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Corporate Award Practitioner Level - Integrated Assignment (1) The roles of procurement and supply in managing this area of expenditure underlining

the inputs that may be made by its stakeholders Role of Procurement

• terms that relate to procurement and supply • roles and benefits of procurement • How effective procurement impacts on profitability or creating savings and

efficiencies • Internal and external priorities;

• Price/Cost • Quality • Time • Quantity • Place

• internal and external stakeholder’s inputs • conflicts of interest • objectives of a procurement • tiers of the organisation’s supply chain • triple bottom line benefits of sustainability (economy, environment, social

development)

Procedures in Procurement • The documentation typically used in procurement and supply:

• Requisitions • Orders • Delivery Notes • Invoices • Other documents

• documented policies and procedures • The responsibilities for procurement • Regulations relating to competition • Levels of delegated authority • Responsibilities for the stages of the sourcing process • Invoice clearance and payment

• ethical codes • corporate governance • financial budgets • achieving compliance with processes and the achievement of outcomes that bring

added value

(2) Techniques that can be applied to the area of expenditure to improve added value

The impact of the External Environment on Procurement and Supply • How markets can be defined in terms of size, scope and stages of development • levels of industry competition such as perfect competition, imperfect competition,

oligopoly, duopoly and monopolies • How demand and supply factors impart on organisations in the supply chain • impact of market change can have on organisations • PEST (political, economic, social and technological) criteria and the Five Forces model

impacts on an organisation, its suppliers and customers to enable an improved understanding of the organisation’s supply chain

• How macro-economic factors such as interest rates, inflation, exchange rates and the level of economic activity (GDP/GNP) impacts on organisations

Effective Purchasing • sources of added value that can be achieved through effective procurement and

supply including: • Competitive pricing • Reduced total costs of ownership • Improved quality • Delivery performance and time to market • Reduced stockholding, quantities of resources matching demand innovation • Sustainability

• portfolio matrices to assess categories of expenditures and perceptions of the organisation by suppliers

• business cases to justify expenditures on supplies, services or projects including: • Costs • Benefits • Options • Alignment with organisational needs • Timescales

• main types of pricing arrangements in commercial agreements including: • Pricing schedules • Fixed pricing arrangements • Cost plus and cost reimbursable pricing arrangements • Indexation and price adjustment formulae • Incentivised gain share pricing • Payment terms

• The operation of financial budgets for the control of procurements • Published reports and indices on markets • The comparison of quoted prices to historical data • The link between costs, prices, margins and mark ups • Negotiating improved prices • Estimating whole life costs • Defining quality and the costs of non-conformance • Assessing the quality of delivered products or services

(3) Inclusions that should be made in contracts formed in the future Developing Contracts • The main types of contracts and agreements including:

• The use of spot purchases • Term contracts • Framework agreements (or blanket orders/panel agreements)

o Call offs • documentation that is used to create commercial agreements for the supply of goods,

services or works and how to complete these including: • The specification • Key performance indicators (KPIs) • Contract terms • Pricing schedule • Other schedules (for health and safety, use of sub-contractors, non- disclosure/confidentiality agreements

• sources of express terms that can be used to regulate contracts made for the supply of goods or services including: • The use of standard or specialised terms of purchase • Model form contracts • Bespoke contracts

• legal issues that relate to the creation of commercial agreements with customers or suppliers relating to offers, counter offers, acceptance and other issues

• Core clauses that comprise commercial agreements with customers or suppliers including:

o Indemnities and liabilities o Sub-contracting and assignment o Insurances o Guarantees o Liquidated damages o Payment o Delivery and completion

• provisions of legislation that relate to contracts for the supply of goods and services including:

o Quality o Delivery o Payment o Passing of property o Compensation

Developing Specifications • different types of specification typically used in the procurement of goods or services

such as drawings, samples, branded, technical, conformance, output or outcome based specifications

• Sources of information that can be used to create specifications such as standards, internet, suppliers and directories

• use of social and environmental criteria in specifications • typical sections of a specification such as scope, definitions, descriptions of

requirements, testing and acceptance, change control mechanisms, remedies • risks that can result from inadequate specifications particularly through under or over

specifying needs • use of standardisation, value analysis and value engineering programmes to regulate

specifications • use of contractual KPIs that link to technical and commercial requirements in contracts Contract Management • sources of added value in procurement and supply such as the movement of: • Prices or total costs • Timescales • Quality • Innovation • Sustainability or other sources of added value • main types of risks in the performance of contracts such as internal, market, economic,

legal, ethical sourcing and performance based risks • Responsibilities for contract management • Demand management for contracts • Performance management and ensuring compliance to agreed standards • Payment responsibilities in contract management • Creating targets for assessing the performance of suppliers based on the SMART

(specific, measurable, achievable, relevant and timely) targets for performance • Supplier improvement plans in contract management

(4) Measures that can be taken to select effective suppliers The impact of the External Environment on Procurement and Supply • Reviewing and clarifying requirements from internal customers and stakeholders • The impact of organisational procedures on the sourcing process including:

• The responsibilities for procurement • Regulations relating to competition • Levels of delegated authority • Responsibilities for the stages of the sourcing process • Invoice clearance and payment

• Developing sourcing options such as single, dual, multiple sourcing arrangements • The development of invitations to tender comprising of specifications, applicable key

performance indicators, contract terms, pricing schedule and other schedules • Analysis and planning involved in a sourcing process • The distinction between the selection in the pre-contract stage and award used in the

post-contract award stages of a sourcing process • The evaluation of supplier’s quotations or tenders • How to use Purchase to Pay (P2P) systems used in procurement and supply such as E-

requisitioning, E-catalogues and E-invoicing • How to use E-tendering software in procurement and supply • The use of E-auctions in the sourcing process Supplier Appraisal • The use of pre-qualification criteria or processes for supplier appraisal in the sourcing

process • Sources of information on suppliers such as:

• Financial reports • Credit rating agencies • Other appropriate publications and sources

• The assessment of financial statements to evaluate the financial, commercial and technical capabilities of potential suppliers in the sourcing process

• The use of ratio analysis to evaluate potential suppliers • The use of scoring in the supplier appraisal process

(5) Any aspects of purchase/supply that may require negotiation • Negotiation in relation to the sourcing process dealing with conflict with stakeholders

and suppliers • The types of approaches that can be pursued in commercial negotiations such as:

• Collaborative (win/win) • Distributive (win/lose) • Pragmatic • Principled styles of negotiation

• The stages of a commercial negotiation including the planning and preparation, opening,

testing, proposing, bargaining and agreeing • The use of data and information in commercial negotiations • The sources of power in commercial negotiations • Creating the right environment for a commercial negotiation including the choice of

location, its surroundings and timings • Behavioural aspects of negotiation including effective listening, the use of persuasion

methods, the use of tactics and influence