CIPS Exam Report for Learner Community:

Transcription

1 CIPS Exam Report for Learner Community: Qualification: Advanced certificate in procurement and supply operations Unit: AC3 - P&S Workflow Exam series: Nov 2016 Each element of a question carries equal weighting unless otherwise stated. Question 1 Learning Outcome 1 (a) Explain why Jonathan s RFI might request the following THREE types of information from potential suppliers. (b) Jonathan intends to use the results of the RFI to short-list suitable suppliers to receive a request for quotation (RFQ). Explain the purpose of an RFQ. (c) Identify FOUR factors other than basic price that Jonathan might consider when evaluating the supplier quotations, and provide an example for each. (d) Once a supplier has been selected a contract will be put in place between QFG and the chosen supplier. Below are FOUR statements relating to interpreting contract terms. For each statement, identify if it is true or false and provide an explanation for your answer. (a) Learning outcome addressed: 1.2 Mark (a) 6 marks (b) 3 marks (c) 8 marks (d) 8 marks Examples of good content/good approaches in answers Financial Information for the last three years Good answers included content such as checking the profitability of the company, assessing its credit potential, ensuring it has the ability to support QFG s project financially, looking for trends to predict future problems and clues for the future. Examples of current customers and types of project Good answers explained that this information would help Jonathan to understand the suppliers capabilities and in turn whether they are likely to meet the needs of QFG, other answers explained that Jonathan could evaluate the number and size of the supplier s current customer base to see whether they are over dependent and as such a higher risk. Details of standards and certifications held approaches which included the confirmation of the supplier s credentials and looking for standards such as ISO9000 to demonstrate their quality management standards. Financial Information for the last three years - Poorer content merely mentioned checking if the supplier is financially stable and did not explain further. Some vague answers described the information that would help Jonathan know if he is going to work well with the supplier, this did not attract marks. Examples of current customers and types of project some candidates discussed the assessment of the current customer to see if they were capable and could meet QFG s requirements; this was incorrect and did not attract marks. SERIES Nov16_ UNIT AC3 EXAM REPORT _LEARNER_COMMUNITY_FV 1/9

2 Details of standards and certifications held weaker answers did not reference an example such as ISO9000 or H&S standards. Some candidates did not attempt this part of the question and so did not attract any marks. (b) Learning outcome addressed: 1.2 Answers in this question part included the ability to obtain a detailed proposal from multiple suppliers which can be evaluated and compared. The buyer can ensure that other stakeholders requirements are met most effectively and that best value is achieved. The use of RFQ enables the buyer to create competition so that the buyer may gain a price advantage. A further purpose which attracted marks was that using an RFQ allows the buyer to control the supplier selection process through a set of up front rules. Some candidates described the RFQ process rather than explaining its purpose and this attracted minimal marks (c) Learning outcome addressed: 1.2 Candidates attaining high marks for this question included four clear evaluation criteria such as payment terms, quality, CSR policy, lead time, warranty. These candidates then went on to provide a clear example for each to demonstrate their understanding of the criteria such as 30 days for payment terms There was some repetition of the examples from the previous question part which used factors as part of the RFI. As this was the same question and scenario, these answers were not awarded marks as they had already been assessed as part of the RFI stage. For example candidates included financial stability then included the example stating stable or unstable. (d) Learning outcome addressed: 1.3 Good approaches began by stating either true or false and then followed with a sentence to back up their claim. Poorer answers incorrectly identified whether the statement was true or false and then repeated the statement adding little of their own explanation. Many candidates misinterpreted the statements by picking up on one word in the statement such as conflict and then explaining conflict between buyer and seller in contracts when the statement was actually about conflict between general terms and special SERIES Nov16_ UNIT AC3 EXAM REPORT _LEARNER_COMMUNITY_FV 2/9

