L4M1-60 Pages

CIPS Exam Report for Learner Community:
Qualification: Diploma in procurement and supply

Unit: Contexts of procurement and supply
Exam series: July 2016
Each element of a question carries equal weighting unless otherwise stated.

Question 1 – Learning Outcome 1 Mark
(a) Outline, using examples, FIVE elements of the total cost of ownership (10 marks)
of capital equipment.
(b) It is widely believed that it is important to attempt to reduce costs and (15 marks)
add value throughout the supply chain.
Explain THREE methods or techniques that might achieve such goals.
Learning outcome addressed

(a) LO1.2
(b) LO1.2
Command word explanation:

Part (a) Outline – give the main features, facts or the general idea of something
Part (b) Explain – give reasons for or account for something
Examples of good content/good approaches in answers:

Answers to part (a) should have outlined five elements of the total cost of ownership. These might have
included:
 Pre-acquisition costs, such as research and tendering
 Acquisition costs, such as the purchase price, the cost of finance if borrowing is necessary, delivery
and installation
 Operating costs, for example labour and materials
 Maintenance costs, such as replacement parts and servicing
 Downtime costs, such as lost production
 End of life costs, such as decommissioning and disposal
Answers to part (b) should have explained three methods or techniques that might achieve lower costs and
added value. These might have included:
 Value engineering, which is the process of analysing the value of a product at the design and
development stage
 Lean supply, which involves eliminating waste across the supply chain
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 Agile supply, which involves collaborating closely with the supply chain to increase the speed and
flexibility of its response to changing customer needs
 Value-adding negotiations, which means collaborating closely with the supply chain to find ways of
improving processes and adding value, with mutual benefits to all parties
Examples of content for merit/distinction grade answers:

The strongest answers, which were awarded marks of a credit or distinction pass standard, identified the
correct number of responses required for each part, five in part (a) and three in part (b). Then they went on to
outline or explain each of the responses in detail and introduce illustrative examples.
Examples of poorer content/ poorer approaches in answers:

In the case of part (a), a small number of candidates simply identified the costs, without providing examples
to illustrate. In the case of part (b), a minority of candidates introduced methods or techniques, which were
not appropriate as cost lowering or value adding. An example sometimes used was the five 'rights' of
purchasing.
Concluding comment:
Overall, this question was answered well. Many answers were awarded the maximum, or almost the
maximum mark for part (a). Similarly, many answers to part (b) were awarded a mark of a credit or distinction
pass standard. The result was that many candidates achieved a high mark for the question.

(a) Explain the activities that could be undertaken by an organisation to (16 marks)
identify and appraise potential suppliers as part of the sourcing
process.
(b) Explain THREE activities that take place post contract award. (9 marks)

(a) LO2.2
(b) LO2.1

Part (a) & (b) Explain – give reasons for or account for something

Answers to the first section part (a) of the question should have focussed on surveying and engaging the
market. Activities which might have been explained include constantly monitoring the supply market and
engaging in market research. Other potential sources of information include procurement database records,
supplier catalogues, trade directories, trade fairs and exhibitions, networking with other procurement

professionals or using the internet.
Answers to the second section of part (a) should have focussed on the process of appraising potential
suppliers, the purpose of which is to ensure that a potential supplier will be able to perform the contract. Pre-
qualification criteria need to be established and one example of a model for doing this is the Carter 10 C's
model. Pre-qualification information should be collected and verified and activities to do this include self-
appraisal questionnaires, analysing the potential supplier's financial statements and checking the supplier's
qualifications and accreditations. Finally, a site visit can be undertaken, the purpose of which is to confirm the
information already collected and to make contact with key staff of the supplier.
Part (b) of the question asked for an explanation of three activities that take place post contract award.
Activities which might have been explained include:
 Expediting, which involves following up or chasing an order, perhaps by using an online track and trace
system
 Contract management, which is the process designed to ensure that both parties meet their
obligations and that the intended outcomes of the contract are delivered
 Supplier management, which are the activities involved in monitoring the performance of the supplier
and developing the supplier
 Contract termination, either when the contract is complete, or if one of the parties is in breach of the
contract terms
 Debriefing unsuccessful suppliers, following a tender process. This gives them the opportunity to
improve in the future

The strongest answers to this question were illustrated by examples from the candidate's workplace. In part
(a), examples of how potential suppliers are identified and appraised were given, while in part (b) examples of
post contract award activities, undertaken by the candidate's organisation, were provided.

A significant number of answers to part (a) responded to one of the requirements of the question. Some
concentrated on the activities involved in identifying potential suppliers and provided no information on the
activities in appraising potential suppliers. Others did the opposite and concentrated on activities involved in
appraising suppliers and provided no information on the activities in identifying potential suppliers. Such
answers could not be awarded a mark of more than a pass standard, because only half of the question had
been answered and some were awarded a fail grade mark. A small minority of answers simply described the
purchasing cycle, which did not address the question and few marks were awarded for such answers.
A In the case of part (b), a small number of answers missed the point of the question and explained pre contract
award activities, rather than post contract award activities, for which no marks could be awarded.

Concluding comment:
Overall, the marks awarded for answers to Q2 were good. Most achieved a mark of at least a pass standard
and, there were a significant number that achieved a mark of a credit or distinction pass standard.

Identify FIVE potential barriers to achieving good procurement governance. (25 marks)

LO3.1
Command word explanation
Identify – mention items separately

Good answers would have identified and given some information about the following:
 The lack of support from senior managers within the organisation
 A lack of co-operation from stakeholders in the procurement function, both in the internal supply
chain and the external supply chain
 Poor ICT systems and systems integration
 A lack of clarity in the organisation's governance model, codes of conduct, rules and procedures
 A lack of resources, including finance and time, to incorporate any governance requirements
 A lack of coherence and co-ordination of procurement responsibilities

Stronger answers would have given more information about and given examples of, the above barriers from
the candidate's work experience or from previous employment.

Many answers did not address the question and attempted to answer it by describing unethical behaviour,
such as conflicts of interest, fraud, accepting gifts and hospitality and not keeping information confidential.
Little credit could be awarded for such answers, because they did not address the question.
Concluding comment:
There were a few very good answers to this question. The few good answers that were provided, correctly
identified five potential barriers to achieving good procurement governance and introduced illustrative
examples from the workplace to demonstrate how they make it difficult to achieve good procurement
governance. Such answers were rewarded by a mark of a distinction pass or credit pass standard. The majority
of answers, however, did not address the question and it was not possible to award a mark of a pass standard.

(a) Outline FIVE roles of a public sector regulator. (15 marks)
(b) Explain, with examples, how objectives for corporate social

responsibility may impact on public sector procurement. (10 marks)

(a) LO4.2
(b) LO4.2

Part (a) Outline – give the main features, facts or the general idea of something
Part (b) Explain – give reasons for or account for something

Good answers to part (a) would have outlined five roles of a public sector regulator. These might have
included:
 The budgets of public sector bodies are set within frameworks laid down by government and
regulators are responsible for ensuring compliance
 Regulators also scrutinise expenditure to ensure that it is within government guidelines
 Regulators also protect national interests and public welfare, to ensure that all operations and
procurement are carried out in ways that will avoid negative effects on national interests
 Regulators also issue and renew licences where organisations need such licences to carry out their
operations and services
 Regulators set and advise on standards of good practice, quality standards and service levels
 Regulators handle complaints against public sector organisations, for example ombudsmen
 Regulators monitor and audit organisational activities for compliance to standards
 Regulators ensure that taxpayers' money is spent appropriately
Good answers to part (b) would have covered the main areas of corporate social responsibility. These might
have included the environment, gifts and ethics, sustainability, using small and local suppliers and the safe
disposal of toxic materials. There would also have been an explanation of how the objective of corporate
social responsibility might impact on public sector procurement.

There were some answers to part (a) which were of a high standard, correctly identifying and outlining five
roles of a public sector regulator and providing examples from the candidate's own country. These were
rewarded by a mark of a distinction or credit pass standard.

There were some very good answers to part (b) of the question. These introduced the main elements of
corporate social responsibility and went on then demonstrate how these might impact on public sector
procurement.
The strongest answers would have gone on to say that to meet environmental objectives, for example to
reduce waste, public sector organisations need to work with the supply base, in order to manage conflicting
objectives of reducing cost against the additional cost of monitoring. Because public sector procurement has a
stewardship role over the public money it spends, it is critical that records and audit trails are maintained to
prove accountability. Also, introducing CSR policies may require public sector procurement to support ethical
and responsible behaviour by supporting local businesses.

Many answers to part (a) did not address the question and instead outlined the roles of a public sector
organisation, rather than a regulator and it was not possible to award such answers a mark of a pass standard.
Some answers to part (b) simply listed the main elements of corporate social responsibility, without
explaining how they may impact on public sector procurement. Such answers were awarded a mark of a pass
or marginal fail standard.
Concluding comment:
Overall, this question was not answered well. There were few answers that were awarded a mark of a
distinction or credit pass standard. The majority were in the range of a pass or marginal fail standard.

Qualification: Diploma in Procurement and Supply
Unit: Contexts of Procurement and Supply
Exam series: May 2016
Each element of a question carries equal weighting unless otherwise stated.

Question 1 Mark
Question:
(a) Explain FOUR challenges for procurement when purchasing services due to
their distinctive features. 16 marks
(b) Outline THREE circumstances in which an organisation might buy and hold
items in stock rather than buying them only when needed. 9 marks

(a) LO 1.1
(b) LO 1.1

Part (a) of the question required an explanation of four challenges for procurement when purchasing services.
As the command word was explain, answers needed to contain some detail.
Part (b) asked for an outline of three circumstances when buying to hold items in stock might be appropriate.
Because the command word was outline, little detail was required.

Answers to part (a) should have identified four distinctive features of services and explained the nature of
each. These might have been:
 Intangibility; the fact that services cannot be weighed, measured or inspected before purchase
 Inseparability; services are produced and consumed simultaneously
 Heterogeneity; services can vary according to the personnel performing them
 Perishability; services can't be stored for future use
 Ownership; the ownership of a service doesn't transfer and it is difficult to assess when risk and
liability have been passed on
Answers to part (b) should have provided an outline of three circumstances when organisations might buy
and hold items in stock, rather than buying them when needed. These might have included:
 Items that are critical to the production process and their unavailability would cause disruption
 Seasonal items where holding items in stock would manage seasonal demand
 Items that increase in value over a period of time
 Where it is anticipated that the price of items will rise in the future
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 If there are legal reasons why items have to be stored on site

Stronger answers to part (a) would have addressed the challenges for procurement when purchasing services.
These might have included:
 The fact that services are intangible means that procurement will have to look for other attributes,
such as service levels, price and convenience
 Because services are inseparable, the efficiency and effectiveness of the people concerned and the
processes is crucial, so that procurement must get this right in selection and evaluation
 To address the challenge of services being heterogeneous, the consistency of provision is difficult to
secure. Procurement will therefore have to develop specifications or service level agreements
 As services are perishable and can't be stored, Procurement will have to plan carefully to get the
availability and timing right
 Because ownership of services doesn't transfer, requirements will have to be defined in specifications
or service level agreements
The strongest answers to part (b) would have included examples to illustrate the three circumstances.
Examples might have included key spare parts for critical items, seasonal items such as Christmas cards and
gifts, fine wines as an example of goods rising in value and health and safety equipment as a legal
requirement.

In the case of part (a) a significant number of candidates correctly identified the distinctive features of
services and gave a brief explanation of their nature. However, they did not go on to explain the challenges
for procurement, arising from each of the features. Such answers were awarded marks of a pass standard.
Some answers to part (b) were very short and although the command word was outline, a short description
was required, with examples.
Concluding comment:
In general terms, this question was answered well. The majority of answers were awarded a mark of at least a
pass standard, with a significant number achieving a mark of a credit or distinction pass grade.

Question 2 Mark
Question:
(a) Identify the main stages of a sourcing process (also known as the purchasing
or procurement cycle). 9 marks
(b) Describe FOUR benefits of using electronic systems in the sourcing process. 16 marks

(a) LO 2.1
(b) LO 2.3

The command word in part (a) of the question was 'Identify'. No detail was required, but only a phrase or
short sentence for each stage.
Part (b) of the question required a description of four benefits of using electronic systems in a sourcing
process. Answers should therefore have identified four benefits and then provided information about them.

Answers to part (a) should have listed the stages of a sourcing process. These should have included:
 Identifying a need
 Describing the need in terms of a specification
 Developing contract terms
 Sourcing the market to identify suitable suppliers
 Appraising potential suppliers
 Inviting quotations or tenders
 Supplier selection
 Negotiating to improve terms
 Contract award
 Contract management
Answers to part (b) should have identified and described four benefits of using electronic systems during a
sourcing process. These might have included:
 Cost savings as processes are streamlined and speeded up
 Improved communication through the internal and external supply chains
 A higher degree of accuracy of data input, manipulation and transfer
 Reduced cycle and lead times as electronic systems are more responsive
 The availability of real time information, for example inventory levels or delivery progress to support
planning and decision making
 A reduced risk of fraud through fewer cash transactions

The strongest answers to part (a) would have identified at least seven of the ten stages in the sourcing
process to achieve a distinction pass grade and six of the ten for a credit pass grade.
Stronger answers would have introduced examples to illustrate the benefits identified. For example, the use
of e-tendering, e-auctions and e-mails will help to achieve the above benefits.

