L4M1 Practice Exam Questions with Answers Scope and Influence of Procurement and Supply Certification

How to approach this question:

- There are 3 terms and an advantage and disadvantage for each you need to talk about. So that’s 9 things. Out of 25 points you can see you’ll probably only get 1-2 points for each aspect of the question. That shows you the level of detail you need to include – not that much!

- In terms of structure feel free to use headings and bullet points for this one

Example Essay

Outsourced procurement, shared service units (SSUs), and consortium procurement are distinct approaches to managing procurement activities within organizations. Each method carries its own set of advantages and disadvantages, catering to different organizational needs and circumstances.

Outsourced Procurement: Outsourced procurement involves engaging a procurement consultant or an external organization to provide advice or handle the entire procurement process on behalf of the company. The advantages of outsourced procurement are that it frees up internal resources, allowing them to focus on other tasks. The expertise and skills brought by external consultants can also fill gaps in the organization's capabilities. Moreover, this approach is flexible, adapting well to irregular procurement needs. However, drawbacks include a potential loss of control, higher costs, the need for an additional management layer, and the risk of losing intellectual property (IP).

Shared Service Unit (SSU): A Shared Service Unit is an internal procurement support function within an organization that various divisions can access for assistance, resembling the outsourcing concept but within the organizational structure. The advantages of SSUs lie in potential cost savings, the ability to aggregate demand, and the establishment of common standards and processes across the company. The expertise utilized is internal, providing a sense of familiarity. The disadvantage is that measuring the success of an SSU can be challenging, and there is a risk of stifling innovation. The unit may also be perceived as remote from end users, and procurement processes might be slower due to serving multiple departments.

Consortium Procurement: Consortium procurement involves a collective effort where separate organizations join forces to purchase goods, thereby increasing their bargaining power. The advantages of this approach are in the aggregated demand, resulting in more economical purchases. Pooling knowledge and expertise within the consortium enhances the collective capabilities of its members, providing a sense of safety in numbers. However, disadvantages include a potential loss of individual organizational power, prolonged decision-making processes within the consortium, challenges in responding quickly to demands, and the potential hindrance to small and medium-sized enterprises (SMEs) competing if demand is aggregated.

In conclusion, organizations must carefully consider their specific needs, priorities, and the nature of their procurement requirements when choosing between outsourced procurement, SSUs, or consortium procurement. Each approach offers unique benefits and challenges, and the decision-making process should align with the organization's overall goals and strategies.

Tutor Notes:

- I’ve named lots of advantages and disadvantages for each of the models. 1-2 advantages and disadvantages of each is all you need to secure you the marks. Remember you only have 35 minutes to write this. A danger with this type of question is spending too long on one aspect of the question and running out of time to answer the rest of it.

- A good idea is to pace yourself and give yourself 10 minutes per term (outsourced, SSU and consortium) then 5 minutes at the end to review and edit your response.

- Some further details you may wish to include:

- Outsourced procurement – this is often used when the organisation doesn’t have the expertise to procure the item they need. This often happens for complex / technical procurements or highly regulated industries. An example may be a housing provider who runs a block of flats where the lift has just broken down and cannot be fixed. They need to procure a new lift but have no idea how to write a specification for this as they don’t have the technical knowledge of how lifts work. Hiring a consultant who is experienced in tendering for lifts, although expensive, may actually save money by reducing the risk of procuring the wrong thing.

- SSU – a Shared Service Unit acts as a support function for the organisation. This is described in Porter’s Value Chain- all other departments can call on the SSU when they require assistance. The SSU is responsible for managing its own costs, employs its own resources and may have contractual agreements with other divisions. The main aim of the SSU is to add value. SSUs are common in large organisations where the core activities don’t revolve around procurement (such as finance and service industries).

- Consortium – Consortium buying is encouraged in the public sector in order to maximise value for money. Consortiums can create their own Frameworks. There is a risk that large consortia can abuse their dominant market position.

- LO 3.3 p. 161

- there are a lot of components to this question so I would take a good 5 minutes to write out some bullet points on the characteristics of each one, and on some differences. Then from your notes make this into an essay. The mark scheme isn’t 100% clear on how many characteristics and differences you need to name, so try and keep an equal split between the two areas. You would probably need 2-3 characteristics of each, and 3 differences for a good score.

- Characteristics of goods: tangible, homogeneous, items tend not to perish quickly, can be stored

- Characteristics of services: intangible, heterogenous, inseparable (produced and consumed at the same time), no transfer of ownership, perish upon use (i.e. cannot be stored)

- Characteristics of construction work: project-based procurement, includes procuring both goods and services, complex procurement which has its own set of regulations (CDM2015).

- Differences between these

1) goods are not usually outsourced and services can be.

2) Complexity of the supply chain (goods and construction may have a complex supply chains, but service contracts usually only involve 2 parties).

