Introducing Procurement and Supply (L2M1)

1.1  Identify the common terms that describe aspects of procurement and supply 

• Definitions of common terms such as procurement, purchasing, buying, supply chain, materials management, distribution, logistics and contract management
• Definitions of different types of procurements such as capital and revenue purchases, products, services, direct and indirect, outsourcing and insourcing
• Three sectors of activity: extraction of raw materials (primary), manufacturing (secondary), and services (tertiary)

1.2  Explain the roles and benefits of procurement and supply in organisations 

• The typical proportion of costs accounted for by procurement of goods and services
• The roles of procurement and supply and procurement professionals
• Achieving value for money
• Sustainability in procurement and supply
• The roles of staff with devolved responsibilities for procurement of goods and services
• The roles of procurement and supply staff in making expenditures with suppliers
• The tiers of a supply chain

1.3  Define components of a supply chain 

• Customers and their customers
• Customers and consumers
• Suppliers and their use of suppliers
• Tiers of a supply chain
• The global aspects of supply chains
• Examples of supply chains in action

2.1  Identify how effective procurement impacts on organisational efficiency 

• How effective procurement impacts on profitability
• Creating savings and improving efficiency
• Budgets and budget monitoring
• How effective procurement helps achieve targets
• Total costs of ownership criteria or whole life costs
• The different objectives of a procurement and supply function
• The creation of centralised, devolved and lead buying structures of procurement and supply functions.

2.2  Define the five rights of procurement and supply 

• The five rights of procurement and supply
• Price, total cost, quality, timing, quantity and place
• Defining value for money

3.1  Identify the delivery of products and services made by external suppliers 

• The need for supplies of products and services from external suppliers
• Outsourced  services
• Seeing suppliers as a part of a supply chain

3.2  Identify the delivery of products and services that organisations make to customers 

• Defining products and services
• The customer role
• Seeing customers as a part of a supply chain

4.1  Indicate stages of a sourcing process 

• Identification of needs
• Producing specifications
• Requesting quotations
• Receiving quotations
• Assessing supplier quotations
• Making contract award recommendations
• Contract authorisation
• Order placement, blanket orders/frameworks and call off orders
• Performance and delivery
• Payment of suppliers
• Expediting deliveries
• Reviewing outcomes and processes
• Pre and post award stages of a sourcing process

5.1  Describe and explain effective and efficient administration 

• Defining administration
• Reviewing the steps taken to forming agreements made with suppliers
• Defining effectiveness and efficiency

5.2  Describe the administration of the pre contract stages of a sourcing process 

• The creation of requisitions and requirements
• The use of specifications, key performance indicators (KPIs) and contract terms
• The creation of requests for quotations or invitations to tender
• The use of prequalification questionnaires
• The submission of quotations or tenders for requirements
• The assessment of quotations and tenders

5.3  Describe the administration of the award and post award stages of a sourcing process 

• The creation of orders or tender award documentation
• Delivery notes and order acknowledgements
• Receiving invoices
• Invoice matching and dealing with non-compliances

5.4  Explain the need for approvals in the administration of procurement and supply 

• Typical procedures for authorising budgets, requisitions, orders and tenders
• The separation of duties
• Contract recommendation and authorisation
• Levels of delegated authority for contracts
• Ensuring an efficient approval process

6.1  Identify good ethical practices and procedures within the context of the procurement and supply function 

• Application of the CIPS Code of Conduct
• Details included in ethical codes affecting procurement and supply
• The use of ethical codes of practice
• The use of documented policies and procedures for the work of procurement and supply
• The principles of corporate governance
• Forms of bonded and exploitative labour that can exist in supply chains