There were very few poor answers to part (a). In the case of part (b), however, a significant number of
answers identified four benefits, but provided little information about them. A small number of candidates
misread the question and described four types of electronic system. In such cases, marks were awarded only
for relevant points made.
Concluding comment:
This question was generally answered well. Many answers to part (a) were awarded the maximum, or almost
the maximum, mark. The majority of answers to part (b) were awarded a mark of at least a pass standard, so
that overall, many credit and distinction pass grade standard marks were awarded. Only a small number of
answers did not achieve at least a mark of a pass standard. At the other extreme, a few candidates spent a lot
of time describing each of the stages in detail.
Question 3 Mark
Question:
Explain FIVE key areas of guidance for procurement professionals within the CIPS
Code of Conduct. 25 marks
Learning outcome addressed 3.1

The command word for this question was 'Explain', so that answers should have provided the five key areas of
guidance, with the reasons why they were key given.

Answers should have identified five key areas of guidance for procurement professionals within the CIPS Code
of Conduct. These might have included:
 Members must disclose any personal interest which might impinge on their work activities, or which
might appear to do so
 Members must respect the confidentiality of information that comes into their possession and it must
not be used for personal gain
 Members must avoid any arrangements which might prevent fair competition
 Business gifts from suppliers or potential suppliers must not be accepted, except for those of low

value
 Any hospitality offered by suppliers or potential suppliers must be modest
 Members must maintain the highest standards of integrity in all business relationships
 Members must ensure that they fully comply with any applicable laws or regulations
Answers which referred to the CIPS Code of Conduct, the CIPS Ethical Code, which was applicable before the
change in 2013, were acceptable. Similarly, answers which referred to general principles of conduct for
procurement professionals, which do not necessarily appear in the CIPS Codes, were acceptable, if
appropriate.

There were few answers that were awarded a mark of a credit pass or a distinction pass standard. Those that
did achieve a higher grade identified five key areas, provided a detailed explanation of why they were
important and introduced illustrative examples. Such examples were either from the workplace or from
recent and current events, highlighted in the press.

A significant number of answers lacked the depth of detail required to achieve a mark of a pass standard. A
small number of answers did not address the question set, with an attempt to use the five 'Rights' of
procurement as a basis. Such answers were awarded few marks, only for any valid points made.
Question 4 Mark
Question:
Discuss FIVE ways in which the objective of profitability, in a private sector
organisation, might impact on its procurement activities. 25 marks
Learning outcome addressed 4.3

The command word in this question was 'Discuss'. This meant that answers had to consider the topic set in
the question from different points of view.

Good answers would have started by examining the concept of profit, stating that it is the difference between
the organisation's revenue from sales and the cost of providing the goods or services. This can affect
procurement activities in many ways, which might include:
 A pressure to focus on reducing expenditure, by becoming more adversarial, or buying cheaper
inputs. This might, however, increase costs in the future if cheaper products lead to poor quality,
which may result in scrap or reworking

 Value Analysis and Value Engineering might also result in lower costs, by challenging the nature of
inputs and the procurement function can contribute to this process, involving suppliers to add value
 Waste reduction and value-adding, which has resulted in the procurement function moving from
being a reactive activity to a proactive one
 Adopting Supply Chain Management concepts, which involves the procurement function moving from
an adversarial approach to collaborative or partnership working
 The procurement function can also add value by a careful approach to supplier evaluation and
selection
 Introducing activities such as early buyer involvement and early supplier involvement can also assist in
lowering costs at the early stage of design

There were few answers to this question that were awarded marks of a credit pass or distinction pass
standard. A significant number lacked the detail required and the most common marks awarded were those
of a marginal pass or marginal fail standard. The few answers that were awarded high marks identified five
areas of impact, discussed them in detail and introduced examples to illustrate.

A small number of answers tried to deal with this question in terms of the five 'Rights' of procurement. Such
answers were awarded few marks, only for any relevant points made.
Concluding comment:
This question was not answered well. Many answers lacked the depth of detail required for a 25 mark
question.

Unit: D1 - Contexts of P&S
Exam series: March 2016
Question 1 – Learning Outcome 1

(a) Explain, with examples, the characteristics of each of the following purchasing (15 marks)
categories:
(i) Commodities
(ii) Goods for resale
(iii) Maintenance, repair and operating (MRO) supplies.
(b) Outline FIVE circumstances where 'buying for stock' would be an appropriate
procurement policy. (10 marks)
(a) LO 1.1Explain the categories of spend that an organisation may purchase.
(b) LO 1.1 Explain the categories of spend that an organisation may purchase.
Answer to part (a) (i) should have stated that commodities are items that occur in nature. They may be mined
or quarried, farmed or fished. Examples include coal, iron ore, cotton, tea and wheat. They are usually the raw
materials that go into the manufacturing process to create finished products. Iron ore is used to make steel,
cotton is used to make clothing, while wheat is converted into bread products. Stronger answers would have
explained some of the key characteristics, such as the fact that they are unequally distributed geographically
and that they are often sourced internationally, resulting in exchange rate and transport risks. A further
characteristic is that they are often subject to significant price fluctuations, because of changes in supply and
demand.
Answer to part (a) (ii) should have stated that goods for resale are finished goods that are sold on to
customers with little or no work carried out by the purchasing organisation. Examples include televisions,
computers, clothing and foodstuffs. The strongest answers would have gone on to explain the key
characteristics. These include 'bottom line thinking' because profit margins are likely to be low, broad
assortment, involving a wide range of products and the fact that buyers will usually purchase according to
supplier specifications.
Answer to part (a) (iii) should have stated that MRO supplies are goods and services needed to transform raw
materials and components into end products. Examples include paints, lubricants and packaging materials.
One characteristic of MRO supplies is that manufacturing companies use such items regularly and this can
lead to a large number of stock lines. Others include the fact that usage of such items can be relatively low,
but the cost of procurement and stockholding can be high and that MRO supply availability is likely to be
crucial, in that their absence might disrupt operations and involve high costs.
Answers to this question were generally good, with a high number of candidates achieving a mark of a
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distinction, or credit. Only a small minority of candidates did not achieve at least a pass mark and this was
because they were unable to explain the three categories.
Part (b) Should have outlined five circumstances where 'buying for stock' would be an appropriate
procurement policy. These include:
• Where there is a long lead time, for example when buying from an overseas supplier
• Where items are critical for operations and running out of them would cause costly disruption to the
organisation, for example 'bottleneck' items
• Where there are legal requirements for holding items, for example health and safety equipment
• Where items are likely to appreciate in value over time, for example fine wines and timber
• Where the price of the item is expected to rise and purchasing now and holding in stock may result in
cost savings
• Where demand for the item is seasonal and the buying organisation lacks the capacity to deal with
peaks in demand, for example Christmas cards
• Where buying in bulk might lead to economies of scale and cost savings, which outweigh the storage
costs
Again, this part of the question was answered well, with many candidates achieving the maximum, or almost
the maximum mark. Only a very small minority of candidates were unable to achieve at least a pass mark,
mainly because they were unable to answer the question.

(a) Outline THREE functions which could be included in a Purchase to Pay (P2P) system. (9 marks)
(b) Explain FOUR potential disadvantages of using electronic systems in the sourcing (16 marks)
process.
(a) LO 2.3 Explain how electronic systems can be used at different stages of the sourcing process.
(b) LO 2.3 Explain how electronic systems can be used at different stages of the sourcing process.
Part (a) should have outlined three functions which could be included in a P2P system. These include:
• Tracking and tracing deliveries
• Expediting by exception
• Automated receipt and inspection, verifying delivery to trigger payment, authorisation and automatic
payment
• Capturing of supplier performance data, budgetary control and spend data
• Receipt of invoices, automated invoice matching and electronic invoice generation
• The generation of payment, by e-payments or fund transfers
Stronger answers to this question included illustrative examples, often from the candidate's own workplace.
The standard of answers was mixed. There were some excellent answers, with candidates outlining three

appropriate functions and introducing examples to illustrate. A few candidates, however, produced answers
which demonstrated little knowledge of P2P systems and these did not achieve a pass mark.
Answers to part (b) should have explained four potential disadvantages of using electronic systems in the
sourcing process. These include:
• High capital investment and set-up costs, which may be too great, especially for small organisations
• High initial learning curve costs, for example the training of users and the cost of initial errors
• Reliability issues, such as the risk of network breakdown, viruses and power failure
• Compatibility issues with suppliers; some suppliers may be located in countries with a less developed
infrastructure
• Some small suppliers, who do not have access to electronic systems, may be precluded from doing
business, even though they may have the capabilities
• Data security risks, arising from unauthorised or malicious access to data
• Supplier relationships may become transactional as personal contact and face-to-face meetings are
reduced
Again, the strongest answers to this question introduced examples to illustrate, often from the candidate's
own workplace.
As was the case for part (a), answers to this part of the question were of a mixed standard. A high proportion
of candidates were able to explain four potential disadvantages and illustrate these with examples, they were
rewarded with a distinction or credit. A small minority of candidates, however, misunderstood the question
and instead of explaining generic disadvantages, selected different e-systems, such as e-tendering and e-
auctions and attempted to explain the disadvantages of these. In such cases, marks could only be awarded for
any relevant points made.

(a) Define the term 'ethics'. (5 marks)
(b) Discuss FIVE examples of ethical or unethical behaviour that could be addressed in (20 marks)
an ethical code for procurement professionals.
(a) LO 3.1 Explain the main aspects of corporate governance of a procurement or supply chain function.
(b) LO 3.1 Explain the main aspects of corporate governance of a procurement or supply chain function.
Answers to part (a) of the question should have stated that 'ethics' are moral principles or values about what
constitutes 'right' and 'wrong' behaviour. At a corporate level, there are issues which face an organisation as it
formulates strategies and policies about how it interacts with its stakeholders, including Corporate Social
Responsibility. Stronger answers would have included examples, such as not dealing with suppliers who
exploit their labour force or suppliers who offer bribes to win business.
This part of the question was answered well, with many candidates achieving a mark of distinction or credit.
Only a small minority did not achieve a mark of at least a pass standard and the reason for this was that

answers were very short and lacked depth of detail.
Answers to part (b) should have discussed five examples of ethical or unethical behaviour that could be
addressed in an ethical code for procurement professionals. These might have included:
• Not accepting inducements or gifts from suppliers or potential suppliers, other than those of a
nominal value and which have been sanctioned
• Not allowing offers of hospitality to influence, or to be perceived to influence, procurement decisions
• Not allowing vested interests, such as having a family link or a personal interest in a supplier, to
influence procurement decisions
• Never breaching the confidentiality of information received in a professional capacity
• Ensuring that information given to suppliers is accurate and that all potential suppliers have access to
the same information
• Striving for genuine, fair and transparent competition
• Promoting positive environmental issues, such as reducing waste and increasing recycling
• Never using one's authority or position for personal gain
Stronger answers would have illustrated the points made with examples, often from the candidate's
workplace or from real life cases which have been featured in the press.
Again, this part of the question was generally answered well. Many candidates achieved a mark of distinction
or credit, by discussing five examples of ethical or unethical behaviour and introducing appropriate examples
to illustrate. Few candidates did not achieve a mark of a pass standard and this was usually because of
repetition, with similar points being made several times.
(a) Describe, with examples, FOUR ways in which a third sector organisation's (16 marks)
objectives may impact on its procurement activities.
(b) Explain the impact of regulation on a third sector's procurement function. (9 marks)
(a) LO 4.4 Analyse the impact of the not for profit or third sector on procurement or supply chain roles.
(b) LO 4.4 Analyse the impact of the not for profit or third sector on procurement or supply chain roles.
Answers to part (a) of this question should have identified four objectives of a third sector organisation and
then gone on to describe how these objectives may impact on procurement activities. These might have
included the following:
• Raising public awareness of the organisation's cause; this might be for an environmental or social
pressure or interest group. The impact on procurement is that all procurement activities must be
done in a way that conforms to the organisation's objectives. For example, in the case of an
organisation concerned with environmental issues, procurement activities must be arranged in an
environmentally friendly manner

• Political lobbying and advocacy on behalf of the organisation's cause. The impact on procurement is
that purchases that might be seen to go against the cause should be avoided
• Raising funds to carry out the organisation's activities, perhaps using commercial operations to
generate profits. This is likely to impact on procurement in that any purchases to be made for resale
must be attractive to customers, in terms of quality and price
• Providing material aid and services to beneficiaries, such as the homeless or the aged. The impact on
procurement would be to source items that would contribute as much as possible to the
organisation's cause
• Providing services to members, for example trade unions advocating employment rights and
professional bodies securing ethical and technical standards. The impact on procurement would be to
source only from suppliers who have similar objectives
• Mobilising and involving members of the public in community projects for mutual benefit. The impact
on procurement will be that purchases will need to be made that will add to the organisation's
objectives in some way
The strongest answers to this question would have illustrated the points made with examples, such as cases
that have been featured in the press.
This was the least well answered question on the paper. Few candidates achieved a mark of distinction or
credit and only about half of the candidates achieved a pass mark. The main reason for this was that the
majority of candidates were not aware of the objectives of a third sector organisation. Instead, they identified
procurement objectives, such as establishing an audit trail and being transparent, which attracted few marks.
A few candidates did correctly identify some third sector organisation objectives, but then did not go on to
describe how these impact on procurement activities, which resulted in low marks being awarded.
Answers to part (b) should have stated that, in the third sector, procurement functions are more closely
regulated than in the private sector. This is because they are spending money which is derived from donations
and government grants. This means that procurement is performing a 'stewardship' role, with a strong
emphasis on accountability. Also, third sector organisations, such as charities, will need to ensure that
procurement complies with the charity's legal requirements and those of the Charities Commission.
Regulators may check that a third sector organisation is run for the public benefit and not for private
advantage. This means that information must be made available to the public and that activities are audited.
Regulators may also investigate complaints about possible mismanagement or abuse. This will apply to the
third sector organisation in general and to the procurement function specifically.
This part of the question was also not answered well, with many candidates not achieving a pass mark. The
reason for this was that there was little understanding of the impact of regulation on a third sector's
procurement function. There were, however, a small number of answers of a high standard, which were
rewarded by a mark of distinction.

