunting The Case Study was set in the third sector, with which candidates may be less familiar. (Get used to thinking about general issues in particular sectors and industries: this is the heart of Case Study questions ) Easy marks There were good marks to be obtained from relatively straightforward questions on mainstream syllabus topics such as: sustainability assessment; sustainable supply chains; drivers for SP; role of procurement; barriers to procurement; global trends; and potential trade-offs. Some of the question themes would already have been familiar from past exams. While we never advise question spotting and you always have to answer the particular question set in your exam there is a strong advantage in analysing and practising past exam questions. 12

The senior assessor s report aims to provide the following information: An indication of how to approach the examination question

The senior assessor s report aims to provide the following information: An indication of how to approach the examination question INFORMATION FOR CANDIDATES The senior assessor s report is written in order to provide candidates with feedback relating to the examination. It is designed as a tool for candidates - both those who have