3 conditions and which would prevail. Concluding comment: Generally candidates scored relatively high on this question so many achieving distinction marks. Candidates should take the time to read the question fully and ensure they are clear about what is being asked. Marks lost were often due to the candidate not addressing the question or misinterpreting the statement. Question 2 Learning Outcome 2 (a) Using the correct words or phrases from the glossary in Fig 1, fill in the missing words in the following statement relating to the budgeting process. (b) Identify FIVE fields of information that might be included on a purchase order and explain why each one should be included. (c) The procurement team at Greenway Limited has also been investigating the use of purchasing cards for some low-value purchases. (a) Explain the term purchasing card. (b) Suggest TWO benefits for Greenway Limited of using purchasing cards for low-value purchases. Mark (a) 8 marks (b) 10 marks (c) i) 3 marks ii) 4 marks (a) Learning outcome addressed: 2.1 The statement of the budgeting process missing word question was the highest scoring question of the whole exam paper with most candidates scoring full marks. Most candidates correctly labelled all the missing words and scored 8 out of 8. Some candidates lost a couple of marks because they confused the production budget and the materials purchasing budget and labelled them the wrong way round. (b) Learning outcome addressed: 2.1 Again this was generally answered very well and many candidates achieved full marks on this question part. Candidates scoring highly identified five distinct fields of information such as title of the document, a unique reference number, supplier s details, buyer s contact details, delivery details and lead time, quantity required, description, unit and total price, cost centre, terms and conditions. These fields of information were then explained in terms of why they were included such as a unique reference number to enable the buying organisation to track the order and link to delivery and payment. SERIES Nov16_ UNIT AC3 EXAM REPORT _LEARNER_COMMUNITY_FV 3/9

4 Although most candidates were able to correctly identify the five fields of information that might be included on a PO, some struggled to explain why these might be included by providing an answer that lacked detail or by providing an answer that did not match the field of information described. For example, the candidate may have identified buyer s details but explained why this is important to say a name where order is coming from, this is insufficient to attract marks as it does not explain why the supplier may need this info. (c) Learning outcome addressed: 2.1 Good approaches to this question part were able to correctly explain a purchasing card which are a charge card which work in a similar way to credit cards. They can be used by buyers to purchase goods or services. They are usually issued to specified people within an organisation, not only within the purchasing department. Each card has a maximum spend which can be varied based on seniority. Purchasing cards enable authorised users to purchase directly from suppliers. The procurement department can limit the suppliers where this card can be used, for example limit to fuel suppliers. Most candidates answered this part of the question well and were able to go on to correctly identify two benefits for using purchasing cards such as a reduction in paper handling of purchase orders and invoices and the associated costs and inefficiencies; improved spending control based on pre-set spending limits and category blocking ; more automated management of spend information; fewer payment issues with suppliers regarding late payment; lost invoices; efficient method of payment for on line transactions; reduces the need for staff to claim back out-ofpocket expenses. Some candidates explained the term purchasing card by explaining their benefits and so did not address the question and were not awarded duplicate marks when they repeated the answer in the next part of the question. Poorer answers merely stated a benefit of purchasing cards being faster but failed to explain how this was the case (because there s no requirement to follow the procurement process and raise a PO). Concluding comment: Generally well answered question particularly on part a and b with most candidates scoring high marks for this question. Almost all candidates passed this question and most scored either merit or distinction. Question 3 Learning Outcome 3 (a) Provide an explanation of the terms direct costs and indirect costs below. Use examples from Pet Haven to support your answers (i) Direct costs (ii) Indirect costs (b) Jem has collected the information on Pet Haven s costs and sales in Fig 2 in Mark (a) (i) 3 marks (ii) 3 marks (b) (i) 6 marks (ii)4 marks SERIES Nov16_ UNIT AC3 EXAM REPORT _LEARNER_COMMUNITY_FV 4/9