Unit: D1 - Contexts of P&S
Exam series: January 2016
(a) Explain, with examples, the differences between direct and indirect procurement. (10 marks)
(b) Explain, in procurement terms, THREE distinctive features of services. (15 marks)
LO 1.1 Explain the categories of spend that an organisation may purchase.
Answers to part (a) should have explained the differences between direct and indirect procurement,
introducing examples to illustrate. The main difference that should have been explained is that direct
purchases are materials for production in a manufacturing organisation, or goods for resale in a retail
organisation. Typical examples that might have been mentioned include raw materials and components for
manufacturing, or computers and televisions for a retail organisation. Indirect purchases, on the other hand,
are items that support manufacturing or resale and examples that might have been mentioned include
marketing items, IT facilities, MRO supplies and stationery.
Another difference is that direct purchases have a direct impact on the organisation's operations, whereas
indirect purchases do not. If the cost of direct purchases is lowered, then the overall cost of production is
lowered, giving the organisation a competitive advantage and contributing to the 'bottom line'. While indirect
purchases do not have the same impact on the cost of production, any savings made will impact on the
'bottom line'.
Candidates might also have referred to differences in quality, stockholding and supplier relationships. The
strongest answers might have referred to Michael Porter's value chain model, which refers to direct
procurement as a primary revenue earning activity, whereas indirect procurement is referred to as a support,
or secondary activity.
This part of the question was answered well, with a large number of candidates achieving a mark of a
distinction or good credit standard. They provided a clear and detailed explanation of the main differences
and introduced appropriate examples. A small number of candidates, however, provided an explanation of
the main difference only, with limited examples. Such answers were rewarded by a mark of a pass standard. A
very small number of candidates did not know the differences.
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Answers to part (b) should have provided a detailed explanation of three distinctive features of services.
These might have included the following:
 Services are intangible, in that they can't be measured, weighed or analysed before purchase, or
when the satisfaction with the service is being assessed after purchase. Evidence of satisfaction might
come from a Service Level Agreement
 Services are inseparable, in that they are produced and consumed at the same time. The efficiency
and effectiveness of service delivery personnel and the service's processes are crucial to the
recipient's experience
 Services are heterogeneous, in that whereas manufactured items tend to be uniform in nature,
services will vary because the personnel and circumstances differ. It is difficult to standardise service
specifications, so that recipients will be sure of what they receive
 Services can't be stored for later use. As a result, the procurement function and suppliers must plan
ahead carefully, so that the service is available when needed
 Services do not result in a transfer of ownership. This makes it difficult when a service contract has
been fulfilled and when risk and liability have passed from one party to another. Buyers should define
requirements clearly in a Service Level Agreement and include an agreed basis for charges
Again, answers to this part of the question were generally good. The majority of candidates were able to
identify and explain three distinctive features of services and they were rewarded by a mark of distinction or
credit. The strongest answers illustrated points made with examples, often from the candidate's own
workplace. A minority of candidates' answers, however, lacked depth of detail and were confined to a few
short sentences.
Analysing the supply market is one of the key pre-contract stages in the sourcing process.
(a) Outline FIVE possible sources of information for finding potential suppliers at this (10 marks)
stage of the sourcing process.
(b) Explain THREE reasons for using a clear specification when defining needs as part of
the sourcing process. (15 marks)
(a) LO 2.1 Explain the main aspects of sourcing processes.

(b) LO 2.2 Analyse the main stages of a sourcing process.
Answers to part (a) of the question should have outlined five sources of information for finding potential
suppliers at the pre-contract stage of the sourcing process. These might have included…
 existing procurement database records of preferred, approved or authorised suppliers, which have
been used in the past
 supplier catalogues and websites

 printed and web-based listings of suppliers and stockists
 trade or industry press and specialist procurement journals
 trade fairs, exhibitions and conferences
 networking with other procurement professionals. who may be willing to make recommendations
Stronger answers would have provided a brief outline of each of the sources chosen, with examples being
introduced.
This was by far the best answered question on the paper, with many candidates scoring a mark of distinction
and often the maximum mark. A small number of candidates, however, outlined methods that did not identify
potential suppliers. Examples included site visits to suppliers and issuing questionnaire to suppliers.
Answers to part (b) of the question should have explained three reasons for using a clear specification when
defining needs as part of the sourcing process, These might have included:
 It encourages all relevant stakeholders to consider what they really need and whether this is the
only, cost-effective or most value adding solution
 It communicates the requirement clearly to the supplier so that they can conform to the
requirement and perhaps use their expertise to suggest innovative or lower cost solutions
 It minimises risk and costs associated with doubt, ambiguity or misunderstanding as to the
requirement
 It provides a means of evaluating the quality or conformance of the goods or services supplied
Stronger answers would have explained the three reasons chosen in detail and provided examples, often from
the candidate's own workplace.
This question was, in general terms, answered well, with many candidates achieving a credit or distinction. A
small number of answers, however, lacked depth of detail, with only a very brief explanation.
(a) A procurement consortium is a group of separate organisations that combine together (15 marks)
for the purpose of procuring goods and services.
Describe THREE disadvantages, for an organisation, of operating within a procurement
consortium.
(b) Describe TWO advantages for an organisation in having an outsourced procurement (10 marks)
function.
LO 3.3 Compare the different structures of a procurement or supply chain function.

Answers to part (a) of the question should have described any three disadvantages, for an organisation, of
operating within a procurement consortium. These might have included:
 There are costs and time associated with communication and coordination, staff development and
policy development. These might outweigh any savings arising from the consortium being able to buy
in bulk and achieve economies of scale
 There is a transparency issue between consortium members. Buyers need full information about
plans, processes, designs and costs in order to make informed procurement decisions. This may
expose some members of a consortium to commercial or intellectual property risk
 A consortium may suffer from lengthy negotiation and decision making processes and this may deter
some suppliers from dealing with the consortium
 Aggregated demand from consortium members may result in large contracts which may deter small
or medium sized enterprises from doing business with the consortium
 A large consortium may fall foul of the laws and regulations designed to prevent dominant market
players from abusing their market position, for example by dictating prices
 Within a consortium, relationships with suppliers may become more transactional and it would be
difficult for a supplier to develop long term relationships with a group of different organisations
Answers to this question were generally good. Many candidates were able to identify and describe in detail
three disadvantages of an organisation being in a consortium and they were awarded a distinction or strong
credit. The strongest answers introduced examples from the candidate's own workplace to illustrate points
made. A small number of answers, however, lacked depth of detail, or only described two disadvantages. A
very small number of candidates misread the question and described the advantages of being in a consortium.
Answers to part (b) of the question should have described in detail any two advantages for an organisation of
having an outsourced procurement function. These might have included:
 The freeing up of resources, such as management time, office space and equipment, which may
be deployed for value-adding activities elsewhere
 The ability to draw on the procurement knowledge, experience, expertise, contacts, systems and
technology of the outsourcing function, which may not be available in-house
 The potential for aggregated demand from a number of clients, resulting in cost savings through
economies of scale and bulk discounts
 The re-focusing of the remaining procurement staff on strategic issues, such as make or buy
decisions and sustainable procurement policies
 Greater flexibility to adjust to the peaks and troughs of demand for procurement activity. The
contracting organisation no longer has to cope with excess payroll in slack periods, or overtime in
peak periods
Answers to this question were generally of a high standard. The majority of candidates were able to describe
in depth two advantages of an outsourced procurement function, earning a high mark as a result. Again, the
strongest answers introduced examples to illustrate. A few answers lacked depth of detail.

(a) Explain the differences between a private sector company and a public sector (10 marks)
organisation in the following areas:
(i) Ownership and control
(ii) Sources of finance
(b) Describe FIVE issues that may affect procurement in the agricultural sector. (15 marks)
LO 4.1 Identify different economic and industrial sectors.
Answers to the first section of part (a) should have stated that a private sector company is owned by
shareholders in the case of a limited company, or individuals in the case of a sole trader or partnership.
Shareholders appoint directors to control the company, who in turn will appoint managers. Public sector
organisations, on the other hand, are owned by the public, with the government representing the public. They
are controlled by the elected government and selected management. Stronger answers would have stated
that the main focus of private sector companies is to maximise profits, whereas the focus of public sector
organisations is to provide public services, such as health care and education.
Answers to the second section of this part should have stated that private sector organisations are primarily
financed by investments from shareholders, or other types of owner, or from re-invested profits. Other
sources might be bank loans, overdrafts or debentures. Public sector organisations, however, are financed by
taxpayers and examples might be personal taxation, such as income tax or value added tax and company
taxation, such as corporation tax. Other sources include council taxes, levied by local authorities, fines and car
parking fees.
This part of the question was generally answered well. The majority of candidates were able to explain both
the differences in ownership and control and the sources of finance and they were rewarded by a high mark.
A minority of candidates, however, missed the point of the question in section (i) and described how
legislation affecting private sector companies and public sector organisations differed.
Answers to part (b) of the question should have described any five issues that may affect procurement in the
agricultural sector. These might have included:
 There is a high degree of risk and uncertainty through the supply chain, resulting from unpredictable
weather and climate factors. The impact on procurement is the need for careful planning to mitigate
such risk and uncertainty
 This is likely to lead to significant fluctuations in the price of agricultural products. Where shortages
arise, prices are likely to rise, while in the case of bumper harvests, prices are likely to fall.
Procurement should have strategies in place to deal with such fluctuations
 The potential long geographical distances from the point of production to the point of consumption of
agricultural products, creating transport and supply chain management risks. Again, procurement will
need to ensure that such risks are mitigated, by ensuring that appropriate methods of transport are
used
 The high capital investment that is likely to be needed, for machinery and start-up stock. Procurement
will need to be involved in the sourcing of such items and ensure that value for money is achieved

 Laws and regulation to protect food hygiene and health and safety is likely to be a key issue facing the
agricultural sector and procurement will have to ensure that such laws and regulations are adhered to
 Environmental and sustainability issues, such as soil exhaustion, water depletion and contamination
and the loss of bio-diversity are issues that must be addressed by procurement in the agricultural
sector
 Supply chains in the agricultural sector often cross political boundaries, leading to issues such as
foreign exchange rate risk, differences in national laws and languages, all of which must be addressed
by procurement
The strongest answers would have introduced examples to illustrate points made, often from recent real life
events. The question was again generally answered well. A large number of candidates were able to identify
and describe five issues that affect procurement in the agricultural sector and high marks were awarded.
Some candidates, however, while describing five issues, did not attempt to explain how they would impact on
procurement and lower marks were awarded as a consequence.

