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CIPS Exam Report for Learner Community:

Qualification: Diploma
Unit: D1
Exam series: January 2015

Question 1 – Learning Outcome 1

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

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

Leading global excellence in procurement and supply

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.

Question 2 – Learning Outcome 2

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

(a) LO 2.1. Explain the main aspects of sourcing processes

(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

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

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.

Question 3 – Learning Outcome 3

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
(b) LO 3.1 Explain the main aspects of corporate governance of a procurement or supply chain

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

 Right and wrong
 Moral values / behaviours
 Interaction with others
 Individual and corporate levels

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.

Question 4 – Learning Outcome 4

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

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