3) Timescales – construction work has a designated timescale but procurement of goods could be a one off or long-term contract, services is usually a long-term contract.

Example Essay

Introduction:

Procurement is a multifaceted field, and understanding the nuances between procuring goods, services, and construction works is pivotal for effective management. This essay explores the main characteristics that differentiate these categories.

Tangible / Intangible:

Goods are tangible items that can be physically seen and touched. For instance, raw materials like wheat and sugar in a manufacturing organization are tangible goods. On the other hand, services are intangible—though the results can be observed, the service itself cannot be touched. An example is a cleaning contract for a factory; while the effects of the cleaning are visible, the service itself remains intangible. Construction is usually a mixture of tangible and intangible procurement; the tangible is the construction materials such as bricks and windows, and the intangible aspect is the labour to complete the project.

Heterogeneous / Homogeneous:

Goods are generally homogeneous, meaning they are always the same. For example, steel purchased for manufacturing purposes will always be the same. In contrast, services are heterogeneous, varying each time they are rendered. Customer service, for instance, is inherently different each time due to the dynamic nature of customer interactions. Construction could be either heterogeneous or homogeneous depending on the project – is it a one off unique building, or is it a large housing estate of same-build properties?

Transfer of Ownership:

When goods are procured, there is a transfer of ownership. The product becomes the property of the buyer upon delivery and payment. In contrast, services do not involve a transfer of ownership as there is no physical entity to transfer. In construction the transfer of ownership is extremely complex and varies depending on the project. Usually the buyer will retain ownership of the land throughout the project, but on some occasions the construction company may take ownership for insurance purposes.

Storable (Separable/ Inseparable):

Goods are storable, allowing for purchase on one day and use on another. For example a factory can buy in plastic to be used to manufacture toys and this is stored in inventory until the time comes to make the toys. However, services are consumed at the point of purchase, making them inseparable. The service is bought and utilized simultaneously. Services cannot be stored. This is the same for construction.

Ability to Outsource:

Goods are rarely outsourced, as they are typically purchased directly from suppliers. Services, on the other hand, can be easily outsourced—examples include outsourcing finance, cleaning, or security services. Construction works are commonly outsourced, with external companies hired to execute projects.

Complexity of the Supply Chain:

Service contracts often involve a simple two-party relationship between the buyer and the supplier. Goods and construction, however, may have complex supply chains. For example, procuring a pen involves a supply chain with various steps, including the raw material supplier, manufacturer, and possibly a wholesaler. Construction works often feature a tiered supply chain with subcontractors playing crucial roles.

Construction as a Hybrid:

Construction procurement represents a hybrid, incorporating elements of both goods and services. It involves hiring a service, such as a bricklayer for laying bricks, while also procuring the tangible goods—bricks. Separating goods from services in construction is challenging, as they are often intertwined, and both aspects are paid for simultaneously.

Conclusion:

In conclusion, distinguishing between the procurement of goods, services, and construction works is essential for effective supply chain management. The tangible or intangible nature, heterogeneity, transfer of ownership, storability, outsourcing potential, and supply chain complexities offer a comprehensive framework for understanding the unique characteristics of each category. Recognizing these distinctions empowers organizations to tailor their procurement strategies to the specific challenges and dynamics associated with goods, services, and construction works.

Tutor Notes

- What a characteristic is can also be a difference. So for example you can say tangible is a characteristic of goods but tangibility is also the main difference between goods and services. So don’t worry too much about which order to write stuff in, or doing clear sections for this type of essay. It all comes out in the wash.

- Other differences in procuring these include:

- Costs: procuring goods such as stationary for an office will be low-cost so may not require approval, but a service contract may require management sign off. Procuring construction projects tend to be huge sums of money

- Where the budget comes from: goods and services may be operational expenditure and construction works capital expenditure.

- The level of risk involved in the procurement: goods tends to be quite low risk and construction high risk.

- Types of contract involved: procuring goods may be very simple and just require a PO, services is more complex so may require a formal contract or Deed of Appointment. Construction projects will require a contract due to the high value and high risk of the purchase

- Legislation – Goods = Sale of Goods Act, Construction - CDM Regulations 2015. Construction is much more heavily regulated than services or goods. Note CDM regulations isn’t part of CIPS. It’s occasionally referenced in various modules but you don’t have to really know what it is. Just know it’s the main legislation governing the construction industry. Construction - Construction Design and Management Regulations 2015 (hse.gov.uk)

- Study guide LO 1.3.1 p. 40, but mainly p. 52 for services. NOTE the title of this learning outcome includes construction and it is hardly mentioned in the study guide. Most of the above information on construction comes from my own knowledge rather than the book.

- Definition of ‘structured procurement process’ – when an organisation provides a sequence of actions / steps to take to get the outcome (the procurement of an item). This involves an organisation providing guidelines and instructions of how things should be done. Basically following a step-by-step process.