Exam series: November 2015
Explain the power and interest of FIVE different stakeholders of a procurement function (25 marks)
using an appropriate model.
LO 1.4 Differentiate the stakeholders that a procurement or supply chain function might have.
This was a 25 mark question, asking for an explanation of the power and interest of five different stakeholders
in a procurement function, using an appropriate model. Up to 5 marks were awarded for each stakeholder,
with 2 marks for the identification and description of the stakeholder and 3 marks for an explanation of their
power and interest.
The most appropriate model was Mendelow's power/interest matrix. The strongest answers identified and
described five appropriate stakeholders, such as shareholders, suppliers, customers, the government, banks
and other internal functions, such as finance and marketing. Then they went on to describe the power and
interest of each of the five chosen stakeholders, with reference to which of the four quadrants of the
Mendelow power/interest matrix they were located in. Such answers were rewarded by a mark of a credit or
distinction pass standard.
For example, in the case of large shareholders, answers might have stated that they lie in the high power and
high interest quadrant. Their interest is in profitability, so that they will receive a good level of dividends and
growth in share value. To achieve this, a procurement function should be looking to achieve best value and
lower costs so that profits are likely to increase. The power of large shareholders is that they can withdraw
their investment in the organisation, and/or vote out the directors of the company, including the director
responsible for the procurement function.
Another example of a stakeholder might have been a supplier. If the supplier was small, they would be
located in the high interest/low power quadrant of the matrix. Their interest would be continued business,
prices which generate profits for their company and to be paid in accordance with the terms of their contract.
They would, however, have little power, other than to stop supplies, which might affect their customer's
production schedules and cause problems for the procurement function. The strongest answers explained
that strategic suppliers would lie in the high power/high interest quadrant.
The answers to this question were of a varied standard. The majority of candidates answered it reasonably
well and achieved a mark of at least a pass standard. They identified and described five appropriate
stakeholders and made an attempt to explain their power and interest. There were, however, a significant
1/5

number of candidates who explained only the interest of the stakeholder, with no mention of their power. A
small number did not explain either the stakeholder's power or interest, or did not refer to the procurement
function. This limited the marks that could be awarded. A large number of candidates did not refer to the
Mendelow power/interest matrix or chose an inappropriate model, such as Porter's value chain or five force
model. Some candidates explained only four stakeholders, choosing one from each of the four quadrants of
the Mendelow matrix and this restricted to marks that could be awarded.
Describe FIVE sequential stages of a typical tendering process. (25 marks)
LO 2.1 Explain the main aspects of sourcing processes.
This was a 25 mark question, asking candidates to describe five stages of a typical tendering process. Up to 5
marks were awarded for each stage, with 2 marks for the correct identification of the stage and up to 3 marks
for a detailed description of it.
Candidates might have chosen any five of the following stages:
 the identification of a need and how this might arise
 an evaluation of the suitability of the tendering process, as opposed to alternative methods of
sourcing
 a detailed description of the need, through specifications, which might be conformance or
performance
 carry out market research to identify suppliers who might be able to fulfil the need
 the preparation of draft contract terms, with examples
 a decision on whether to use open or selective tendering
 the determination of a realistic timetable for the tendering process
 the issue of invitations to tender, accompanied by specifications
 the submission of completed tenders by potential suppliers, within the deadline specified
 the opening and analysis of each tender against the stated criteria, with a view to selecting the best
offer, which might be on the lowest price or best value basis
 the award of the contract and notification of the award
 the de-briefing to unsuccessful tenderers to enable them to improve performance in future bids
The strongest answers selected five of the above stages, in sequence and provided a detailed description of
each stage. For example, if the first stage had been chosen, answers might have stated that a need might be
identified by a requisition from a user department within the organisation. For the second stage, answers
might have considered the advantages and disadvantages of tendering, as opposed to alternative methods of
sourcing. In the case of the third stage, answers might have considered whether conformance or performance
2/5

specifications would be appropriate and the importance of specifications in communicating to potential
suppliers the exact needs of the organisation.
This question was generally answered well, with many candidates being awarded a high mark, because they
selected five correct stages in sequence and provided a good description of each stage. Some candidates,
however, achieved only a mark of a pass standard, because their answers lacked depth of detail. Some
candidates included contract management and supplier management as stages in the process. In such cases,
no marks were awarded because these stages come after the tendering process. A small minority of
candidates selected five relevant stages, but not in sequence. As a result, maximum marks could not be
awarded as the question specifically asked for 'five sequential stages'.
(a) Describe FOUR alternative structures for the procurement function of an organisation. (16 marks)
(b) Outline THREE areas in which organisational policies could affect the procurement (9 marks)
function.
(a) LO 3.3 Compare the different structures of a procurement or supply chain function.
(b) LO 3.2 Analyse the impact of organisational policies and procedures on procurement.
Part (a) of this question tested candidates' knowledge of the different structures of a procurement function.
Up to 4 marks were awarded for each structure, with 1 mark for the correct identification of each structure
and up to 3 marks for a description of the structure.
Structures that might have been selected include centralised, decentralised, CLAN (Centre Led Action
Network), SCAN (Strategically Controlled Action Network), a Lead Buyer approach, a consortium, business
partnering, shared services or outsourcing.
The strongest answers selected four of the above structures, described their characteristics and considered
the advantages and disadvantages of each structure. Such answers often introduced examples from the
candidate's own work place to illustrate points made.
The question was, in general, answered well. Many candidates achieved a mark of a credit pass, or distinction
pass standard, because of the quality of their answers. Where candidates were awarded a mark of a pass
standard, it was often because their answers lacked depth of detail. A small minority of candidates
misunderstood the question and answered it in terms of lean and agile supply and Just-in-Time supply.
Part (b) of the question required candidates to outline three areas in which organisational policies could affect
the procurement function. Up to 3 marks were awarded for each area in which an organisational policy could
affect the procurement function. Such organisational policies might have included:
3/5

 levels of delegated authority for procurement staff
 policies on sourcing, such as single, dual or multiple sourcing
 ethical and sustainable procurement, corporate social responsibility and how this might impact on
supplier selection
 policies on make or buy
 an intention to comply with all relevant laws and regulations, standards and codes of practice
 responsibilities at different stages of the procurement process
The strongest answers selected three appropriate organisational policies and provided an outline of how each
would impact on the procurement function. For example, if an organisation has a robust corporate social
responsibility policy, the procurement function will have to take this into account in the supplier selection
process. Where possible, only suppliers that share this policy should be selected.
The answers to this question were of a mixed standard. There were some candidates who achieved a high
mark, because they selected three appropriate organisational policies and outlined their impact on the
procurement function. Some answers, however, lacked depth of detail, resulting in a mark of a pass standard.
A small number of candidates introduced policies which did not affect the procurement function, or instead of
organisational policies, introduced national legislation.
(a) Describe THREE objectives of public sector organisations. (9 marks)
(b) Explain FOUR ways in which regulation might impact on public sector procurement. (16 marks)
(a) LO 4.2 Analyse the impact of the public sector on procurement or supply chain roles.
(b) LO 4.2 Analyse the impact of the public sector on procurement or supply chain roles.
Part (a) of this question asked candidates to describe three objectives of public sector organisations. Up to 3
marks were awarded for each objective correctly identified and described.
These might have included:
 to deliver essential public services, such as education, healthcare and housing, which the private
sector might not otherwise provide
 to encourage national and community development, by developing skills, stimulating economic
activity and employment and developing technology and infrastructure
 to pursue socio-economic goals, such as to support small and minority owned businesses and to
promote legislation for minimum standards of human, civil and labour rights
 to achieve value for money, as the public sector is accountable to taxpayers
4/5

This question was answered reasonably well, with some candidates achieving full marks or almost the
maximum marks available. A significant number of answers, however, although identifying three objectives,
did not provide sufficient detail and these were rewarded by a mark of a pass standard. A small minority of
candidates provided suggestions that were not really objectives, such as compliance with EU Procurement
Directives and transparency.
The strongest answers introduced examples from the candidate's own country's public sector.
Part (b) of the question asked for an explanation of four ways in which regulation might impact on public
sector procurement. Up to 4 marks were awarded for an explanation of each of the four regulations. Such
regulations might have included:
 to ensure that bought-in materials, goods and services comply with defined public standards and
specifications
 to ensure that all procurement processes are compliant with public policies, standing orders and
statuary procedures
 to ensure that all supply chain operations are compliant with the health and safety,
environmental sustainability and freedom of information requirements
 there is a high requirement for accountability, with the effect of detailed procedures and record
keeping to provide an audit trail
 all public procurement must ensure value for money, which may not necessarily be the lowest
price, but the optimum combination of cost and quality
Answers may have referred to the impact on public sector procurement of EU Procurement Directives.
There was a wide variety of answers to this question. Only a small number of candidates achieved a high mark
for this question, with the majority of candidates being awarded a pass or marginal fail mark. There were
several reasons for this. Some answers lacked depth of detail, with only a one sentence response to each
regulation. Some repeated the same regulation several times, while others introduced regulations that did
not impact on procurement. The strongest answers correctly identified four relevant regulations and then
explained the impact of each on public sector procurement. Often, examples to illustrate were introduced
from the candidate's own country.
5/5

Unit: D1
(a) Explain TWO ways in which 'procurement' differs from 'purchasing'.

(10 marks)
(b) Outline FIVE ways in which improving the quality of products can add value for an
organisation.
(15 marks)
(a) LO1.1 Explain the categories of spend that an organisation may purchase.
(b) LO1.2 Analyse the different sources of added value in procurement and supply
Part (a) of the question required candidates to explain two ways in which procurement differs from
purchasing. Stronger answers would have explained that procurement is a wider term than
purchasing and involves the process of obtaining goods and services in any way, including
purchasing, hiring or leasing and borrowing. Procurement is also a more proactive process and
strategic, whereas purchasing is more likely to be reactive and of a tactical nature. Answers might
also have stated that procurement includes activities prior to purchasing, for example supplier
appraisal and selection, whereas purchasing is more likely to involve the purchase-to-pay cycle.
Answers to this part of the question varied widely. There were a small number of excellent answers
which provided an in-depth explanation of two appropriate differences and such answers were
rewarded by a mark of a distinction pass standard. Some candidates, however, provided only one
difference, which meant that it was impossible to award a mark greater than a pass standard. A few
answers confused the two terms, stating that purchasing was a wider and more strategic process
than procurement.
Answers to part (b) of the question were generally stronger with candidates able to outline five ways
in which improving the quality of products can add value to an organisation. These might have
included reducing the need for appraisal and prevention activities, which saves time and money, that
the risk of failure is reduced and that improved quality will lead to an improved brand image, which
will result in increased sales and revenue. Other ways might have included reducing the level of
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quality control, again saving time and money and less waste and re-working.
A significant number of candidates were awarded a mark of at least a credit pass standard for
providing an outline of five ways in which improving the quality of products adds value to an
organisation. Some candidates, however, missed the point of the question and answered it by
outlining ways in which an organisation can improve quality, for example value analysis and
engineering, Total Quality Management and quality assurance, As such answers did not address the
question, few, if any marks were awarded.
(a) Outline FIVE stages of the sourcing process.

(10 marks)
(b) Describe THREE benefits to an organisation of following a structured sourcing
process. (15 marks)
(a) LO 2.1 Explain the main aspects of sourcing processes

(b) LO 2.1 Explain the main aspects of sourcing processes
LO 2.2 Analyse the main stages of a sourcing process
Part (a) of this question required candidates to outline five stages of the sourcing process. These
should have included the identification of a need, through a requisition or Bill of Materials, the
description of the need through a specification, the development of contract terms, sourcing the
market, appraising suppliers, inviting quotations or tenders, negotiating best value and contract
award. As the command word was 'outline' and given that only two marks were allocated to each
stage, only a brief explanation of each stage was required.
This was by far the best answered question on the paper. The majority of candidates were able to
identify and briefly explain five stages of the sourcing process, with the result that maximum marks
were awarded. A small minority of candidates, however, simply listed five stages, with no
explanation and such answers were awarded a mark of a pass standard.
Part (b) of the question asked candidates to describe three benefits of following a structured
sourcing process. These might have included ensuring that all tasks have been performed, with no
gaps, enabling adequate c0-ordination of efforts between the parties involved and maintaining
consistency in processes and outcomes. Stronger answers might have included examples form the
candidate's work place or from their previous experience.
Although there were a few answers of a high standard, rewarded by high marks, a significant number
of answers lacked depth of detail, with candidates writing short responses for each benefit. The

marks awarded for such answers were of a pass or credit pass standard. Another common error was to
describe the nature of a structured sourcing process, rather than to describe the benefits, as
specified in the question.
(a) Explain FOUR advantages for an organisation of adopting a centralised procurement

structure. (16 marks)
(b) Explain the following IT systems used by procurement or supply chain function:
(i) Enterprise Resource Planning
(ii) Materials Requirement Planning
(iii) Purchase to Pay (P2P) (9 marks)
(a) LO 3.3 Compare the different structures of a procurement or supply chain function
(b) LO 3.4 Explain the common IT systems that can be used by a procurement or supply chain
function
Part (a) of the question tested candidates' knowledge and understanding of the advantages of a
centralised procurement function. The advantages explained could have included the specialisation
of procurement staff, the potential for consolidating requirements and achieving bulk discounts,
greater co-ordination of procurement activities and greater standardisation of specifications. As four
marks were allocated to each advantage, a relatively in-depth explanation of each benefit was
required. Again, stronger answers might have included examples to illustrate, from the candidate's
work place or from their previous experience.
In general terms, this question was answered well. Many candidates were able to explain four
relevant benefits and achieve a mark of a credit pass, or distinction pass standard. Some answers,
however, lacked the depth of detail required and achieved a mark of a pass standard for the correct
identification of four advantages and a short explanation of each. A small minority of candidates
confused centralised purchasing with outsourcing, for which few, if any marks were awarded, or
assumed that a centralised procurement function automatically creates a single delivery point and
warehouse.
Answers to part (b) (i) should have stated that an ERP system consolidates materials, manufacturing,
logistics, supply chain and marketing, finance and HR planning into a single integrated management
system. It is a single database able to offer real time information for solving a range of business
problems.
Answers to part (b) (ii) should have stated that MRP is a set of logically related procedures, decisions,
rules and records for managing dependant demand items. It is designed to develop a Master

Production Schedule, from which can be derived a bill of materials.
Answers to part (b) (iii) should have explained that a P2P system is a two way flow of transactions to
follow a contract through to completion. It covers the raising of a purchase order, acknowledgement,
expediting, goods inward, invoicing and payment.
Stronger answers to all three sub-sections would have been illustrated by examples, often from the
candidate's own work place.
The quality of answers to this part of the question varied widely. These were some excellent
answers, illustrated by examples, which were awarded the maximum mark. Some answers, although
partially correct, lacked some detail and these were rewarded by a mark of a pass, or credit pass
standard. In a small number of cases, candidates did not understand the concepts specified in the
question and no marks were awarded.
Explain FIVE factors that impact on purchasing activities in the retail sector.
(25 marks)
LO 4.1 Identify different economic and industrial sectors
This question required candidates to recognise that a retailer buying goods for resale has many
concerns that buyers in other sectors do not usually have. An example of this might be bottom line
thinking, in that retailers add little value to the products they sell and so they must focus on buying
products that will sell at good profit margins. A second factor is broad assortment, because retailers
need to make available to customers a wide range of goods offered by many different
manufacturers. Also, retail buyers buy against suppliers' specifications and they buy what is available
in the market. There is a short feedback loop and retailers learn very quickly which lines are selling
and which are not. As a result, retail buyers have to respond quickly. Finally, a retailer develops a
product mix to maximise potential sales and this mix will change in line with seasons, tastes and
fashions. A retail buyer needs to work closely with its marketing department to ensure that the
product mix is right.
This question was the least well answered on the paper. There were a small number of very good
answers, where candidates correctly identified five factors specific to the retail sector and explained
them in sufficient detail to achieve a mark of a distinction pass standard. The majority of answers,
however, introduced factors that were not specific to the retail sector, but could equally have
applied to other sectors of the economy. Examples included achieving best value for money, buying
goods of the right quality, or adopting Corporate Social Responsibility and ethical policies. In such
cases, marks were only awarded if the candidate had attempted to apply the factor to the retail
sector. A few candidates attempted to answer the question in terms of the five 'rights' of purchasing,
namely price. quality, quantity, time and place. Again, marks were awarded only if an attempt had

been made to apply these to the retail sector. Some candidates attempted to answer the question
by selecting five elements of the STEEPLE concept, for which little credit was awarded. As a result,
the number of candidates who achieved a mark of a pass standard on this question was quite low.

