Aim

To provide a framework that can be used in order to identify potential sources of supply, appraise and select the best suppliers from these sources and then monitor and encourage improvement in these suppliers.

Rationale

A successful purchase will always depend on finding and selecting the right supplier - this is particularly important for items which are critical to the operation of the organisation.

1. The sourcing process

a) The stages in the sourcing cycle

b) Purchasing documentation associated with each stage

Learning outcomes

In the assessment the candidate may be required to:

1.1 Identify what characteristics the right supplier will possess

1.2 Describe the key stages of the sourcing process

1.3 Demonstrate familiarity with the documents that are used in the sourcing process

1.4 Explain the importance in the purchasing process of selecting the right supplier

2. Appraising suppliers

1. When supplier appraisal should be carried out
2. Methods of supplier appraisal
3. Supplier appraisal criteria including: technical/quality, financial, commercial and environmental appraisal
4. Evaluating suppliers' commitment
5. Evaluating suppliers' capabilities

Learning outcomes

In the assessment the candidate may be required to:

2.1 Explain what supplier appraisal is, the need for it and why it is an important procurement activity

2.2 Explain how a supplier appraisal can be carried out

2.3 Describe how to appraise a supplier's capabilities in a number of areas and how to draw conclusions as to the best supplier under given circumstances

2.4 Appraise a supplier's commitment in addition to their capabilities

3. Sources of information

1. Identifying potential sources of supply
2. Sources for supplier evaluation
3. Setting up a supplier data system

Learning outcomes

In the assessment the candidate may be required to:

3.1 Identify different sources of information about suppliers and how these sources enable the buyer to appraise a supplier's capabilities

3.2 Discuss the impact of electronic systems like the Internet, in both supplier identification and supplier evaluation

3.3 Explain the advantages of computerised systems of managing information over manual systems

3.4 Suggest useful categories of information which could be held on a supplier data system

3.5 Design a simple supplier data system

4. Sourcing methods

1. Requests for proposals and quotations
2. Open tendering processes
3. Restricted and selective tendering processes
4. Direct negotiations and post-tender negotiation

Learning outcomes

In the assessment the candidate may be required to:

4.1 Explain the stages of the tendering process and the appropriate use of tendering

4.2 Outline and explain the advantages and disadvantages of the different types of tendering arrangements

4.3 Identify appropriate circumstances for direct negotiations with suppliers, rather than using competitive tendering

4.4 Identify situations where the use of post-tender negotiation is appropriate

4.5 Describe how quotations or bids received from suppliers could be analysed, how data would be tabulated and how judgements would be made as to which bid represents best value for money for the buyer.

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Aim

To provide an understanding of the process of negotiation, and the strategies and tactics required for an effective negotiation complemented by specific aspects of behaviour.

Rationale

Relationships that exist between buyers and sellers are complex. They can cover a number of commercial issues, such as cost, legal definitions, terms and conditions of contract, delivery, and conformance to quality requirements and deliverables.

For these relationships to exist harmoniously in a modern-day commercial environment requires a specific set of skills, such as understanding each other's objectives, techniques of persuasion, tactics and the way in which the process of negotiation can be affected by different types of communication.

1. Planning a negotiation

1. What is negotiation?

2. Market analysis

3. Building a cost model

4. Carrying out a SWOT analysis

5. Generating variables

6. Understanding the supplier organisation

7. Understanding the people involved

8. Position and interests

9. Determining the balance of power

Learning outcomes

In the assessment the candidate may be required to:

1.1 Define 'negotiation'

1.2 Explain the phases of negotiation

1.3 Show an understanding of the time required for each phase for the negotiation to be effective

1.4 Outline the importance of the preparation and planning phase and its role in a negotiation

1.5 Explain the concept of supply and demand

1.6 Explain how external influences can affect the process and outcome of negotiations

1.7 Explain how internal pressures can affect the process and outcome of negotiations

1.8 Explain how to identify the bargaining position of each party, including the power base, the levels of authority, the strength of the purchase, and the size of the organisation

1.9 Understand how bargaining positions apply to both individuals and the organisation

1.10 Explain the degree of responsibility required from those in a negotiation

1.11 Outline how the levels of authority delegated down affect the decision making process within the organisation

2. Negotiation objectives and strategy

a) Defining objectives and targets

b) Developing the strategy

Learning outcomes

In the assessment the candidate may be required to:

2.1 Understand the effect of differing objectives on the process of the negotiation

2.2 Define 'strategy' in relation to a negotiation

3. The negotiation meeting

1. Stages of the meeting

2. Persuasion techniques

3. Negotiation tactics

4. Characteristics of successful negotiators

5. Body language

6. Negotiating with people from other countries

7. Negotiating by telephone

Learning outcomes

In the assessment the candidate may be required to:

3.1 Understand the stages of the meeting phase

3.2 Explain the differences between the tactics used in a negotiation and the strategic view of negotiations

3.3 Outline the implications of immediate concessions

3.4 Explain the different psychological approaches to the negotiating process, through the use of differing techniques

3.5 Describe the attributes of a good negotiator, and their effect on the negotiation

4. Follow-up to the negotiation

1. Implementing the agreement
2. Evaluating the agreement

Learning outcomes

In the assessment the candidate may be required to:

4.1 Explain the importance of the ratification of negotiations once communications have ended

4.2 Explain the importance of reviewing the negotiation to establish whether it has been successful, through the analysis of the outcome, the gains, the meeting of predetermined objectives and the disappointments of non-achievement

4.3 Describe how the process of evaluation leads into a planning process for the next negotiation or stage of a negotiation, when objectives may need to be altered.