5 order to conduct a breakeven analysis. (i) Draw a line graph showing the fixed costs, total costs and sales revenue using the information in Fig 2. (ii) Identify the breakeven point on the graph and calculate the breakeven value, rounding the answer up to the nearest whole number of pets per night. (c) 6 marks (d) 3 marks (c) Jem is also concerned about the financial stability of his rabbit and guinea pig food supplier. Explain how he might use the following sources of financial information to gain a better understanding of his supplier s financial position. (d) Jem has already set the sales budget for the next financial year at 50,000. Pet Haven is open 365 days per year, and therefore incurs 36,500 of fixed costs. Using the information in Fig 2, discuss whether the business will make a profit or a loss if annual sales revenue is 50,000. (a) Learning outcome addressed: 3.2 Good answers defined each cost clearly as a cost that can (for direct) and cannot (for indirect) be economically identifiable to a specific saleable unit of output, in the scenario this output was a night accommodation for pets. An example was required for each and candidates offered examples such as food for direct costs and rent as in indirect cost (an overhead). Most candidates were able to provide a basic definition of each to explain the term and almost all could provide an appropriate example for each. Some candidates confused the two terms and explained them the wrong way round resulting in no marks. A minority of candidates explained fixed and variable costs rather than direct and indirect. (b) Learning outcome addressed 3.2 Part (i) of this question required candidates to draw the appropriate lines and label each line on the graph provided using data from the table. The majority of candidates were able to correctly draw the lines for fixed costs, total costs and sales revenue as per the diagram below. SERIES Nov16_ UNIT AC3 EXAM REPORT _LEARNER_COMMUNITY_FV 5/9

6 ( ) 300 Sales revenue 200 Breakeven point Total costs 100 Fixed Costs Sales Volume (units per night) Part (ii) of this question part required the candidate to plot and label break-even point on the graph and also calculate break-even point value. This was a very poorly answered question part. A minority of candidates were able to correctly plot and label the break-even point on the graph as above and to calculate break-even point which results as pets and so rounded up would be 34 pets. Answers providing between 32 and 34 pets were credited with marks. Although many candidates were able to plot the three lines (FC, TC and Sales revenue), some candidates failed to label them and some candidates did not complete the lines so that sales revenue line didn t show as beginning at 0 and fixed costs didn t show as being 100 at 0 units. Candidates who omitted labels or failed to complete the lines scored lower marks. Part (ii) many candidates did not attempt calculations for break-even and did not correctly plot and label break-even point on the graph and so attracted no marks for this question part. Many candidates did not recognise the break-even equation and so incorrectly calculated using various figures from the table. (c) Learning outcome addressed 3.3 Profit and loss account statements better answers explained that this financial information shows the profits and expenditure of the company over a period of time (usually a year), by comparing year on year we can look for trends to help understand the direction of the company. The P&L accounts also reveal whether the company has retained profits which would indicate financial success and a commitment to reinvesting which supports future capability. Some candidates commented that if trends such as a persistent loss were made then the buyer would question the supplier s longevity and may eliminate from selection process. Credit rating report many candidates were able to offer examples of a third party provider such as Dunn & SERIES Nov16_ UNIT AC3 EXAM REPORT _LEARNER_COMMUNITY_FV 6/9