Explain FIVE differences between operational expenditure and capital expenditure.

(25 marks)
LO 1.1 Explain the categories of spend that an organisation may purchase.
Answers to this question required an explanation of five differences between operational expenditure and
capital expenditure. These might have included:
 operational items are financed from the buying organisation's revenue budget, whereas capital
expenditure items are chargeable to its capital account
 operational items are usually purchased for short-term consumption, such as raw materials and
components, whereas capital items are used for a long period of time, often several years
 operational items tend to be relatively inexpensive, whereas capital items are usually high-value
assets, such as buildings, machinery or IT systems. It is important to consider the total life cycle costs
of capital items
 operational expenditure is less complex and often repeat spending and once budgets are agreed, they
can be managed by procurement staff or budget holders. Capital items, on the other hand, tend to
involve complex requirements and decisions concerning such expenditure will usually involve a
number of stakeholders
 the preparation work for capital expenditure is likely to be lengthy and involve the preparation of a
business case and detailed specifications. Operational expenditure tends to be more straight forward
and budgets are pre-set for regular demand
 capital items are fixed assets, which are purchased to produce goods, whereas operational items are
purchased to support production and they are usually incorporated into the finished product
 capital items are purchased less frequently, while operational items are purchased and used on a
regular basis
 stronger answers would have given examples of the two types of expenditure. Examples of
operational expenditure include raw materials, maintenance and repair consumables and stationery.
Examples of capital expenditure include buildings, machinery and vehicles
Answers to this question were of a mixed standard. There were some excellent answers, which explained five
differences between the two types of expenditure in detail and were illustrated by examples, often from the
candidate's work place. Such answers were rewarded by a mark of a distinction pass, or strong credit pass
MAY2015_PM_Report 1/6

standard. Some answers lacked depth of detail and even though the candidate had identified five differences
between the two types of expenditure, there was little explanation and the mark awarded was of a pass
standard. A few answers simply listed the main features of operational and capital expenditure, without
attempting to explain the differences. In such cases, marks were awarded for valid points made, but usually
the final mark awarded was not of a pass standard.
(a) Outline THREE ways in which supplier selection may add value in the sourcing process.
(9 marks)
(b) Describe FOUR uses of electronic systems in the sourcing process.
(16 marks)
(a) LO 2.2 Analyse the main stages of a sourcing process
(b) LO 2.3 Explain how electronic systems can be used at different stages of the sourcing process.
Answers to part (a) of this question should have outlined three ways in which supplier selection may add
value in the sourcing process. These might have included:
 poor suppliers are eliminated from the competition at an early stage, which will result in saving the
buyer time at a later stage
 it will enhance the even-handedness of the buyer and build more genuine competition between
suppliers, leading to lower prices
 it will lead to the highest quality suppliers being awarded contracts, resulting in high quality inputs
 it will help to encourage innovation and creativity from suppliers, resulting in better quality products
 it will ensure that only those suppliers who have the capacity, capability and commitment are
selected
 stronger answers might have referred to a recognised model, such as the 10 C's model
Again, answers to this question were of a mixed standard. There were some very good answers that outlined
three ways in which supplier selection may add value in the sourcing process and these were rewarded by a
high mark. Some candidates, however, attempted to answer the question by describing the sourcing process,
which did not address the question set and marks were only awarded for any valid points made. A small
minority of candidates answered the question in terms of the five 'rights' of purchasing. As this is a post
contract award tool, rather than sourcing, little credit was awarded for such an approach.
Answers to part (b) of the question required a description of four electronic systems used in the sourcing
process. These might have included:
 e-catalogues, the equivalent of a supplier's printed catalogue, giving information about specifications
and costs
 automatic ordering, where framework or systems contracts have been placed with approved

suppliers
 e-contracting, where contracts can be transmitted to suppliers electronically, in an efficient and
flexible way
 e-auctions, which enable suppliers in any location to participate and drive down prices
 e-tendering, where the tendering process is carried out on-line, with tender documents been
transmitted and bids received electronically
Stronger answers included reference to examples, often from the candidate's own work place.
This question was generally answered well. Many candidates were able to identify and provide a detailed
description of four appropriate electronic systems used in the sourcing process. Such answers were rewarded
by a high mark of a distinction pass or strong credit pass standard. Some candidates, however, although
identifying four electronic systems used in the sourcing process, did not describe them in sufficient detail,
resulting in a mark of a pass standard. A few candidates misinterpreted the question and described the
advantages of using electronic systems in the sourcing process. In such cases, marks were only awarded for
reference to any electronic systems.
(a) Explain FIVE ways in which IT based inventory management systems can be used by the
procurement and supply chain function. (15 marks)
(b) Define the term 'Conflict of Interest' and explain why governance in this area is
particularly important for procurement. (10 marks)
(a) LO 3.4 Explain the common IT systems that can be used by a procurement or supply chain function.
(b) LO 3.1 Explain the main aspects of corporate governance of a procurement or supply chain function.
Answers to part (a) should have explained five ways in which IT based inventory management systems can be
used by the procurement and supply chain function. These might have included:
 capturing goods inwards information accurately and integrating this information with stock balance,
contract management and payment systems
 recording stock movements in terms of receipt, issues and transfers
 translating issue requisitions into stock 'picking and packing' tasks (for warehouse and stores staff to
select and prepare items for issue)
 maintaining stock balances and valuation, for use in financial reporting
 triggering automatic replenishment requisitions or order at pre-established order points and
calculating economic order quantities where appropriate
 monitoring productivity and utilisation, to derive usage rates for feeding into demand management
calculations
 maintaining stock integrity, by recording and identifying damage, deterioration and loss
In general terms, this question was answered well. Many candidates were able to identify and explain five
ways in which IT based inventory management systems can be used. They produced strong answers, with

reference to examples from their work place or large organisations such as Nissan. Such answers were
rewarded by a mark of a distinction pass, or strong credit pass standard. Again, however, some answers
lacked depth of detail and simply produced a short list of ways, for which a mark of a pass standard was
awarded.
Answers to part (b) should have started by providing a definition of 'Conflict of Interest'. A key principle of
business ethics is not offering or receiving gifts or inducements which may influence the recipient's decision
making. A related principle is that individuals should not make decisions, or divulge confidential information,
for personal gain. Such situations create a conflict of interest, because the interests of the organisation
conflict with the interests of the individual.
Answers should have gone on to explain why governance in this area is important for procurement. It is to
avoid situations of conflict of interest. Most organisations have clear rules or guidelines on the receiving of
gifts or hospitality, where there is a perceived ethical issue. It is also the subject of a code of ethics in the
procurement profession. As a general principle, any conflict of interest should be disclosed, so that
proceedings are transparent and open to control.
Again, stronger answers were illustrated by examples, either from the candidate's own work place, or from
high profile cases from the media.
This was the least well answered question on the paper. Only a minority of candidates provided a good
answer, with a clear definition of the term 'Conflict of Interest', with an explanation of why governance is
important in this area. These were rewarded by a high mark. A significant number of candidates could not
define the term correctly, but provided an answer in terms of a conflict between different functions of an
organisation, for example procurement and finance. Some answered it in terms of a contract dispute with
another organisation. Such answers were awarded no marks.
(a) Compare a private sector organisation with a public sector organisation in the (15 marks)
following THREE areas:
(i) Legal and regulatory environments
(ii) Organisational objectives
(iii) Importance of corporate social responsibility
(10 marks)
(b) Describe FIVE ways in which the charitable status of a third sector organisation
impacts on its procurement function.

(a) LO 4.2 Analyse the impact of the public sector on procurement or supply chain roles.
LO 4.3 Analyse the impact of the private sector on procurement or supply chain roles.
(b) LO 4.4 Analyse the impact of the not for profit or third sector on procurement or supply
chain roles.
Answers to the first section of part (a) should have compared the legal and regulatory
environments of private and public sector organisations. A private sector organisation is
regulated to offer protection to its customer, to offer protection with a market and to
maintain competitive markets and to prevent monopolies. A public sector organisation, on
the other hand, is regulated to protect national interests and international standards. Also,
the public sector has to follow strict tendering rules, such as EU procurement directives.
Stronger answers would have explained that both sectors are governed equally by some
regulations, for example health and safety and employee protection.
Answers to the second section should have explained that the main objectives of private
sector organisations is to maximise profits, increase shareholder value and to increase
market share. Public sector organisations, however, have objectives such as providing
effective public services, such as education and health, to fulfil economic and social goals.
Answers to the third section should have stated that traditionally, because private sector
organisations objective is to maximise profits, corporate social responsibility was not
important. The public sector, however, with its significant and diverse expenditure, is better
placed to adopt and influence CSR. However, private sector organisations are now
increasingly adopting CSR policies as a means of establishing a reputation, to gain customers
and increase sales. Stronger answers would have described examples of this.
Answers to this question were generally quite good. However, the first section attracted the
lowest marks as many candidates were unable to differentiate between the legal and
regulatory environments of the two sectors. The second section was answered well, with
the majority of candidates able to analyse the objectives of organisations in the two sectors.
Many candidates scored maximum marks or almost the maximum mark for this section.
Answers to the third section were also reasonably good, with many candidates being able to
differentiate between CSR in private and public sector organisations.
Answers to section (b) should have described five ways in which the charitable status of a
third sector organisation impacts on its procurement function. These might have included:
 the need to be cost effective and use the limited resources efficiently
 to be accountable to members and trustees
 the need for probity in all financial transactions
 the need for procurement activities to be ethical and sustainable, to be in line with
the organisation's objectives
 the need for transparent accounting
 the need to be fully compliant with all legislation and regulations

 the need to act in line with the values and culture of the organisation
This part of the question was not answered well. Only a minority of candidates were able to
describe five ways in which the charitable status of a third sector organisation impacts on its
procurement function. They were rewarded by a high mark, of a distinction pass or strong
credit pass standard. Some candidates were able to provide only three ways, which reduced
the mark awarded. Also, some candidates attempted to answer the question by describing
the features of a third sector organisation, for which few, if any, marks were awarded.
A few answers referred to generic procurement activities, applicable to all three sectors,
such as selecting the right suppliers, monitoring supplier performance and developing
suppliers. Such answers did not address the specific question and gained no marks.