- Why this is important – Ensures all tasks that need to be done are done, maintains consistency, prevents conflict and suboptimal behaviour, improves efficiency, better managerial control, compliance (with laws and standards), assists with continuous improvement, may result in time/ cost savings, reduces risks such as fraudulent spending.

Example essay:

The first part of the question is worth 10 points, so you could include a few of the following points. It would also be good to include examples:

- Structured procurement involves creating rules on how procurement should be done

- This is in contrast to reactive / maverick spending

- May come about due to company policy, external regulations or through trying to achieve Competitive Advantage

- Examples include an organisation having set procedures for ordering items of different spend- e.g. Procurement Assistants can purchase items up to £500. Items between £500-£1000 require a manager’s approval and anything over £1000 requires a written Business Case in order to procure

- Structures Procurement Processes will usually also include the use of a designated e-procurement tool. E.g. an organisation may insist that all tenders use a certain online system and that invoices are sent via X system within 30 days.

The second part of the question is worth slightly more points, so spend more time on this. You could put each of the reasons why it is important in a separate paragraph. Also use examples where you can;

- Ensures all tasks that need to be done are done- having structured processes means having a step-by-step guide to how to procure. This means activities are well co-ordinated and there are no gaps, no duplications of effort and no conflicting efforts. It may involve assigning different people in the team different roles e.g. someone makes the requisition and someone else approves it. It also means that nothing is forgotten.

- Maintains consistency- having standardised processes means each procurement exercise follows the same process. This may include using a standard template for a requisition or ITT. Where there is consistency, this results in time being saved and less mistakes being made as everyone (including supply partners) is familiar with the processes.

- Prevents conflict and suboptimal behaviour- in organisations that use structured procurement processes everyone does the same. This means there is no conflict (e.g. one person doing things one way and another person does it differently and arguing which way is best). It also means no one can do procurement ‘wrong’ – there are written guides and procedures to follow. This is particularly helpful for new starters.

- Efficiency – time and money can be saved where there are standard procedures as people don’t have to plan each procurement activity individually. Structured Procurement Processes may also involve completing bulk orders and co-ordinating activity within the organisation which means less orders are placed over the year and efficiency savings can be made. For example, a factory may create an order of cleaning products once a quarter, compared to ordering products just as and when they are required. This will save time of the procurement department overall throughout the year and allows them to focus on other more value-adding tasks.

- Better managerial control – Managers have more oversight when using structured procurement. There are clear rules as to when managers need to be involved and provide sign-off. This visibility makes it easier for managers to make decisions and allows for early intervention where someone needs assistance. It will reduce maverick spending and fraudulent spending. For example, it is much harder to provide kick-backs to suppliers when there are clear processes and audit trails and managers have visibility over all processes.

- Compliance (with laws and standards) – particularly in the Public Sector there are rules and regulations regarding procurement practices. Using standardised processes allows organisations to demonstrate compliance with appropriate legislation. It also protects them from ‘challenge’. This is when a bidder who is unsuccessful challenges the decision to award a contract to someone else. Using a structured procurement process allows the organisation to demonstrate that they procured the item correctly and the challenge is unfounded.

Tutor Notes

- This topic isn’t as well explained in the new study guide as it used to be. It’s all pretty obvious stuff but the language is slightly different. The guide now talks about ‘compliance with processes’ and the benefits this brings. Which is exactly the same as why do you follow a structured process. This is on p. 114.

- If you’re feeling clever, you could mention the difference between Public and Private Sector- e.g. a private organisation may use standardised processes for efficiency and cost savings, whereas a public sector organisation may use it more for compliance purposes.

How to approach this question

- This question is testing to see if you know the 4 procurement procedures allowed in the Public Sector which are: open, restricted, competitive dialogue, competitive dialogue with negotiation. The Public Sector is limited in how it can procure due to the Public Contract Regulations, so things like Early Supplier Involvement isn’t an option.

- The question doesn’t specifically say it has to be these four, but these are the ones in the book. Because of the vagueness you could say something like running a competition and awarding via a Framework instead. Talking about Public Private Partnerships could also be appropriate but that is outside of the scope of this module (and Level! It comes up in Level 5). These answers would be accepted.

- Also note that it doesn’t say the UK in the question, so if you answered this about your own country, that would be fine.

Example Essay

Each country’s government has its own regulations relating to how goods, services and works can be procured. The UK’s procurement rules is currently dictated by the Public Procurement Regulations 2015 which is based off EU Procurement Directives. This piece of legislation will likely be superseded in Autumn 2023 due to the UK leaving the EU. Until this point, the PCR allows UK public sector organisations to procure in the following ways: open, restricted, competitive dialogue, competitive dialogue with negotiation

Open Procedure: This is the most straightforward and transparent method. A local government issues an open tender for office supplies. Any company that provides these supplies can submit a bid. The government then evaluates all bids based on price, quality, and delivery terms to select the supplier. Any interested supplier can submit a tender. The process is open from the outset, and all submissions are evaluated against pre-defined criteria. This procedure is used when you wish to attract a large number of bidders for the opportunity and is often posted online on a platform such as Find A Tender.com so that suppliers can find the opportunity. If it is a large contract it is a requirement for details to be published on OJEU. The disadvantage of using this approach is that you may receive many bids which can be time-consuming.