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Aim

To provide an understanding of the methods used by organisations to obtain the right quantities of stock or inventory.

Rationale

The holding of stock can be a large financial burden upon an organisation and needs to be carefully controlled. It is important that purchasing and supply professionals understand the methods and techniques for reducing the cost of holding goods while providing an efficient and effective service to their customers.

1. The costs of holding stock

a) Supply and demand

b) Holding costs

c) Stock evaluation methods

Learning outcomes

In the assessment the candidate may be required to:

1.1 Demonstrate an understanding of the effect of customer demand

1.2 Describe the different costs involved in holding stock

1.3 Explain the different stock evaluation methods LIFO, FIFO, average cost, standard cost, replacement cost

2. Stock control methods

a) Determination of demand

b) Forecasting techniques

c) Stock replenishment systems

d) Determination of safety and service levels

e) Inventory monitoring and control

f) Stock classification and coding

Learning outcomes

In the assessment the candidate may be required to:

2.1 Explain ways in which demand can be affected (i.e. seasonal demand)

2.2 Explain the need for forecasting and demonstrate a knowledge of the different demand forecasting techniques

2.3 Show an understanding of stock replenishment systems and the use of economic order quantities

2.4 Define the terms 'safety' and 'service levels' and describe their effect on order quantities

2.5 Describe the different ways in which stock can be classified and the coding systems available

3. Other inventory management techniques

a) Material requirements planning (MRP)

b) Manufacturing resource planning (MRP2)

c) Distribution resource planning

d) Just in Time stocking systems

Learning outcomes

In the assessment the candidate may be required to:

3.1 Describe the systems for determining dependent demand - MRP and MRP2

3.2 Demonstrate an understanding of how the MRP system works

3.3 Explain distribution resource planning and the importance of this system in managing the supply chain

3.4 Outline the Just in Time philosophy and the requirements for its success

4. Physical stock management

1. Stores/warehouse location
2. Stores/warehouse design
3. Stockyard design
4. Stores/warehouse layout
5. Materials handling
6. Stock transaction recording

Learning outcomes

In the assessment the candidate may be required to:

4.1 Outline the requirements for the location of a stores or warehouse

4.2 Identify the factors which should be taken into account when designing a stores/warehouse

4.3 Identify the factors which should be taken into account when designing a stockyard

4.4 Describe the general principles of stores/warehouse layout (i.e. flow, space utilisation and flexibility)

4.5 Explain the principles of efficient materials handling

4.6 Explain the advantages and disadvantages of the different types of materials handling equipment

4.7 Outline the different stock recording and stocktaking methods 

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Aim

To provide an understanding of the immediate business environment which affects the organisation and the individual in business activities.

Rationale

Organisations and individuals are affected by a number of internal and external pressures. Some of these pressures can be controlled and some cannot. The organisation and the individual must be able to understand the effects of these pressures on the purchasing and supply function, and be able to respond to them.

1. Types of organisations

1. Organisational objectives - private and public sectors
2. The types of economy: planned economy, market economy, mixed economy
3. The sectors of an economy: primary, secondary and service sectors

Learning outcomes

In the assessment the candidate may be required to:

1.1 Outline the three types of economy

1.2 Distinguish between public and private sector organisations and understand the influences involved

1.3 Explain the impact of privatisation policies

1.4 Describe the different business sectors and their role within the business environment

1.5 Distinguish between the trends in different business sectors

2. Corporate strategy

a) Strategic planning

b) Three levels of strategy: corporate, business and functional

c) Generic corporate strategies: diversification, withdrawal, consolidation, market penetration, mergers and acquisitions, joint developments and strategic alliances

d) Competition in the marketplace

e) Product development

Learning outcomes

In the assessment the candidate may be required to:

2.1 Show a basic understanding of the determination of business strategies

2.2 Explain the effect of different market conditions (i.e., pure, imperfect and monopoly)

2.3 Describe the product development process and show an understanding of the product life cycle

2.4 Outline the advantages and disadvantages of horizontal, backwards and forwards integration

3. Organisational structure and culture

1. Types of organisational structure
2. Centralised and decentralised functions
3. Organisational cultures

Learning outcomes

In the assessment the candidate may be required to:

3.1 Define the different organisational structures and how they are managed

3.2 Demonstrate an understanding of the implications of organisational structure

3.3 Outline the advantages and disadvantages of centralised and decentralised functions

3.4 Explain how organisations differ in terms of culture

4. Information systems

1. The purchasing system
2. IT systems
3. eProcurement - electronic data interchange (EDI)

Learning outcomes

In the assessment the candidate may be required to:

4.1 Outline the advantages and disadvantages of manual and computer-based purchasing systems

4.2 Demonstrate their understanding of the purchasing process

4.3 Identify the main requirements of a purchasing IT system

4.4 Describe how IT will help their organisations in the future

5. Corporate policies and initiatives

1. Quality management
2. Environmental policy
3. Human resources policy

Learning outcomes

In the assessment the candidate may be required to:

5.1 Demonstrate an understanding of quality issues and their effect on purchasing decisions and total cost

5.2 Explain 'total quality management' and the continuous improvement philosophy

5.3 Describe the implications for business success of adopting environmental standards

5.4 Demonstrate an understanding of human resource issues such as grievance procedures, discrimination and health and safety