Exam series: March 2015
(a) Explain the importance of each of the 'five rights of procurement', outlining the added
value each might achieve for the procuring organisation. (20 marks)
(b) Explain ONE additional source, other than the 'five rights', of potential added value in
procurement and supply.
(5 marks)
(a) LO 1.2 Analyse the different sources of added value in procurement and supply
(b) LO 1.2 Analyse the different sources of added value in procurement and supply
Answers to part (a) of the question required candidates to explain the importance of each of the 'five rights of
procurement' and how each might achieve added value to the procuring organisation. As the question was
worth 20 marks, 4 marks were allocated to each of the five rights.
Answers should have explained the importance of price, quality, quantity, place and time and how each of
these might achieve added value. For example, in the case of quality, answers should have explained that it
means that inputs coming into the organisation are fit for purpose and conform to the specifications.
Appropriate quality ensures that the manufacturing process works efficiently to produce finished goods that
satisfy customers, so that they will place further orders. It also ensures that money is not wasted on
unnecessary features and avoids the cost of higher or lower specifications that might cause damage or faults
in products that would lead to reworking or disposal.
The other 'rights of procurement' should have been explained in a similar fashion.
Stronger answers examined potential 'trade-offs' between the 'rights'. For example, to achieve improved
quality, it might be necessary to pay a higher price.
In general, answers to this question were of a high standard, with many candidates being awarded a mark of a
credit or distinction pass standard. A small number of answers lacked depth of detail and although describing
the meaning of the 'five rights of procurement', did not go on to explain how they might contribute to added
value.
Part (b) of the question required candidates to explain one additional source, other than the 'five rights', of
potential added value in procurement and supply. Appropriate answers might have referred to the right
March2015_EXAM_REPORT 1/4

supplier, innovation on the part of the supplier, selecting suppliers with a robust ethical or corporate social
responsibility policy or supplier relationship development. However, marks were awarded for any suggestion,
relating to procurement and supply, that might add value.
Again, this question was generally answered well, with many candidates achieving a high mark. A small
number of candidates, however, suggested sources not related to procurement and supply, such as after sales
service and developing a brand. Such answers were awarded little credit.
(a) Explain the activities that could be undertaken by an organisation to identify and
appraise potential suppliers as part of the sourcing process. (16 marks)
(b) Explain THREE activities that take place post contract award. (9 marks)
(a) LO 2.2 Analyse the main stages of a sourcing process
(b) LO 2.1 Explain the main aspects of sourcing processes
Answers to part (a) of this question should have explained the main activities, undertaken by an organisation,
to identify and appraise potential suppliers. These should have included surveying and engaging the market,
which involves identifying potential suppliers through a range of methods. These might include the
organisation's database records, supplier catalogues, trade publications, trade fairs and exhibitions, or
networking with other procurement professionals.
The next stage is to appraise the suppliers identified, to ensure that suppliers will be able to perform the
contract. This might be achieved by the Carter 10 C's model (Competence, Capacity, Commitment, Control,
Cash Resources, Consistency, Cost, Compatibility, Compliance and Communication).
A further stage might be a supplier audit or site visit, to confirm information provided by a supplier in an
appraisal questionnaire.
Answers to this question were of a mixed standard. There were some answers of a high standard, which
explained activities relating to both the identification and appraisal of potential suppliers. A significant
number of answers, however, focussed on only one of the two required activities. Some explained in detail,
identification activities, with no explanation of appraisal activities. Others explained in detail appraisal
activities, with no explanation of how potential suppliers might be identified. As 8 marks were allocated to
each set of activities, candidates who took this approach could be awarded no more than half the total marks
available for the question. A small number of candidates did not answers the specific question, but instead
provided an explanation of the pre-contract stages of the sourcing process. In such cases, appropriate marks
were awarded for any valid points made.
Answers to part (b) should have explained any three activities that take place post contract award. These
might have included expediting, the payment process, contract management, supplier management, or post
contract learning.
Again, answers to this part of the question were generally good, with the majority of candidates able to

identify and explain three post contract award activities. A small minority of candidates, however, explained
pre-contract award activities, such as specification development and agreeing contract terms, for which no
credit was awarded.
(a) Explain THREE advantages to an organisation when adopting a devolved procurement

structure. (9 marks)
(b) Describe FOUR benefits delivered to an organisation by an outsourced procurement
function. (16 marks)
(a) LO 3.3 Compare the different structures of a procurement or supply chain function.
(b) LO 3.3 Compare the different structures of a procurement or supply chain function.
The majority of candidates answered part (a) of this question well. They were able to identify and explain
three advantages of a devolved procurement structure. These might have included stronger communication
and co-ordination between procurement and operating departments, buyers being closer to internal and
external stakeholders, quicker response times to operational user needs and better relationships with local
suppliers. As a result, such answers were rewarded by a high mark, often of a credit or distinction pass
standard.
There were, however, a number of candidates who misread the question and provided an answer relating to a
'developed', rather than a 'devolved' procurement structure, for which few, if any, marks were awarded.
Part (b) was also generally well answered, with candidates able to identify and explain four advantages of an
outsourced procurement function. These might have included the freeing up of internal resources, access to
expertise and experience, the potential to aggregate demand and achieve economies of scale and greater
flexibility to adjust to peaks and troughs of procurement activity. Some answers, however, lacked depth of
detail, with little explanation of the benefits of adopting an outsourced procurement function. In such cases,
appropriate marks were awarded.
(a) Outline the impact of TWO private sector objectives on procurement and supply
chain activities. (10 marks)
(b) Outline the impact of THREE objectives in the 'not for profit' sector on
procurement and supply chain activities. (15 marks)

Part (a) of this question was generally answered well. The majority of candidates were able
to identify two relevant objectives of private sector organisations and outline their impact
on procurement and supply chain activities. These might have included profit maximisation,
securing market share through competitive advantage, improved shareholder value or
achieving corporate social responsibility. The impact on profit maximisation might have
been reducing the cost of inputs from suppliers, advising on new product features to
increase sales or adopting new practices such as just-in-time.
A few candidates, however, outlined only one valid private sector objective, profit
maximisation, meaning that they could achieve no more than half the marks available for
the question.
Part (b) was the least well answered question on the paper. Candidates were required to
identify three objectives of 'not for profit' organisations and then outline the impact of each
on procurement and supply chain activities. These might have included achieving a profit, to
be reinvested in the social, economic or value driven objectives of the organisation, to raise
public awareness of the organisation, to provide representation services to members, or to
raise funds, to enable the organisation to carry out charitable and value driven activities.
Although there were some answers of a high standard, rewarded by a mark of a distinction
pass standard, a significant number of candidates were unable to identify objectives specific
to the 'not for profit' sector, but instead outlined objectives that apply to all sectors.
Examples included value for money and accountability. Some candidates confused the 'not
for profit' sector with the public sector and used local authorities, hospitals and schools as
examples. As a result, many candidates did not achieve a pass mark for their answer to this
question.
A general weakness for some candidates in both parts of this question was that the
question was not answered in its entirety. Although they were able to identify objectives of
private sector organisations in part (a) and 'not for profit' organisations in part (b), they did
not go on to outline the impact of such objectives on procurement and supply chain
activities. In such cases, it was not possible to award a mark of a pass standard, as the
question had not been fully answered.

Qualification: Diploma
Unit: D1
Exam series: November 2014
Part (a) Explain, with examples, the characteristics of each of the following
purchasing categories:
(i) Commodities
(ii) Goods for resale (15marks)
(iii) Maintenance, repair and operating (MRO) supplies.
Part (b) Outline FIVE circumstances where ‘buying for stock’ would be an
appropriate procurement policy (10 marks)
(a) LO 1.1. Explain the categories of spend that an organisation may purchase
(b) LO 1.1 Explain the categories of spend that an organisation may purchase
This question is testing the candidates knowledge and understanding of spend categories within an
organisation.
Part (a) requires an explanation, and therefore reasonable level of detail, of three procurement
spend categories. Explanation is of characteristics with supporting examples. At least two
characteristics are required to be explained with supporting examples. Each of the three categories
carries an equal 5 marks.
Commodities are items that occur in nature. For example, coal, iron ore, cotton, tea, insurance,
metals, utilities and wheat (there are many more possibilities). They are unequally distributed and
experience price fluctuations. This may involve international sourcing, currency exchange risks,
transport risks, differences in legal jurisdictions.
Goods for Resale are 'finished goods' that are sold on with little or no work carried out by the
purchasing organisation. Examples include products sold by supermarkets and those sold by
distributors). Characteristics include: Bottom line thinking, broad assortment, supplier specifications,
short feedback loop, and low technical complexity.
MRO supplies: these are all goods and services necessary to transform raw materials and
components into end products - e.g. paints, lubricants, packing materials, etc. Characteristics include
large number of stock lines, quality problems or absence can stop a production line, and MRO items
are often stocked if critical.

Stronger candidates may make reference to the impact that the characteristic may have on
purchasing but this is not a mandatory requirement
This part was not well answered, some answers lacked depth and detail for 5 marks each. Some
answers to part (a) were shorter that part (b) even though higher marks were allocated to the
former. A number of answers described commodities as general purchases or components.
Goods for resale answers concentrated on retail examples and went on to gain good marks but a few
answers incorrectly interpreted this as sub assembled goods sold by manufacturers or unwanted
products that were re sold. MRO appeared well understood with only a few answers referring
mistakenly to capital purchases. Some answers were very short and some very long. Candidates
should use the command word and the mark allocation to determine the length of answers.
Part b required five of the following points or similar to be outlined which can be brief but must
provide the justification to stock items for the full 2 marks.
 When demand for the item is independent.
 Stable/predictable demand for low-value, non-perishable, using limited space
 Long lead time
 Critical for operations
 Legal requirements for holding stock of items.
 If appreciate in value over time.
 Where the item’s price is expected to rise
 Where demand for the item is seasonal
 Economies of scale
Answers to part (b) were much better demonstrating a good understanding of the reasons to buy for
stock. Most answers found four or five good circumstances for buying for stock with many gaining
full marks. There are many examples to choose from. Some answers contained much more text than
was required for 2 marks. Other answers could have gained more marks with more detail, which
should include the reason to hold stock. For example stating bulk buying for discount would need to
be justified by referencing a stockholding cost that gave a net benefit. Some answers lost marks
describing why a company should not hold stock/ JIT theory and repetition in the answer was
occasionally seen.
Analysing the supply market is one of the key pre-contract stages in the sourcing
process.
Part (a) Outline FIVE possible sources of information for finding potential suppliers
at this stage of the sourcing process. (10 marks)
Part (b) Explain THREE reasons for using a clear specification when defining needs as
part of the sourcing process (15 marks)
1
(a) LO 2.1. Explain the main aspects of sourcing processes
(b) LO 2.2 Analyse the main stages of the sourcing process
This question tests the candidates knowledge and understanding of the sourcing process.
Part (a) required a brief outline of five possible sources of information when finding potential
suppliers before the contract is made which might include:
 Procurement database
 Supplier catalogues, sales force presentations, and websites.
 Printed and web-based listings
 Online market exchanges
 Trade or industry
 Trade fairs, exhibitions and conferences,
 Networking
 Expressions of Interest
With Q2b this was the best answered question Most answers understood the relevant stage and that
this was about identifying a new supplier. Many good answers were seen. However, some answers
described the sourcing process and some, inappropriately for the stage, suggested
PQQ/RFI/RFP/auctions/financial assessments/supplier visits. Some answers fell into the trap of not
stopping at five sources, additional sources were not marked.
Part b required a more detailed explanation of THREE reasons for using a clear specification when
defining needs as part of the sourcing process. A detailed answer is required and might include
clarifying the needs, stakeholder engagement, communication to suppliers, allowing standardisation
and innovation, minimising risk and cost of ambiguity and rejection, enabling benchmarking and
evaluation
Answers were mixed. Where answers clearly showed three distinct reasons with a good explanation,
high marks were gained. Marks were lost when three reasons were not clearly identified and
explained in a depth that justified 5 marks. Some answers were poorly structured and others very
short. The poor structure and repetition of some answers made this part difficult to mark where it
was hard to distinguish three distinct answers. The team agreed that points in the answer would be
marked as they were written but three different reasons were required for higher marks.
A number of candidates provided irrelevant text at the beginning of the answer with long rambling
introductions to the sourcing process and descriptions of conformance/performance specs. This time
could have been spent elsewhere.
Part (a) Describe FOUR alternative structures for the procurement function in an
organisation (16marks)
Part (b) Outline THREE areas in which organisational policies could affect the
procurement function (9 marks)
2
(a) LO 3.3. Compare the different structures of a procurement or supply chain function
(b) LO 3.2
This question tests the candidates’ knowledge of structure in Procurement and the supply chain and
the impact on procurement of organisational policy.
A description is required in Part (a) of FOUR different structures and could be drawn from
Centralised, decentralised or hybrids like CLAN and SCAN. Other structures such as lead buyer,
partnering, category management, consortium, shared services and outsourcing are other valid
answers. Each structure described could be awarded up to 4 marks each.
There were some very good, detailed answers picking out a variety of structures. However, some
candidates missed the point of the question completely and described roles and reporting structures
within a procurement department. A few answers described other organisation functions e.g.
production and marketing and occasionally tiering of suppliers. Hybrid (SCAN/CLAN) were often
described with central/de-centralised. Some answers touched on partnering, lead buyer and
category management. The depth of answer varied and candidates should be guided by the
command word and mark allocation. Some other traditional structures ;matrix, geographical,
divisional were marked positively.
Part (b) required the answer to describe THREE areas where organisational policies can affect
procurement and can include complying with laws and standards, procurement role in product
development, delegated authority levels, procedures and decision making through the sourcing and
tendering processes. Ethics and sustainable procurement. Alternatively candidates may structure
their answer by focusing on the stages of procurement that may be impacted by organisational
policy. An equal three marks was available for each description.
This proved difficult for some candidates. Many stated policies which were more Procurement
related that ‘organisation’ policies. Where the policy could be regarded as both (eg ethics) it was
considered valid. Moreover many marks were missed when the policy was identified/described but
the question was not fully answered, the question asked about the IMPACT on procurement. This is
a mistake that is often seen. This was repeated in Q4. CSR/ethics/sustainability featured a lot in
answers and sometimes was repetitive and lacked breadth to distinguish the three as separate
points.
Describe THREE objectives of public sector organisations (9 marks)
Explain FOUR ways in which regulation might impact on public sector procurement (16 marks)
(a) LO 4.2. Analyse the impact of the public sector on procurement or supply chain roles
(b) LO 4.2 Analyse the impact of the public sector on procurement or supply chain roles
3
The question aims to test the knowledge and understanding of the impact of public sector regulation
on procurement.
Part (a) The primary objectives of the public sector are not to make economic surplus or profits, but
instead to deliver essential public services, encourage national and community development and
pursue socio-economic goals. Alternatively answers could use the National Procurement Strategy
2003. This addressed objectives such as quality, diversity of suppliers, continuous improvement,
achieving greater value, achieving community benefits and stimulating markets and driving
innovation. Reference to central government objectives is also a valid answer.
Transparency and accountability are outcomes of the public procurement process rather than
objectives of the public sector organisation.
A mixed range of answers was seen. Those answers that correctly identified three objectives scored
well. Many did not get three correct and even more answers struggled to pass choosing such as
gathering tax, bailing out companies… as objectives. Candidates seem to struggle to distinguish
objectives (what) and process (how) public services are delivered.
Part b carried 4 marks for each of four ways regulation impacts procurement. Answers are required
to explain so some detail is required.
Regulation may have the following impact on public sector procurement, generic areas of regulation
include:
 Compliance with public standards
 Compliance with public policies, standing orders and statuary procedures.
 Health and safety, environmental sustainability, data protection and freedom of information
requirements.
 Detailed procedures and record keeping (audit trail)
 Value for money
 Tendering and.
 SMEs may be excluded from the process.
 Awarding contracts according to M.E.A.T might preclude suppliers who can provide
Specific EU regulation impact can also be explained such as advertising the needs, awarding
contracts, the right to debrief
Some good answers but like Q3b some did not gain marks because the question (IMPACT) was not
answered. Many candidates described public sector procurement regulation (EU) regulations very
well but again limited in the further description of impact on procurement. Those answers, which
referenced EU regulations, appeared to demonstrate an understanding and were able to also explain
the impact on procurement.
Positive marking was applied to international scripts where regulations differ and assessors found
that the knowledge of the regulations that impact was good but the answers were not then
extended to include what the impact was.
4

