CIPS Exam Report for Learner Community:

Transcription

1 CIPS Exam Report for Learner Community: Qualification: Advanced diploma in procurement and supply Unit: AD4 - Category management in P&S Exam series: July 2016 Each element of a question carries equal weighting unless otherwise stated. Question 1 Learning Outcome 1 (a) Distinguish between technical and behavioural skills needed to implement category management. Mark 10 Marks (b) Discuss THREE types of technical skill required for the implementation of category management. 15 Marks (a) Learning outcome addressed 1.4 Command word explanation: Distinguish identify the differences between two or more factors, events or situations Examples of good content/good approaches in answers: Answers were expected to identify the differences between technical skills and behavioural skills that are needed by people when implementing a category management process. Technical skills are generally also known as hard skills, these are skills or competencies that tend to be learnt by undertaking professional training courses, such as those provided by CIPS. Examples of technical skills are: data analysis, supplier market analysis, financial management & legal aspects. Behavioural Skills are generally known as soft skills, they are also sometimes referred to as people skills as they are characteristics that people can contribute too, to help deliver category management in the organisation. Examples of soft skills include: teamwork, communications and emotional intelligence. Examples of content for merit/distinction grade answers: Better answers that managed to achieve a merit included the addition of tools and techniques used in the examples given, such as market analysis tools like Porter s 5 forces or, when undertaking financial management, using Pareto analysis and the Kraljic matrix. Better answers also included negotiation, identifying that negotiation is both a hard and soft skill as you need to undertake analysis into the company you are negotiating with to understand their market position, products and drivers and the soft skills when undertaking the negotiation, which includes people management, body language and emotional intelligence JUL16_AD4_EXAM REPORT _LEARNER_COMMUNITY_FV 1/8

2 Examples of poorer content/ poorer approaches in answers: Weaker answers tended to discuss three or more types of technical or behavioural skills rather than distinguish the difference between the skills needed to implement category management. Concluding comment: Most candidates were able to provide pass grade answers and a large number provided merit or distinction answers which showed a very good understanding of the differences between the skills. (b) Learning outcome addressed 1.4 Command word explanation: Discuss consider something by writing about it from different points of view Examples of good content/good approaches in answers: Candidates were expected to discuss three different types of technical skills needed for the implementation of category management. These could include: Data analysis- using tools such as Pareto s ABC analysis and the Kraljic matrix to identify your suppliers and their criticality to the organisation. Market analysis- using tools such as Porters Five Forces to identify which market type your suppliers fall into e.g. monopoly, oligopoly imperfect & perfect competition, using this information to understand how best placed the organisation is to retender/negotiate contracts. Financial Management- this is an important area of implementing category management as it is about understanding how and where the organisation s money is spent for example: direct, indirect costs, material cost & labour costs. passes and in some exceptional cases distinction grades, included a greater depth of understanding of the selected technical skill. For example in financial management, understanding the different types of costs, analysing spend, the ability to analyse trends and how to quantify them, and budgeting - setting budgets, budget forecasting, budget control and effects of over/under spend against budget. Other technical skills included: Negotiation, the skills needed include: market & supplier analysis, to gain an understanding of the market your supplier is operating in, their competitors and availability of alternative products, who the stakeholders are and what the companies objectives are etc. Legal Aspects, having a working knowledge of express & implied legal frameworks, international trading, Incoterms, legal jurisdictions etc. Risk Management, risk affecting buying from different markets, internal risks, market risks etc. JUL16_AD4_EXAM REPORT _LEARNER_COMMUNITY_FV 2/8

3 Examples of poorer content/ poorer approaches in answers: Weaker answers did not give a depth of understanding of the relevant technical skill chosen or the answers did not relate to the implementation of category management. Concluding comment: Generally this was a well answered question with candidates achieving merit marks. Candidates tended to discuss a limited number of technical skills, these tended to be Financial Management, Legal Aspects and Data/Market Analysis. Question 2 Learning Outcome 2 Assess the main factors that will influence an organisation s decision to make or buy. Mark 25 Marks Learning outcome addressed 2.4 Command word explanation: Assess evaluate or judge the importance of something Examples of good content/good approaches in answers: Answers were expected to assess/evaluate the main factors that would influence an organisations decision to make products/goods/services themselves or to buy these into the company (Outsourcing). There are many different reasons why an organisation may wish to make the products, this could be because there is no other provider in the market (monopoly), or that they want to protect their Intellectual Property Rights, it could be for reasons of secrecy if they are manufacturing for certain government departments or market sectors. If an organisation decided to buy in the product or outsource their manufacturing they could lose their inhouse skills base and manufacturing facilities and their ability to develop new products. The quality of the products might decrease if they were procured at a lower price using substandard materials and workmanship. However if the goods/products were in a perfect competition market there would be plenty of suppliers who could produce them and to buy them in could lead to an increased quality, faster delivery times and an increased profit margin for the buying organisation. passes and in some exceptional cases distinction grades, included an introduction to why it is important to assess whether to make or buy, the answers also demonstrated greater depth of knowledge on the subject, including that make or buy decisions can be applied to all procurements including services or raw martials. They also considered strategies for vertical or horizontal integration to further growth. Risk is another area that would need to be assessed these include: risk of failure from not outsourcing, risk of failure from the outsourced product not meeting quality, delivery dates and risk of reputational damage. Other considerations could be the cost of in-house manufacturing, direct and indirect cost, transport and material costs and cost of specialised staff and/or machinery. JUL16_AD4_EXAM REPORT _LEARNER_COMMUNITY_FV 3/8