Restricted Procedure: In this method, the public sector organization invites suppliers to express their interest. After a preliminary selection process, only those who meet the criteria are invited to submit tenders. This is used when the opportunity is more technical, for example a healthcare authority needs specialized medical equipment. The authority would requests expressions of interest from suppliers. After reviewing these, it invites a shortlist of qualified suppliers to submit detailed bids for further evaluation. The benefit of this approach is that unsuitable suppliers are weeded out early, this saving time.

Competitive Dialogue: This is used for complex contracts where the organization cannot define the technical means or legal or financial make-up of a project in advance. A dialogue with selected bidders is conducted to develop one or more suitable solutions, which are then put out to tender. For example, a local council is planning a new public transport system but is unsure of the best solution. It enters into a dialogue with several firms specializing in transport systems to explore various options before requesting final bids based on the developed solutions. Suppliers can be eliminated through the dialogue process based on pre-determined criteria.

Competitive Dialogue with Negotiation: Similar to competitive dialogue, but with an added phase of negotiation. It's used for particularly complex projects where the needs cannot be met without adaptation of readily available solutions. For example: a government department requires a complex IT system that integrates various existing systems. It engages in a competitive dialogue to develop potential solutions and then negotiates with bidders to refine these solutions before finalizing the contract. This procedure allows for negotiations with the winning bidder to readjust requirements if needed.

The approach taken by a public sector organisation will depend on a number of factors, but in particular the complexity of the project and whether there is a pre-determined scope. Other factors to consider include; the time-sensitiveness of the project and how quickly the procurement exercise needs to be completed, the amount of suppliers in the marketplace, and whether suppliers need to be consulted on to create the specification.

Tutor Notes

- These four procedures are outlined on p.212. Post PCR 2015, these procedures may change, or be renamed, depending on what the UK government decide to do. So if you’re taking this exam in November 2024 or later, note that the study guide is now out of date and you should conduct a bit of your own research.

- You could also mention that the value of spend is a factor when public sector organisations are deciding on a procurement route. For really low value stuff, like they need a new sofa for the office, most organisation's requirements are to get three quotes and compare them. That isn't in the study guide, it's just real life (I've worked in this sector so know this stuff). Each organisation will have it's own thresholds for what procurement route needs to be taken, so I wouldn't comment on that but generally if it's under £10k there's quite a bit of flexibility. Where you reach 'threshold' then things become very serious and there's much more scrutiny.

- Thresholds are not part of the syllabus so don't worry about learning this. But if you're interested have a read here: New public procurement thresholds from 1 January 2024 - BM Insights - Blake Morgan

How to approach the question

- This is a very open question so your essay could discuss

o the functions of a brand; e.g. advertising, marketing, creating trust, identity

o What is effective branding? Strong image, convincing people to purchase, shared values with customers, offering a solution to a problem.

o The impact for procurement and supply chain isn’t explained in the study guide so tailor this however you like. The best thing to do would be to think about some companies where branding is important, such as luxury goods, cars, or the brand is synonymous with a particular aspect such as Apple being associated with innovative technology. From there you could argue the importance of selecting the right suppliers to work with in order to keep up the brand image. Another example could be an ethical company needing to ensure their supply chain is ‘clean’, so as not to damage their branding. Possibilities are endless with this one.

Example Essay

In the contemporary business landscape, the significance of branding extends far beyond marketing and consumer perception. In procurement and supply operations, an organization's brand plays a pivotal role in shaping relationships with suppliers, determining the quality of goods and services that are procured, and influencing overall supply chain efficiency. This essay delves into the importance of branding in procurement and supply, exploring how a strong brand image can drive competitive advantage, foster trust and collaboration, and impact an organization's bottom line.

Building Competitive Advantage Through Brand Reputation:

The reputation of an organization's brand is a key determinant in attracting and retaining high-quality suppliers. A strong brand often correlates with financial stability, market presence, and business ethics, making such organizations more appealing to work with. This advantage is critical in procurement as it can lead to preferential treatment, such as priority access to scarce resources, better payment terms, and opportunities to collaborate on innovative products. For example, a well-regarded technology company might receive early access to cutting-edge components from suppliers eager to be associated with a market leader.

Enhancing Supplier Relationships and Negotiations:

Branding extends into the realms of trust and reliability, essential components in building long-term relationships with suppliers. A well-respected brand often implies a history of fair dealings, prompt payments, and mutual respect, which can make suppliers more willing to negotiate favourable terms. This trust can be particularly vital in times of supply chain disruptions or market volatility. Suppliers are more likely to extend credit or expedite orders for trusted partners, which can be invaluable for maintaining uninterrupted operations.

Influencing Quality and Sustainability Standards:

An organization's brand also communicates its commitment to quality and sustainability, which are increasingly crucial in procurement decisions. Suppliers aligning with brands that emphasize high-quality standards are often more diligent in maintaining these standards in their products and services. Additionally, a strong brand committed to sustainability can drive supply chain practices that align with environmental and social governance (ESG) principles. This commitment can lead to long-term cost savings, risk mitigation, and enhanced brand loyalty among environmentally conscious consumers.

Brand Image and Consumer Perception:

The procurement function directly impacts the final product quality, which in turn affects consumer perception of the brand. An organization's ability to procure high-quality, ethically sourced materials can significantly enhance its brand image and appeal to a broader customer base. For instance, a fashion brand's commitment to ethical sourcing and procurement of sustainable materials can bolster its image as an environmentally responsible brand, appealing to a growing demographic of eco-conscious consumers. The reverse is also true, brands associated with child or forced labour where this is found to be in their supply chains can suffer from loss of customers, revenue and reputation as well as potentially even legal consequences.

Internal Branding and Employee Engagement in Procurement:

Internal branding, the way an organization's values and culture are perceived by its employees, plays a crucial role in procurement. Employees who are proud of their organization's brand are more likely to engage deeply with their work, leading to better performance in procurement roles. This engagement can result in more innovative procurement strategies, improved vendor management, and a greater focus on aligning procurement practices with the organization’s overall strategic goals.

Conclusion:

The role of an organization's branding in procurement and supply operations is deeply impactful. A strong brand can create competitive advantages, foster better supplier relationships, influence quality and sustainability standards, enhance consumer perception, and drive employee engagement. In the modern business world, where supply chains are complex and consumer expectations are high, branding is not just a marketing tool but a strategic asset in procurement and supply operations. Organizations that recognize and leverage the power of their brand within these operations are poised to achieve greater efficiency, sustainability, and overall success.

Tutor Notes

- This is a really random section of the study guide and doesn’t really relate to the rest of the content. Branding comes up on p.226 – 228. It therefore can come up as a question, but because it’s such as small part of the syllabus, don’t focus too much effort on this subject.

- If you remember one line from this topic it’s this: “branding is not just a marketing tool but a strategic asset in procurement and supply operations”

- This type of question could come up as a scenario / case study. E.g. How does the branding of X Company impact upon their supply chain.

How to approach this question

- The first question can be a simple introduction with a bit of extra detail. The main ‘meat’ to your essay is going to be explaining the three sectors, their characteristics and example businesses.

- Aim for three well explained characteristics as a minimum

Example essay

An industry sector refers to a broad category or grouping of businesses and economic activities that share similar characteristics and functions in the production and distribution of goods and services. These sectors are often classified into three main categories: Primary, Secondary, and Tertiary. Here are the main characteristics and types of businesses you will find in each of these industry sectors:

1.Primary Sector:

•Characteristics: The primary sector involves activities related to the extraction and production of raw materials and natural resources directly from the environment. This sector relies on nature and weather patterns: businesses in the primary sector are highly dependent on natural factors such as climate, weather, soil quality, and geographic location. These factors can significantly impact the productivity and profitability of primary sector activities. Extreme weather such as floods can severely impact this sector. Moreover there is a seasonality to this sector and many activities in the primary sector require a significant amount of manual labour, particularly in agriculture, fishing, and forestry. However, modern technology has also been integrated into some primary sector activities to increase efficiency.

•Types of Businesses: a. Agriculture: This includes farming, crop cultivation, livestock raising, and forestry. b. Mining and Extraction. c. Fishing and Aquaculture: Forestry and Logging: Includes the harvesting of timber and related activities.

2.Secondary Sector:

•Characteristic: The secondary sector focuses on the transformation of raw materials and intermediate goods into finished products. The main characteristic of the sector is that it requires high levels of machinery and industrial techniques. There is a reliance on technology. Secondly, the secondary sector adds significant value to the products compared to their raw material form. This value addition is achieved through processing, assembly, and quality control processes. The third main characteristic is standardisation: Manufacturing processes often involve standardization of components and processes to ensure consistency and quality in the final products. Standardization helps in economies of scale.

•Types of Businesses: a. Manufacturing: This sector includes factories and plants that produce tangible goods such as automobiles, electronics, textiles, and machinery. b. Construction: Involves the building and construction of structures like buildings, bridges, and infrastructure. c. Utilities: Companies providing essential services like electricity, gas, and water supply fall into this category.

3.Tertiary Sector:

•Characteristic: The tertiary sector is also known as the service sector and involves businesses that offer various services to consumers and other businesses. The main defining characteristic of this sector is Intangibility: Services are intangible and cannot be touched or held. They are often experienced directly by consumers through interactions with service providers or through the use of technology. Secondly, High Human Involvement: The tertiary sector relies heavily on a skilled and often highly educated workforce to deliver services effectively. This can include professionals such as doctors, lawyers, teachers, and customer service representatives. Lastly, Customization: Many services are customized to meet the specific needs and preferences of individual clients or customers. This personalization is a key characteristic of the tertiary sector. For example Legal Advice will always be different depending on the specific needs of the client.

•Types of Businesses: a. Retail and Wholesale: Businesses engaged in the sale of goods to consumers or to other businesses. b. Healthcare and Education: This includes hospitals, clinics, schools, colleges, and universities. c. Financial Services: Banks, insurance companies, and investment firms are part of this sector. d. Hospitality and Tourism: Hotels, restaurants, travel agencies, and entertainment venues fall into this category. e. Professional Services: Legal, accounting, consulting, and IT services are part of the tertiary sector.

These industry sectors represent the different stages of economic activity, with the primary sector providing raw materials, the secondary sector processing and manufacturing goods, and the tertiary sector offering services and distribution. Together, these sectors form the backbone of an economy, contributing to its growth and development

Tutor Notes

- I've gone overboard on naming the types of organisation in the different sectors. You don't have to remember all of these. 3 examples is sufficient to get good marks. I've just named them all so you can see what could be considered a right answer.

- Some people are talking about Quaternary and Quinary Sectors. CIPS is not one of those people, so don’t worry if you come across those terms in any further reading. But FYI

1.

•Quaternary Sector: This sector involves knowledge-based activities, including research and development, information technology, and data analysis.

•Quinary Sector: The quinary sector comprises high-level decision-making and leadership roles in areas such as government, academia, healthcare, and top-level corporate management.

- LO 4.1 p.196

How to approach this question:

- There are 4 sections to this essay, so before you start writing I’d make a couple of notes on each of the points. Then build those notes into separate paragraphs. Your notes may look like this:

How to manage the contract – ensuring contract is fit for purpose, holding XYZ to their responsibilities, ensuring ABC are also fulfilling their responsibilities, issuing contract variations if required, planning for contingencies.

- How to manage the supplier – ensure the right relationship is in place (transactional vs collaborative), communication – open and honest, ensure there is mutual trust and understanding of each other’s goals/ objectives.

- Ways of monitoring performance – use KPIs / SLAs, Supplier Scorecard, Vendor Rating, feedback from customers

- How to add value for ABC – increasing efficiencies (e.g. less product defects), improved quality, assisting with Value Engineering exercises, reduction in time and costs (e.g. through improved processes such as ordering), the supplier delivers ‘extras’ for ABC such as training to staff at no additional cost.

- Ensure each paragraph refers to Jan, ABC and XYZ. The question doesn’t state what the businesses are buying/ selling so you can use this as an opportunity to provide examples: ‘if ABC are procuring raw materials from XYZ such as metal, an effective way to manage performance would include …. If they are procuring a service, it may be more beneficial to use …. methodology’

Example Essay

Jan, the Contracts Manager at ABC Ltd, plays a pivotal role in ensuring the success of the recently awarded contract with XYZ Ltd. Efficient contract and supplier management involves careful planning, communication, performance monitoring, and the continuous addition of value. Here's how Jan can navigate these aspects:

In terms of contract management, Jan must ensure that the terms and conditions of the contract are "fit for purpose," aligning with the specific needs and complexity of the procurement. For instance, a simple goods procurement may necessitate a concise document, while more intricate projects like engineering endeavors may require a detailed contract such as a JCT or NEC contract. Additionally, Jan should vigilantly manage the contract during its lifespan, addressing any potential 'scope creep' that might necessitate amendments. If the contract lacks provisions for such changes, Jan may need to initiate the creation of a new contract to accommodate evolving needs

Clear delineation of responsibilities and contingencies is crucial in the contract to ensure accountability and preparedness for unforeseen circumstances. The inclusion of Key Performance Indicators (KPIs) and damage clauses, where appropriate, adds a layer of clarity and accountability to the contractual relationship. Planning for contingencies involves having backup strategies in place, especially considering potential challenges that may arise during the collaboration with XYZ Ltd. For example, having other suppliers she can call upon if XYZ fail to deliver on an order.

Turning to supplier management, Jan's role involves fostering a positive and productive relationship with XYZ Ltd. This includes regular meetings to discuss progress, achievements, and future plans. A mobilization meeting is particularly important to ensure a strong start to the contract. Subsequent monthly or quarterly meetings provide a platform to review performance retrospectively and plan for the future. Additionally, effective communication is paramount, with Jan ensuring that both organizations regularly communicate, particularly regarding urgent issues that may require immediate attention. This proactive communication can occur through various channels, such as email or phone calls, facilitating a swift resolution of any emerging concerns.

Trust and honesty form the bedrock of the relationship between ABC Ltd and XYZ Ltd. Jan should work towards fostering mutual trust through both formal and informal activities, recognizing the importance of a transparent and cooperative partnership

In terms of performance monitoring, Jan can employ Key Performance Indicators (KPIs) and Service Level Agreements (SLAs) to track performance regularly. These metrics should not be viewed as one-off activities but rather as ongoing tools for assessing and ensuring that performance aligns with expectations. Clear communication regarding the consequences of failing to meet these targets, such as the implementation of a Performance Improvement Plan or potential contract cancellation, is essential for maintaining accountability. Regular performance meetings between ABC Ltd and XYZ Ltd provide an opportunity to discuss achievements, setbacks, and any necessary adjustments. Beyond quantitative metrics, surveys and feedback from customers can provide qualitative insights into performance.

Finally, Jan can contribute to the partnership's success by focusing on adding value. This involves going above and beyond the contractual obligations, such as delivering products more efficiently at no additional cost or improving operational efficiencies. Encouraging XYZ Ltd to participate in Value Engineering exercises and engaging in Early Supplier Involvement to shape and define future requirements would be a good example of this. Additionally, providing 'add-ons' or 'extras' outside the contractual framework, such as training for ABC Ltd staff, further enhances the value derived from the partnership.

In conclusion, Jan's role as Contracts Manager extends beyond the initial awarding of a contract- rather her role involves strategic contract and supplier management throughout the lifetime of the professional relationship. By ensuring the contract is well-suited for its purpose, fostering a positive relationship with the supplier, monitoring performance effectively, and consistently adding value, Jan contributes to the success of the collaboration between ABC Ltd and XYZ Ltd. This comprehensive approach sets the stage for a mutually beneficial and enduring partnership.

Tutor Notes:

- A case study question like this in the real exam is likely to come with more details. They often come with lots and lots of details to be honest, talking about what XYZ supplies to ABC and the names of the people involved. The case study usually gives you some good clues as to what the examiner will be looking for you to include, so do read them carefully.

- You don’t have to include much ‘theory’ on case study questions – the important thing is to reference Jan as much as possible. BUT you could throw in a cheeky mention of the Kraljic matrix. The approach to managing the contract and supplier would depend on the type of item supplied by XYZ – e.g. if it is a bottleneck item the supplier may need to be handled differently to if it is a routine item. You could also mention KPIs and objectives as being ‘SMART’ - Specific, Measurable, Attainable, Relevant, and Time-Bound

- study guide p.86-90 / p.94 / p.96 -98

How to approach this question

- For the first part of the question you should look to give a definition of the public sector, think about it’s characteristics and give so examples e.g. local government, hospitals, libraries.

- For the second part try to explain 4-5 objectives. Try to remain as broad as you can – think about objectives that all public sector organisations have in common rather than anything very specific to one organisation, what the question is looking for is the higher level, more broad aims.

Example Essay

A public sector organization, is a branch of government responsible for providing a wide range of services and functions to citizens and communities. It is funded by taxpayers' money and operates under governmental authority at various levels, including federal, state, and local governments. Public sector organizations can encompass government departments, agencies, authorities, and public enterprises. The main objectives of these organizations are multifaceted, aimed at serving the public interest and ensuring the efficient functioning of society. Examples include hospitals, schools and libraries. In this essay, we will explore the primary objectives of public sector organizations: improving services, achieving value for money, supporting communities and social value, and promoting equality, diversity, and inclusion (EDI).

Improving Services:

One of the central objectives of public sector organizations is to enhance the quality and accessibility of services provided to the public. These services can range from healthcare and education to transportation and public safety. The focus is on improving the well-being of citizens by ensuring that essential services are accessible, efficient, and responsive to evolving societal needs. For example, public healthcare systems aim to deliver high-quality medical services to all citizens, striving to reduce health disparities and provide equitable care.

Value for Money:

Public sector organizations are entrusted with the responsible and efficient use of public funds. Achieving value for money is a critical objective, ensuring that taxpayer money is spent wisely and that resources are allocated efficiently. Government agencies are tasked with optimizing budgets, reducing waste, and delivering services in a cost-effective manner. For instance, public infrastructure projects must be designed and executed to maximize benefits while minimizing costs and delays.

Supporting Communities and Social Value:

Public sector organizations play a pivotal role in supporting communities and generating social value. This objective involves initiatives and policies aimed at fostering community well-being, economic development, and social cohesion. It includes activities such as urban planning, affordable housing initiatives, and community development programs. By focusing on supporting communities, public sector organizations contribute to the overall betterment of society, creating opportunities and improving the quality of life for residents. In the UK it is a legal requirement for all large public sector contracts to consider Social Value, in line with the Social Value Act 2012.