Explain the interests of FIVE connected or external stakeholders that a procurement (25 marks)
function might need to consider.
LO 1.4 Differentiate the stakeholders that a procurement or supply chain function might have.
This was a 25 mark question requiring an explanation of the interests of five connected or external
stakeholders in a procurement or supply chain function. Therefore, five marks were allocated to each
stakeholder.
Answers could have explained the interests of connected stakeholders, such as suppliers, customers,
shareholders or financiers, or external stakeholders such as the government, pressure groups or the
community. To gain high marks, answers had to identify five relevant stakeholders, explain the nature of the
interests of each one and to explain their interest related to the procurement or supply chain function.
As an example, answers might have referred to shareholders as a connected stakeholder. They are the owners
of the company and their interests are for the company to maximise its profits so that they receive a high
level of dividend and an increase in the value of their shares. The interest in the procurement function is that
it will want to achieve value for money in the sourcing process to reduce costs, or by finding higher quality
inputs which might increase sales revenue.
There were some excellent answers which identified five relevant stakeholders and went on to explain their
interests related to the procurement or supply chain function. Such answers were rewarded by a high mark,
often higher than 20/25.
Some answers, however, although correctly identifying five relevant stakeholders and explaining the nature of
their interests, did not go on to fully explain the interests that procurement or the supply chain function may
need to consider. Such answers were awarded a mark of a pass or marginal credit standard.
A significant number of answers incorrectly identified internal stakeholders.
JULY2014_(D1)_EXAM_REPORT_LEARNER_COMMUNITY 1/4

A few answers were very brief, being less than 200 words in total and lacking depth of detail. They simply
identified five stakeholders and provided a very short explanation of their interests. The marks awarded for
such answers were low, often not reaching the pass mark standard.
(a) Outline the potential impact of complex compliance requirements on the achievement (10 marks)
of positive outcomes in the sourcing process.
(b) Describe FIVE ways in which contract management might add value after the contract (15 marks)
award stage of the sourcing process.
Q2(a) LO 2.4 Analyse the relationship between achieving compliance with processes and the achievement of
outcomes.
Q2(b) LO 2.2 Analyse the main stages of a sourcing process.
Part (a) of this question tested candidates' knowledge of the link between complex compliance requirements
and the achievement of positive outcomes in the sourcing process.
Stronger answers demonstrated a knowledge of the stages of the sourcing process and given examples of
complex compliance requirements. They would have to stated that such compliance requirements lead to
organisations becoming rigid, inflexible and inwardly focused. They become resistant to change and incapable
of adapting to changes in customer demand. Initiative and innovation are stifled and organisations tend to
become bureaucratic.
In general terms, this question was not answered well. There were a few very good answers, which followed
the above criteria. Many candidates, however, missed the point of the question. Some simply described the
stages of a sourcing process, for which few marks were awarded. Other answers simply described different
types of specification, without addressing the question set and again low marks were awarded for this
approach. A small number of candidates did not attempt to answer this question.
Part (b) of the question required a description of any five ways in which contract management might add
value in a sourcing process. As it was a 15 mark question, three marks were allocated to each way described.
Stronger answers would have described methods such as the buyer and supplier working together to achieve
cost savings and continuous improvement, the buyer measuring supplier performance, a reduced risk of
misunderstanding and disagreement and an increased likelihood of supplier innovation.

In general terms, this part of the question was answered well, with many candidates describing five relevant
actions to add value, following the award of a contract. Such answers were rewarded by a high mark, often of
a credit pass, or even a distinction pass standard.
There were a small number of answers which did not address the question set. Some described the five
'rights' of purchasing, while others referred to stages in the sourcing process prior to the award of a contract.
Such answers achieved low marks and in some cases no marks, because the question specified 'after the
contract award stage of the sourcing process'.
In general terms, this part of the question was answered well, with many candidates describing five relevant
actions to add value, following the award of a contract. Such answers were rewarded by a high mark, often of
a credit pass, or even a distinction pass standard.
(a) Explain the term 'Enterprise Resource Planning'. (5 marks)
(b) Describe FOUR of the main functions of an IT based inventory management system. (20 marks)
Q3(a) LO 3.4 Explain the common IT systems that can be used by a procurement or supply chain function.
Q3(b) LO 3.4 Explain the common IT systems that can be used by a procurement or supply chain function.
Part (a) of this question tested candidates' knowledge of Enterprise Resource Planning (ERP). The strongest
answers stated that ERP systems consolidate materials, manufacturing, logistics, supply chain, sales and
marketing, finance and HR planning into a single integrated management system. It is a single database which
offers real time information for solving a range of business problems. Examples, such as SAP, could have been
mentioned.
There were a few very good answers to the question, where candidates scored the maximum mark of 5/5 or
4/5 if the answer was not quite comprehensive enough. Other candidates were familiar with the term ERP,
but focussed on the production and inventory control elements, without mentioning the other resources of
an organisation that should be included in a holistic management system. A few candidates answered the
question in terms of Materials Requirement Planning, for which few marks were awarded.
Part (b) of the question was worth 20 marks. As four functions of an IT based inventory management system
had to be described, 5 marks were allocated to each function.
Answers to part (b) of the question were generally good, with many candidates being awarded marks of at
least a pass standard and often higher.

The strongest answers described functions such as managing and forecasting the demand for inventory,
controlling stock levels, capturing goods inwards information accurately, ensuring that stocks are replenished
in accordance with procurement policies and recording stock movements and locations.
Some answers, however, lacked depth of detail, with only two or three lines of script for each function. Such
answers were often not awarded a mark of a pass standard. Some candidates misunderstood the question
and attempted to answer it by describing four IT systems, such as MRP I, MRP II, DRP and ERP, which resulted
in few, if any marks being awarded.
Describe FIVE possible 'drivers' or influencing factors of procurement activities in third (25 marks)
sector organisations.
LO 4.4 Analyse the impact of the not for profit or third sector on procurement or supply chain roles.
This was a 25 mark question. As it asked for a description of five drivers or influencing factors, five marks were
allocated to each.
Stronger answers to this question would have provided a detailed description of five relevant drivers, or
influencing factors of procurement activities in third sector organisations. These might have included
regulatory bodies, such as the Charities Commission, the management of reputation, with examples, ethical
issues, such as treating suppliers fairly, the limited resources available from donors and public bodies and the
values of stakeholders which are often directly related to the mission and purpose of the organisation.
Answers to this question were of a mixed standard. There were a few of a high standard, which were awarded
marks of a distinction pass standard.
Some answers, however, lacked depth of detail and were very short and these were usually awarded a mark
of a pass standard. A few candidates missed the point of the question and described drivers that were
particularly applicable to purchasing in the private sector (e.g. shareholder returns), or the public sector (e.g.
compliance with EU regulations). As the question specifically asked for drivers of procurement in third sector
organisations, such answers were awarded few marks.
A few candidates misunderstood the question and interpreted the third sector as the tertiary sector and
described purchasing activities in banking, retailing and transport. Such answers were awarded few, if any,
marks. Also, a few candidates, on seeing the word FIVE in the question, attempted to answer it by describing
the five 'rights' of purchasing and marks were only awarded for any relevant points made.

Qualification: Diploma in Purchasing Diploma in procurement and supply
and Supply
Unit: D1 D1 - Contexts of P&S
Explain FIVE differences between operational expenditure and capital expenditure (25 marks)
LO1.1 Explain the categories of spend that an organisation may purchase
This question tests candidate’s knowledge of different categories of procurement spend and the differences
between them.
This is a 25 marks question requiring an explanation of FIVE differences between operational and capital
expenditure. Each difference explained. The command word requires a level of detail in each answer. Answers
can draw from a range of features including finance accounts, period of use/consumption, comparative value
of items purchased, elements of total cost, complexity of requirements, number of stakeholders, preparation
involved, revenue generation and frequency of purchase. While a brief description of the categorisation and
features is required for context marks are in the main awarded for explaining the differences. Higher marks
are gained by including relevant examples such as Examples of capital expenditure might include warehouse
buildings, manufacturing machinery and vehicles. Examples of operational expenditure might include stocks
of materials, maintenance and repair consumables and stationery or examples to support the differences
Many answers found pass marks for this question identifying and explaining the differences between the two
expenditures. There were some excellent answers but many candidates lost marks for a lack of detail/depth in
their explanation.
Some answers were very brief (one page or less) for a 25 marks question. Marks were also lost through
answers which described the two spend areas but not the ‘differences’. Where candidates used a table format
or detailed the features of one spend and then the other, appropriate marks were awarded for sufficient
content so that differences could be inferred. Candidates often took a narrow definition of operational
expenditure concentrating on services and not raw materials or finished product which narrowed the choice
of differences to explain. Occasionally more than five answers were given but only the first five received
marks. Other answers did not distinguish clearly the FIVE answers making marking difficult.
May2014_(D1)_EXAM_REPORT_LEARNER_COMMUNITY_(EHT)_FV 1/4

(a) Identify the main stages of a sourcing process (also known as the purchasing or (9 marks)
procurement cycle).
(b) Describe FOUR benefits of using electronic systems in the sourcing process (16 marks)

(b) LO 2.3 Explain how electronic systems can be used at different stages of the sourcing process
Part (a) tests knowledge of the basic stages of the sourcing process/purchasing or procurement cycle.
Answers that capture several stages from identifying a need through contract award to contract and supplier
management. The command word ‘identify’ indicates a short answer is acceptable.
The majority of candidates gained high or full marks on part (a) for a very straightforward question,
demonstrating good subject knowledge. However, in contrast to Q1 many candidates wrote lengthy answers
when the question was simply to ‘identify’. This may have taken up valuable time to gain no further marks.
Candidates should use the command word in the question and the mark allocation to help determine the
length, depth and content required in each question and question part.
Part (b) requires a description of benefits of using electronic systems in the sourcing process. The focus is on
description of benefits not the electronic system, but also must be in the context of the sourcing process (and
the broader definition of sourcing process as in part (a). Benefits include cost savings, accuracy of data
input/output, improved and transparent communication, reduced lead-times, collaboration opportunities,
real time information, reduced risk of fraud and broader market access.
Answers were mixed here with some very good answers capturing the benefits as required but others
providing a description of a system without describing the benefit. Some candidates provided more than
FOUR answers but only the first four can be marked. Lack of depth /detail in answers also prevented higher
marks being awarded. Answers were well linked to relevant systems in the sourcing process and better
answers used examples from the workplace to support the benefits stated.
(a) Describe the roles typically undertaken within an organisation by:

(i) The local procurement teams (13 marks)
(ii) The central procurement team.
(b) Describe THREE possible hybrid structures for a procurement or supply chain function (12 marks)

LO 3.3 Compare the different structures of a procurement or supply chain function
Question 3 was in 2 parts both testing knowledge and understanding of roles and organisational structure for
procurement.
Part (a) is further split into two parts and requires a description of roles undertaken by local and central
procurement teams. Answers need to put the role description into the context of the local or centralised
structure. Local teams will deal with smaller order items, items used only by that location, emergency orders,
dealing with local suppliers and social sustainability policies. Central teams will take a more strategic role
determining procurement policies, standardising specifications and consolidating organisational spend to gain
leverage. Central teams might undertake wide market research, procure capital assets and support training
and development initiatives.
Better answers provided good depth clearly demonstrating knowledge of the different roles. Some answers
drifted into general descriptions of any procurement roles without relating them to local or central which
gained less marks as the question was not fully answered.
Part b followed testing knowledge and understanding of other procurement structures known as hybrid.
Answers could describe THREE of several hybrid structures such as CLAN (Centre led action network), SCAN
(Strategically controlled action network, Lead buyer approach, business partnering, consortium, shared
services approach, category management, matrix structure or outsourced services. Four marks are available
for each of the three structures described.
This was by far the lowest graded answer. Some answers demonstrated a clear understanding of the question
and possible answers, and gained good marks, some excellent marks, but these were in the minority. Others
mistakenly described supply chain management and supplier tiering, buyer supplier relationship or
procurement roles. A number of candidates described centralised and decentralised procurement which are
not hybrid. Some candidates did not attempt this part of the question gaining no marks at all.
A few answers captured SCAN and CLAN but then did not give an accurate description of what they are.