4 Examples of poorer content/ poorer approaches in answers: Weaker answers tended to be very short in content and/or not showing a depth and breadth of knowledge, or they concentrated on either outsourcing or in-house production rather that assessing both make or buy, and in some cases candidates only listed and briefly outlined the relevant considerations. Concluding comment: Generally this was a well answered question providing an assessment of both make or buy considerations, however candidates tended not to give an introduction to make or buy, which would of gained them additional marks. Question 3 Learning Outcome 3 (a) Joint proposition improvement is an approach where a buyer and supplier work together under their contract to jointly improve performance or to develop the contract for their mutual gain. Describe the benefits and risks of using joint proposition improvement approach. (b) Many organisations have moved towards the use of reverse e-auctions as a means of obtaining prices from suppliers. Suggest the factors that an organisation should take into account to implement reverse e-auctions successfully. Mark 12 Marks 13 Marks (a) Learning outcome addressed 3.2 Command word explanation: Describe give a full account of something Examples of good content/good approaches in answers: There are both benefits and risks when using joint proposition improvement. Benefits could include: Joint product development Improvement and innovations - as the resources of the buyer and supplier organisations work together to develop/ Improve and innovate their products Increased marketing of products - both organisations can promote the product. Improved delivery - the supplier would ensure that the products are despatched and delivered on time. This could lead to improved customer satisfaction, greater sales and increase the organisations reputation within the market. SLA s would be developed and agreed and applied for the benefit of both the supplier and the buyer organisations. Both organisations would be transparent, open, fair and professional and have agreed ethical standards. Risks could include: Issue s over ownership of intellectual Property Rights. JUL16_AD4_EXAM REPORT _LEARNER_COMMUNITY_FV 4/8

5 Exiting the contract could prove difficult and could involve legal claims and legal costs to decide who owns what and who has paid for what. The relationship between the buyer or suppliers organisation could be very difficult to manage especially if the buyer still needed the product. Price increases, late delivery, reputational damage and loss of profits could occur as the relationship breaks down. To mitigate against these risks the contracts between the organisations would need to be robust. passes and in some exceptional cases distinction grades, included: An introduction to joint proposition which is to jointly improve performance or to develop the contract to their mutual gain. There would be a clear and agreed understanding to when improvements would be made and this would be recorded in a roadmap. The stakeholders from both organisations would have buy-in to the joint proposition improvement. The contracts would have clearly defined terms on what improvements would be delivered, these would be baselined against an agreed starting point. Risks include: The relationship between both organisations becomes too informal and meetings and actions are not recorded or actioned. Relationships may be impacted and agreements cannot be met, which can lead to a breakdown in joint working. Exits from joint proposition could be costly for one or both organisations as they may have to pay for legal advice if one of the organisations decides it cannot work with the other and decides to terminate the contract. Examples of poorer content/ poorer approaches in answers: Weaker answers tended to be very short in content and tended to use comparison charts with little or no explanation to their answers, there was no breadth and depth of understanding of the subject. Concluding comment: This was the best answered question in the paper and the majority of candidates tended to achieve higher marks, weaker answers were where candidates had little or no knowledge of the subject or in some cases had not provided enough depth. (b) Learning outcome addressed 3.2 Command word explanation: Suggest give the most appropriate answer or answers Examples of good content/good approaches in answers: Candidates started with a definition: A reverse auction is the opposite of a conventional or forward auction, where buyers compete for products or services with increasingly higher bids. However In a reverse auction sellers compete to sell their products, offering JUL16_AD4_EXAM REPORT _LEARNER_COMMUNITY_FV 5/8

6 increasingly lower prices. Reverse auctions are increasingly taking place over the worldwide web and this is known as a reverse e- auction, this is where the suppliers bid against each other online over a short period of time and the winner of the reverse e-auction is the supplier who provides the lowest price. The buyer needed to ensure that the specifications are clear and well defined and include the required quality as the reverse e-auction only looks at lowest price. For example when buying pens, the specification might say: the ink must be permanent, the pen must write smoothly without any blobs, it must be able to deliver ink to draw a continuous straight line of a mile in length and be 0.5mm in width and the suppliers must be able to supply the pens in four standard colours Blue, Black, Red & Green to the following standard ISO/EN. The buyer will need to research the market to ensure that they know the market prices for the goods and service to ensure that they can identify when a supplier might submit very low prices to obtain the business... As the reverse e-auction only looks at lowest price you might want to pre-qualify the suppliers taking part on their technical and commercial capability. As an e-auction uses computer software you will need to ensure that the potential bidders are able to access the software and that it works on their ICT equipment. Training may be required in how to use the software for both the buyer bidding organisations. The time the e-auction takes place could be another problem, especially if you are buying globally, you will need to be aware of the different time zones involved. passes and in some exceptional cases distinction grades, included candidates explaining the use of Porters Five Forces to identify the market structure to ensure that the goods or services were not provided by suppliers who were a monopoly or oligopoly as this would limit competition. When developing a procurement strategy the buyer should consider breaking the requirement down into Lots of discrete work packages for suppliers to bid against. The buyer might want to set a selection criteria to check that the winning bid meets the requirements set out in the specifications and ensure this is validated before the contract is signed. A buying organisation might want to give post auction feedback to all bidders, to show that a transparent process was undertaken. Examples of poorer content/ poorer approaches in answers: Weaker answers tended to be very short in content and did not demonstrate breadth and depth of knowledge on the subject. Concluding comment: This was a generally well answered question with most candidates providing pass or merit grade answers. JUL16_AD4_EXAM REPORT _LEARNER_COMMUNITY_FV 6/8

7 Question 4 Learning Outcome 4 (a) Explain the term mobilisation as a key stage of a category management process. (b) Examine the elements that should be considered in contract transition arrangements in a category management process Mark 5 Marks 20 Marks (a) Learning outcome addressed 4.1 Command word explanation: Explain give reasons for or account for something Examples of good content/good approaches in answers: Mobilisation is when the buying organisation makes ready to implement the category management approach. It is when the organisation has completed its research, has buy-in from the relevant stakeholders, defined the goods or services to be included in the categories and is ready to start the implementation of category management into the organisation. passes and in some exceptional cases distinction grades, included: All Mobilisation begins with a look back of where the category management project is, it looks to see what stages of the process have been missed or not completed. It might look at what the motivation of the organisation is and if the senior stakeholders and managers are in place and ready to proceed with the category management process. The organisation will need to check that the following two key tasks have not been overlooked: finalising contracts, and ensuring continuous improvement. Examples of poorer content/ poorer approaches in answers: Weaker answers included: Mobilisation is the implementation of category management, where the category manager takes over running the project and puts the contracts in place and gets then signed off. Stakeholder management is undertaken and the RACI charts completed. It s when all the contracts have been finalised and the organisation moves to a business as usual process. Concluding comment: Although this was only a 5 mark question it was the question that received the lowest number of passes. Candidates were not able to explain what Mobilisation was and instead explained Implementation. In some cases candidates did not attempt to answer this question. (b) Learning outcome addressed 4.1 Command word explanation: Explain give reasons for or account for something JUL16_AD4_EXAM REPORT _LEARNER_COMMUNITY_FV 7/8

8 Examples of good content/good approaches in answers: Transition is where we move from the old supplier to the new one. It is important to ensure that a proper handover takes place, this is to ensure that the outgoing supplier transfers all the relevant data, IPR, tools, drawings and equipment to the new supplier. When transitioning to a new supplier it might be worth having a period of duel supply in which time the old supplier can run down stocks whilst the new one ramps up supply, this is to ensure there is a continuity of supply. It s important to include Exit clauses in the contracts so that the supplier will prepare an exit strategy. Exit clauses, might also cover unforeseen exits, unplanned exits, planned exits and contract termination. Risk is another consideration in transition, this includes: Managing the risk of failure. Risk that the new supplier is late in delivering the goods, this could be mitigated by the organisation holding stock or increased inventory which is an additional cost to the organisation. Risk that the knowledge transfer between the outgoing and incoming supplier is not undertaken. Risk that the stakeholders will not use the new supplier as the communications to the business have not been undertaken or has not been communicated to all the relevant stakeholders, this could lead to off contract spend which could erode any savings from the new supplier. Poor handovers could result in legal action and bad supplier relationships. passes and in some exceptional cases distinction grades, included greater breadth and depth and additional explanations of factors to be considered during transition which included: Stakeholder mapping and setting up a stakeholder management programme. Communication strategies to ensure awareness of the transition to a new supplier. Implementation review meetings and supplier transition meetings. Customer surveys and questionnaires to obtain their views and see if there are any differences in the supply or improvements in products have been noticed by the consumers/customers. Examples of poorer content/ poorer approaches in answers: Weaker answers tended to be very short in content and did not demonstrate breadth and depth of knowledge on the subject, they tended to focus on one or two points or tried to cover every possible point in short sentences. Concluding comment: Answers to this question were generally well answered with most candidates obtaining a pass or merit mark however some candidate s answers appeared to be rushed and or incomplete. It is important to time manage during the exam to ensure that answers are answered as fully as possible. JUL16_AD4_EXAM REPORT _LEARNER_COMMUNITY_FV 8/8