7 Bradstreet and explain their use in demonstrating to the buyer how likely the supplier is to get credit to fund their business. Candidates generally showed a good level of knowledge on this financial information. Ratio analysis - this was quite poorly answered, the question was looking for examples such as profitability, liquidity, efficiency and investment ratios and an explanation that they can be used to measure and compare the suppliers financial performance to highlight trends or compare against other suppliers. Some candidates showed limited understanding of these sources of financial information and as such were unable to explain their use. In particular, many candidates had little understanding of the use of ratio analysis and repeated comments from the previous boxes that it would tell the buyer if the supplier was financially stable. This was too vague and more depth was needed to gain marks. (d) Learning outcome addressed 3.4 Candidates were required to recognise and describe that a sales budget of 50,000 means that Jem will need to sell 10,000 units. The fixed costs for one year are 36,500 (365 X ) and the variable costs would be 20,000 (10,000 X 2.00). Therefore a sales budget of 50,000 would mean a loss of 6,500. Where candidates correctly identified that Pet Haven would make a loss; a mark was awarded, a further 2 marks were awarded for correct calculation of the loss at The majority of candidates identified that the company would make a loss, although not all of those candidates correctly calculated 6500 loss. Generally, those candidates who did not attract marks for this question part, did not attempt the question at all. Some answers merely identified that Pet Haven would make a loss without calculating that loss and so were awarded minimal marks. Concluding comment: Candidates generally found this the toughest question of the whole exam paper and many struggled to attain more than a pass. Many candidates failed this question which ultimately reduced their total marks for the paper. Question 4 Learning Outcome 4 (a) Explain the role of each of the 3 Ps of the service mix in the delivery of procurement services. (b) For the FOUR scenarios outlined below, you are required to: Identify in each case whether formal or informal communication is appropriate; secondly, suggest whether the communication is mainly upward, downward or horizontal; and thirdly, explain the most appropriate method of communication that could be used. (c) Explain how the following technologies might support effective Mark (a) 9 marks (b) 8 marks (c) (i) 4 marks (ii) 4 marks SERIES Nov16_ UNIT AC3 EXAM REPORT _LEARNER_COMMUNITY_FV 7/9

8 communications for the procurement function at BuyTogether. (i) Intranet (ii) Messaging technology (a) Learning outcome addressed 4.1 This question required an explanation of the role of people, processes and physicals with 3 marks on offer for each explanation. Good content included: PEOPLE -Effective customer service relies on recruiting, developing, motivating and managing the right staff and putting effective customer service at the heart of performance criteria. Skills, motivation and training are also valid people elements of the service mix. PROCESSES - These are the policies, procedures and systems that support service delivery. The intangible nature of services means that processes are difficult to standardise. Procurement processes should be streamlined and specify clear service levels to focus on customer feedback and continuous improvement. PHYSICALS As services are intangible, the physicals become very important as they provide evidence that a service has been delivered. Examples provided included staff uniforms and tickets. Weaker answers showed limited understanding of the service mix and instead described the role of people, processes and physicals in general companies rather than linking to a service offering of a procurement service. (b)learning outcome addressed 4.2 Candidates who correctly identified three pieces of information for each scenario; whether the scenario required formal or informal communication, which direction the communication would be in, and suggested an appropriate method were awarded 2 marks for each scenario. Most candidates correctly identified whether formal or informal was appropriate and could suggest an appropriate method. Many candidates incorrectly identified the direction of communication stating upward when the direction for individual performance targets would be downward, and stating downward when the correct direct for establishing the general level of motivation should have been upward. SERIES Nov16_ UNIT AC3 EXAM REPORT _LEARNER_COMMUNITY_FV 8/9

9 c) Learning outcome addressed 4.3 Good content referred to an intranet as a technology that allowed the procurement staff to share information cross-functionally, advertise job vacancies, share news and achievements to promote the function. Holding centralised up-to-date versions of policies and procedures securely and accessible by all internal staff and more modern versions enable staff to submit views and ideas through suggestion box schemes. Candidate answers on messaging technology that attracted higher marks identified , SMS, virtual conferencing and voic . This technology ensures that stakeholders both within and external to BuyTogether are informed. These technologies allow for time differences and can travel geographical distances in real time. Good content explained the ability of messaging technology to show diagrams and pictures to suppliers via a fast and cost effective medium. Some candidates explained the use of e-procurement systems rather than an intranet and failed to recognise that an intranet was for internal staff only, commenting that suppliers would be able to access it. This was incorrect and did not attract marks. Few candidates recognised the breadth of this question by mainly referring to SMS text messages as used to inform suppliers if the buyer was to be late for a meeting. Although some included , very few linked the question to web conferencing. Concluding comment: Relatively well answered question with candidates demonstrating their understanding of delivering effective customer service. SERIES Nov16_ UNIT AC3 EXAM REPORT _LEARNER_COMMUNITY_FV 9/9