Module 1 24th Nov 2023

CIPS (Chartered Institute of Procurement and Supply) UK –

CIPS – 5 levels of training - FCIPS, MCIPS (Member of CIPS)
Level 2 and 3  Certificate programs
Level 4 – Diploma in Procurement and Supply
Level 5 – Advanced Diploma in Procurement and Supply
Level 6 – Professional Diploma in Procurement and Supply

Level 4: 60 credits
L4M1 – Scope and Influence of Procurement and Supply (subjective – constructed
response type, 100 marks, pass marks 50, 3 hours) – 12 credits
L4M2 – Defining Business Need (MCQ – Type, Time 1.5 hrs, 60 questions, pass mark is 70%)
– 6 credits
L4M3 – Commercia Contracting (MCQ – Type, Time 1.5 hrs, 60 questions, pass mark is 70%))
L4M4 – Ethical and Responsible Sourcing (MCQ – Type, Time 1.5 hrs, 60 questions, pass
mark is 70%))
L4M5 – Commercial Negotiation (MCQ – Type, Time 1.5 hrs, 60 questions, pass mark is
70%))
L4M6 – Supplier Relationship (MCQ – Type, Time 1.5 hrs, 60 questions, pass mark is 70%)) –
6 credits
L4M7 – Whole life Asset Management (MCQ – Type, Time 1.5 hrs, 60 questions, pass mark is
70%))
L4M8 – Procurement and Supply in Practice (subjective – constructed response type, 100
marks, pass mark: 50, 3 hours) – 12 credits
Definitions
 Purchasing – the act of physically ordering and buying something (product/service)
[ a set of transactions  placing the PO, expediting the supply, receiving the goods,
processing the invoice and paying the supplier]
 Procurement – the process of obtaining goods/services in response to an
organizational need.
Procurement is an overarching process to fulfil the needs of an organisation in the
most economical, efficient and effective manner.
Procurement  Sourcing (strategic) + Purchasing (transactional)
 Supply Chain
 Supply Chain Network
 Supply Chain Management

Purchasing is transactional (operational)

Procurement
Economical  buying for the minimum price without any adverse impact on quality
Efficient  procuring with minimum waste of resources (framework agreements,
blanket orders, e-catalogues, e-procurement etc.)
Effective buying the right product/service
Efficiency  executing a process with minimum waste of resources
Effectiveness  getting the right output
Supply Chain
 Supply chain is the process of mapping out how raw materials are transformed to
finished goods and how to deliver them to the consumer
Upstream side  supply side
Downstream side  customer side (demand side)
 ‘The Supply chain encompasses all organisations and activities associated with the
flow and transformation of goods from raw materials stage, through to the end user,
as well as the associated information flows’ – Handfield and Nichols
  A supply chain involves a network of individuals, organisations, technology, activities
and resources to make sure goods or services flow along the chain.
 Supply chain includes both:
 Processes
 Entities

Supply Chain Network

 A Supply Chain Network (SCN) is an extension of a supply chain. The supply chain
concept has evolved to include the links between various organisations involved in
the entire supply process rather than just one element.
 Individual supply chains are part of SCN

Value in Supply Chain

 Value in the Supply Chain comes from effective management of the following:
• Price
• Delivery
• Storage
• Ethics
• Environment
• Sustainability
• Communication
• Quality

Supply Chain Management

 The process of managing the supply chain is called Supply Chain Management (SCM)
 It aims to reduce costs, improve value and reduce risks.
 SCM involves managing customer relationships (there are multiple customer-
supplier relationships in a SC)
 However, there is only one consumer in the supply chain
Customer  one who buys some products/services but the customer may or may not be
the user
Consumer  the actual user of the product/service

Procurement Versus SCM

 Procurement is the process of obtaining goods and services in response to a need.
Supply chain refers to the infrastructure involved in physically getting the goods and
services delivered
 Without procurement there would be no supply chain
 The process of Supply chain management continues beyond procurement until the
end product reaches the consumer

Supply Chain Tiering

 Globalisation and localisation are drivers of supply chain tiering

 Adv. – better supplier relationships, lower administrative burden
 Disadvantages – Buyers exposed to risk from lower tier suppliers
Logistics and materials management
 Logistics is the control of the flow of goods and services between two points.
 It includes demand planning, material handling, packaging, inventory management,
storage & warehousing, order fulfilment, fleet management and transportation
 Logistics can be categorized in the following ways:
 Internal and external
 Inbound and outbound
 Forward and reverse