(a) Explain the impact of THREE objectives of a public sector organisation on its (15 marks)
procurement activities
(b) Explain how a purchaser in the public sector complies with the regulatory requirement (10 marks)
for:
(i) Competitive supply
(ii) Accountability.
LO 4.2 Analyse the impact of the public sector on procurement or supply chain roles
This question relates to the public sector and part (a) tests understanding of the objectives that are set in the
public sector and how these impact the procurement activities. THREE objectives can be chosen such as
delivery of special services, encourage national and community development, the pursuit of socio economic
goals, VFM/efficient use of public funds. The description of the objective will gain minimal marks but the
description of its impact on procurement will gain higher marks. Other objectives could include quality
services, realising community benefits and a mixed economy of service provision. Each of the three answers
worth up to 5 marks.
Most candidates attempted this question and many gained pass marks with strong knowledge but higher
marks were not being achieved because answers sometimes lacked depth. Answers at times focused on
describing the objectives and public sector organisations/procurement in general rather than the IMPACT on
procurement and so not fully answering the question. This meant that higher marks could not be awarded.
Some candidates were unclear on the main objectives of public sector.
Part b was split into two further parts each carrying five marks. The question tested knowledge of public
sector regulatory requirements to encourage competitive supply and accountability and also an
understanding of how a purchaser might comply with these requirements. Competition can be encourage
through a variety of quotation and tender procedures, standardising requirements and accountability ensured
through detailed procedures and audit trails, declaration of interest and segregation of purchase and invoice
duties. Also, fair evaluation of tender responses and feedback to suppliers keeps the process and decision-
making visible.
The subject matter of part a and part b generated some repetition in answers. However, the parts were
marked as separate entities so that candidates were not disadvantaged by this. In general this part was well
answered with the answers relating to the question of HOW the purchaser complies to regulations. However,
some answers did give lengthy descriptions of the regulatory requirements.

Qualification: Diploma
Unit: D1
Exam series: January 2015
Part (a) Outline, using examples, FIVE elements of the total cost of ownership of
capital equipment. (10marks)
Part (b) It is widely believed that it is important to attempt to reduce costs and add
value throughout the supply chain.
Explain THREE innovative strategies that might achieve such goals (15 marks)
(a) LO 1.2. Analyse the different sources of added value in procurement and supply
(b) LO 1.2 Analyse the different sources of added value in procurement and supply
This question is testing the candidates knowledge and understanding of added value and how it is
derived in the supply chain
Part (a) requires an ‘outline’ or brief description to show understanding what elements make up the
total cost of ownership together with examples to support the answer. FIVE elements were required
for 10 marks therefore up to 2 marks each.
Answers could outline five from the following costs; pre-acquisition, acquisition, operating,
maintenance, downtime and end of life costs. Answers can make reference Baily et al price/cost
iceberg analysis.
This question was well answered with good detail and appropriate examples gaining good marks and
often high to full marks. Some answers listed the five and so did not gain the higher marks. Others
wrote in great detail which was not appropriate for 2 marks each, time that might have been better
spent on other questions. Some split out elements of the purchase price which in itself was only one
element.
Part (b) This question requires a more detailed answer. The command word is ‘explain’ and the mark
allocation is asking for THREE answers for 5 marks each. Innovative strategies used in the whole
supply chain were acceptable.
The key to a good answer was in finding ‘innovative strategies’. A range of strategies are acceptable

such as Lean supply (JIT), Agile supply, Value engineering, Value-adding negotiations and
relationships, outsourcing, early supplier involvement, stakeholder management, innovation, Supply
chain management approaches. Taichi Ohno’s 7 wastes would gain marks too.
Candidates who understood the question and chose appropriate strategies to write about scored
well in this question. The most common answers included Lean/JIT, Agile, Value engineering,
supplier collaboration (ESI). However on the whole this question was not well answered with the
word ‘innovative’ appearing to cause difficulty. Some answers did not gain marks where general
supply chain practices were explained (eg inventory management or procurement practices eg. 5
rights). A level of detail was required to gain higher marks and some answers lacked this depth.
Part (a) Outline THREE pre-contract award stages of the sourcing process. (9 marks)
Part (b) Explain FOUR advantages for an organisation of following a structured (16 marks)
sourcing process

(b) LO 2.4 Analyse the relationship between achieving compliance with processes and the
achievement of outcomes
This question tests the candidates knowledge and understanding of the sourcing process, its stages
and the benefits of following good practice.
Part (a) was a very straightforward question again, asking for three brief answers on the stages of a
sourcing process before the contract is awarded. 3 marks were available for each answer.
Answers could draw from

 Identification of need.
 Specification of need
 statement of the requirements to be satisfied in the supply of a product or service.
 Develop contract terms
 Source the market
 Appraise suppliers
 Invite quotations or tender.
 Analyse quotations and select most promising supplier:
 Negotiate best value
Answers were mostly correct and in enough detail to gain credit or distinction level pass marks. A
minority of answers incorrectly included post contract award activities. A few answers contained
more than three stages. A range of different stages were outlined across all the answers seen
1
although many chose the first three stages. The command word and mark allocation are a useful
guide to the length and content of answers as this is the maximum marks that can be awarded. Some
answers were lengthy and the time taken to write these might have been better spent on other
answers.
Part b This question requires answers to ‘explain’ FOUR advantages for 4 marks each. A further level
of detail was required to demonstrate knowledge and understanding of the sourcing process. The
question is about the benefits of the sourcing process being structured and consistent rather than
the benefits of procurement itself.
Answers could include avoiding gaps, ensuring all activities are undertaken, co-ordination and
collaboration between parties, avoiding duplication and waste, avoids conflict, consistency,
balancing differing objectives and goals. A structured process can also support good governance and
avoid ‘reinventing the wheel’. It promotes compliance and documentation ensures delegation and
future projects can be easily managed. So there are many answers to draw from.
Mixed results were seen in this question. Some answers gained good marks choosing enough
different advantages and answering in enough detail. Some candidates described the process but
not the benefit of following in a structured way and so did not fully answer the question. A small
minority did not attempt the question.
Part (a) Define the term ‘ethics’.

(5 marks)
Part (b) Discuss FIVE examples of ethical or unethical behaviour that could be
addressed in an ethical code for procurement professionals (20 marks)
(a) LO 3.1. Explain the main aspects of corporate governance of a procurement or supply chain
function
(b) LO 3.1 Explain the main aspects of corporate governance of a procurement or supply chain
function
This question tests the candidates knowledge of structure ethical policies in the oovenance of
procurement and supply
A definition of the term ‘ethics’ is required in Part (a) for 5 marks. The answer did not need to be
lengthy but a number of elements need to be covered for higher marks. Examples were not required
and were requested in part (b) so repetition would not gain additional marks.
There are many ‘definitions’ and candidates own versions are acceptable. Marks were gained for
words and phrases such as :
 A set of principles
 Policy
2
 Right and wrong
 Moral values / behaviours
 Interaction with others
 Individual and corporate levels
 CSR
Many candidates gained a pass mark at least by including 2 or 3 relevant points. Some candidates
used just examples which did not answer the question and formed part b so would not be valid to
gain marks in part a. Other answers were very short and lacked enough detail to allocate marks to.
Relatively few answers made reference to the CIPS code of ethics.
Part (b) This question required more detailed answers. FIVE examples for 20 marks which assumes 4
marks per example.
A very wide range of answers was possible. Some common answers included gifts, hospitality, fraud,
bribery, fair dealings with suppliers, conflict of interest, personal gain, transparent practices, social
and environmental policies.
Many candidates provided five relevant examples and used a mix of ethical and unethical practices
showing a good understanding and relating the answer to the whole question. Higher marks were
not gained for answers which either lacked detail or did not relate the behaviours to those which
would appear in a code for procurement. Some answers provided more than five examples which
could not be marked.
Compare FIVE characteristics of manufacturing sector organisations with those of

retail sector organisations
(25 marks)
LO 4.1 Identify different economic and industrial sectors
The question aims to test the knowledge and understanding of the manufacturing and retail
industrial sectors and the similarities and differences between them.
Answers were required to compare (this could include similarities or differences) characteristics of
manufacturing and retail organisations. The command word ‘compare’ and 5 marks each allocation
assumes some level of detail. Stronger answers appeared to have some planning in notes to identify
the characteristics and then to find the comparison between five of these characteristics.
There is a very broad range of characteristics to choose from.
Answers could include manufacturing/retail characteristics such as transformation /non

transformation of goods, forecast demand /speculative buy to sell, stable product range/changing
3
trends, narrow product range/ wide variety, long-term supplier relationships/shorter term
transactions, remoteness of customer, stockholding patterns, IT support and many others
Most candidates were able to compare five characteristics but often lacked detail or just described
two characteristics but did not make a comparison. Some answers were only one page long for a 25
marks question so that the content was not sufficient to marks. Relatively few compared similarities
and most focussed on differences.
A few stronger answers recognised that retail sector has goods for resale and good not for resale.
Some answers were based on the narrower workbook definition of retail for example manufacturing
spends more on capital but not recognising some retail organisations manage automated
warehouses. On the whole many answers gained a pass or credit mark for this question. A small
number of answers provided lists of characteristics, sometimes in a table with no comparison.
Some marks were allocated to these answers as appropriate but not high marks. Candidates either
do not understand the requirement of the command word ‘compare’, the depth/breadth required
for 25 marks or some may have run out of time for this the last question

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CIPS Exam Report for Learner Community:

Qualification: Diploma in procurement and supply

Each element of a question carries equal weighting unless otherwise stated.

Learning outcome addressed

Command word explanation:

Examples of good content/good approaches in answers:

JUL16_D1_EXAM REPORT _LEARNER_COMMUNITY_FV 1/6

Leading global excellence in procurement and supply

Examples of content for merit/distinction grade answers:

Examples of poorer content/ poorer approaches in answers:

Question 2 – Learning Outcome 2 Mark

Learning outcome addressed

Command word explanation:

Examples of good content/good approaches in answers:

JUL16_D1_EXAM REPORT _LEARNER_COMMUNITY_FV 2/6

Leading global excellence in procurement and supply

Examples of content for merit/distinction grade answers:

Examples of poorer content/ poorer approaches in answers:

JUL16_D1_EXAM REPORT _LEARNER_COMMUNITY_FV 3/6

Leading global excellence in procurement and supply

Question 3 – Learning Outcome 3 Mark

Learning outcome addressed

Examples of good content/good approaches in answers:

Examples of content for merit/distinction grade answers:

Examples of poorer content/ poorer approaches in answers:

JUL16_D1_EXAM REPORT _LEARNER_COMMUNITY_FV 4/6

Leading global excellence in procurement and supply

(b) Explain, with examples, how objectives for corporate social

Learning outcome addressed

Command word explanation:

Examples of good content/good approaches in answers:

Examples of content for merit/distinction grade answers:

JUL16_D1_EXAM REPORT _LEARNER_COMMUNITY_FV 5/6

Leading global excellence in procurement and supply

Examples of poorer content/ poorer approaches in answers:

JUL16_D1_EXAM REPORT _LEARNER_COMMUNITY_FV 6/6

Leading global excellence in procurement and supply

Each element of a question carries equal weighting unless otherwise stated.

Learning outcome addressed

Command word explanation

Examples of good content/good approaches in answers:

MAY16_D1_EXAM REPORT _LEARNER_COMMUNITY_FV 1/6

Leading global excellence in procurement and supply

Examples of content for merit/distinction grade answers:

Examples of poorer content/ poorer approaches in answers:

MAY16_D1_EXAM REPORT _LEARNER_COMMUNITY_FV 2/6

Leading global excellence in procurement and supply

Learning outcome addressed

Command word explanation

Examples of good content/good approaches in answers:

MAY16_D1_EXAM REPORT _LEARNER_COMMUNITY_FV 3/6

Leading global excellence in procurement and supply

Examples of poorer content/ poorer approaches in answers:

Learning outcome addressed 3.1

Command word explanation

Examples of good content/good approaches in answers:

MAY16_D1_EXAM REPORT _LEARNER_COMMUNITY_FV 4/6

Leading global excellence in procurement and supply

Examples of content for merit/distinction grade answers: