CIPS Exam Report for Learner Community:

Qualification: Diploma in Procurement and Supply

Unit: Contexts of Procurement and Supply
Exam series: March 2015

Question 1 – Learning Outcome 1

(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

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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.

Question 2 – Learning Outcome 2

(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

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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.

Question 3 – Learning Outcome 3

(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.

Question 4 – Learning Outcome 4

(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)

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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.

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