Equality, Diversity, and Inclusion (EDI):

Promoting equality, diversity, and inclusion is another fundamental objective of public sector organizations. These organizations are tasked with ensuring that all citizens are treated fairly and have equal access to opportunities and services. This objective encompasses anti-discrimination policies, diversity hiring practices, and programs that address societal inequalities. Public sector entities strive to create environments where individuals of diverse backgrounds can thrive and participate fully in public life, regardless of race, gender, age, disability, or other characteristics.

In conclusion, public sector organizations serve as key agents in addressing societal needs and promoting the common good. Their objectives encompass improving services, achieving value for money, supporting communities and social value, and promoting equality, diversity, and inclusion (EDI). By pursuing these objectives, public sector organizations contribute to the welfare and development of society, ensuring that public resources are utilized efficiently and equitably. They play a vital role in shaping the overall well-being and progress of their respective communities and nations.

Tutor Notes

- The study guide talks about the main objective of the public sector as being ‘to improve services’. This is true, but in reality, the public sector may be the only people providing that service. They may be providing a service that the private sector can’t or won’t because it’s simply not profitable. An example is the Forestry Commission which looks at protecting forests and conducting research on forests. No private sector organisation is going to do that because there’s simply no money in it.

- With a lot of public sector organisations there are competing private sector organisations, just look at medical care and the rise of private health insurance. Same with transport. This essay doesn’t ask you to talk about this, and it is outside of the scope of the study guide but it’s an interesting observation: traditionally the aim of the public sector was to serve the public, nowadays it’s actually competing with private sector organisations to do this!

- Social Value Act for anyone who’s not familiar: Social Value Act: information and resources - GOV.UK (www.gov.uk)

How to approach this question

- Your essay should mention at least one regulation and one governing body particular to the charity section and I would recommend these be the Charities Act 2011 and the Charities Commission.

- If you don’t know a lot about the sector you can bring up more generalised regulations and governing bodies, such as financial conduct and the Equalities Act, but make sure it’s relevant to Sarah. Her charity is a small, local one, so things like Modern Slavery Act will not be appropriate to talk about.

Example Essay

When setting up a charity in the UK, particularly one focused on animal welfare, there are several regulations and governing bodies that Sarah should be aware of. These ensure that the charity operates legally, ethically, and effectively.

A charity’s purpose involves raising awareness and helping someone or something, in Sarah’s case this will be local animals and potentially their owners. A charity has to satisfy two aspects: The benefit aspect and The public aspect. In the UK, both aspects are regulated by the Charities Act 2011.

To satisfy a benefit aspect, a charity must: have a purpose that must be beneficial to the community it works in – this must be in a way that is identifiable and capable of being proved by evidence. For Sarah this would be showing that her charity helps animals, potentially by taking them in off the street or removing them from dangerous homes and caring for them.

To satisfy a public aspect, a charity must benefit the public in general, or a sufficient section of the public. In Sarah’s case the public benefit may be in removing stray dogs and cats from the streets where they can transport diseases and potentially attack people. Most charities strive to satisfy both aspects but in some cases this is not possible.

All charities are regulated. Because charities are funded by donations from the public, businesses and sometimes from government, their conduct is regulated closely. Key regulatory bodies that Sarah will have to engage with include:

1. Charity Commission for England and Wales:

· As the primary regulator for charities in England and Wales, the Charity Commission oversees the registration and regulation of charities. Sarah's organization must meet the legal definition of a charity and apply for registration if its income is over £5,000 per year.

· The Commission ensures compliance with the Charities Act, offering guidance on charity governance, financial management, and reporting.

2. HM Revenue and Customs (HMRC):

· Charities can apply to HMRC for recognition as a charity for tax purposes. This status allows for tax reliefs and exemptions, including Gift Aid on donations.

· HMRC ensures compliance with tax obligations and scrutinizes the use of charity funds.

3. Data Protection:

· Under the General Data Protection Regulation (GDPR) and the Data Protection Act 2018, any charity handling personal data must ensure its protection and comply with data privacy laws.

4. Health and Safety Executive (HSE):

· The HSE provides guidelines for workplace safety, which are important if the charity has employees or volunteers.

In conclusion there are many regulations and bodies that Sarah should be aware of when setting up her charity. Sarah should consider seeking legal advice or consulting with charity advisory services to ensure full compliance with all relevant laws and regulations. Additionally, staying informed about changes in charity law and animal welfare legislation would be beneficial to the smooth operation of her charity.

Tutor Notes

- With case study questions you’re not expected to know anything about the specific topic, in this case Animal Charities. If it happens to be something you know about, you can bring in some of your own knowledge, but this isn’t a requirement to get a good score. You’re not expected to know, for example about the Animal Welfare Act 2006, but if you happen to do so, it could be a nice little thing to add in. Just don’t focus your essay on it. However you can make some sensible guesses on what Sarah will be doing, for example I talked about removing stray animals from the street.

- Charities comes up in LO 4.4 p.232