L2M1 Tutor Slides

CIPS Level 2 Certificate in Procurement and Supply Operations
Teaching Resources
Module title: Introduction to Procurement and Supply [L2M1]
Leading global excellence in procurement and supply

Introducing Procurement and Supply [L2M1]
Learning Outcome (LO)1: Understand the

role of procurement and supply within
organisations
All rights reserved. These slides are provided exclusively to CIPS Approved Study Centres for the sole purpose of teaching CIPS Professional
Slide 1
Qualifications, they are not to be used for any other purpose and may not be altered, copied, sold or lent to other parties. Copyright ©2018 CIPS
Learning Outcome 1: Understand the role of procurement
and supply within organisations
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 and their customers

• Suppliers and their use of suppliers, customers and consumers and the tiers of a supply chain
• The global aspects of supply chains, and examples of supply chains in action
Slide 2
(1.1) The procurement and supply cycle
Figure 1.1 The main processes that take place during procurement
Slide 3
1.1: The three business sectors
Figure 1.4 The three sectors of the economy
Slide 4
(1.2) The role of procurement and supply
What are procurement and supply professionals responsible for?
Discuss with a partner to make a list of:

• All the different types of people they might need to interact
with
• All the stages involved in obtaining supplies
• What they need to take into account when deciding on the best
option
Slide 5
(1.2) Evaluating value for money
Factors to consider:
• The price of the product • Supplier’s reputation

or service • Order quantities and
• Currency and exchange inventory
rates • Packaging
• The freight costs • Payment terms
• Maintenance costs • Rebates
• The warranty offered • Quality
• Environmental factors • Service levels
Slide 6
(1.2) CSR policies
Figure 1.5 Subjects that could be included in a CSR policy
Slide 7
(1.3) Components of a supply chain
Figure 1.7 The supply chain
Slide 8
(1.3) Tiers in a supply chain
Figure 1.8 Supply tiering
Slide 9
Recommended reading
Level 2 Introducing Procurement and Supply Study

Guide
Slide 10
Learning exercise: Sasha’s first day
1. What sector does ChicCheap Furniture Ltd

operate in?
2. List five products or services that the
organisation might need to source.
3. What sorts of information does Sasha need to
obtain from each team?
4. Once Sasha has identified all of the suppliers
involved, she intends to carry out an audit of
the suppliers. List three things she will look for.
Slide 11
Learning Outcome (LO)2: Understand the

organisational impact of procurement and
supply
All rights reserved. These slides
Qualifications, areare
they provided exclusively
not to be used for to
anyCIPS Approved
other purposeStudy Centres
and may foraltered,
not be the solecopied,
purpose of teaching
sold or lent toCIPS Professional
other parties. Copyright ©2018 CIPS
Slide 12
Learning Outcome 2: Understand the organisational
impact of procurement and supply
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
Slide 13
(2.1) Profitability
Amount
earned
Profit
Amount
spent
Slide 14
(2.1) Efficiency
Figure 2.2 5S Framework based on kaizen Figure 2.3 Lean wastes
Slide 15
(2.1) Setting and monitoring budgets
Figure 2.3 Lean wastes
Slide 16
(2.1) Total cost of ownership
Figure 2.5 TCO components
Slide 17
(2.1) Objectives and structures
Figure 2.6 Centralised and devolved procurement (Source: www.spendmatters.com)
Slide 18
(2.2) The five rights of procurement and supply
Figure 2.8 The Five Rights of procurement and supply

Slide 19
(2.2) Value for money
Figure 2.3 (Source: www.nao.org.uk)

Slide 20
Recommended reading

Guide
Slide 21
Learning exercise: Anton’s decision
1. Discuss with a partner to make a list of any other
costs that Anton will need to consider.
2. Anton has been told the shop floor needs the

widgets in 5 days’ time. What impact might this have
on the price he has to pay, and which supplier he
selects on this occasion?
Slide 22
Learning Outcome (LO)3: Know how

products and services are received from
suppliers and delivered to customers
anyCIPS Approved
and may foraltered,
purpose of teaching
Slide 23
Learning Outcome 3: Know how products and services
are received from suppliers and delivered to customers

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
Slide 24
(3.2) Defining products and services
Products
vs
services
Slide 25
(3.1) The make or buy decision
Figure 1.3 The Outsource Matrix,

based on Barnes (2008)3
Figure 3.1 The make-or-buy decision (Source: Linton,

2018, adapted from www.cleverism.com/make-or-buy-
decision-step-by-step-guide/)
Slide 26
(3.1) Outsourced services
Characteristics of outsourcing:
• In-house performed activities are transferred to
a third party.
• Assets and knowledge are sent to an external
party.
• The parties have an extended and long-term
relationship
• Buyers and suppliers experience new costs and
risk profiles
Slide 27
(3.1) Seeing suppliers as a part of a supply chain
Figure 1.7 The supply chain
Figure 3.2 Supply chain failure
Slide 28
(3.2) Customers in the supply chain
Figure 3.3 Customers along the supply chain
Slide 29
(3.2) Supply Chain Managers
Supply Chain Managers assess:
• The quality of goods or services to make sure they are
fit for purpose
• Conformance to expected standards
• Brand – to always get the same experience from the
brand
• Customer service; that is, the time taken to respond to
queries as well as the products received
• The price
• Value for money
Slide 30
Recommended reading

Guide
Slide 31
Learning exercise: Khalid’s make or buy
decision
Products and services to discuss:

• Entertainment news video clips
• The company website
• Marketing materials
• Catering in the staff restaurant
• Facilities
• IT support for the entire company
Slide 32
Learning Outcome (LO)4: Know the stages of

the sourcing process
anyCIPS Approved
and may foraltered,
purpose of teaching
Slide 33
Learning Outcome 4: Know the stages of the sourcing
process
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
Slide 34
4.1 The procurement cycle
Figure 4.1 The simplified procurement cycle
Slide 35
(4.1) Needs and specifications
The sourcing process starts with the identification of a
need. Needs can be:
• Tangible or intangible
• Urgent or for the future
• Generated by internal or external customers
• Raised manually, electronically or by MRP system
What information needs to be included on a requisition?
Slide 36
(4.1) Selecting suppliers
Carter’s ‘Ten Cs’ for evaluating suppliers:
• Competency
• Capacity
• Commitment
• Control
• Cash
• Cost
• Consistency
• Culture
• Clean
• Communications
Slide 37
(4.1) Framework agreements
Figure 4.3 How a framework operates
Slide 38
(4.1) Monitoring supplier performance
Key performance indicators for a baker
supplying cakes to an independent cake shop:
• Deliver goods before 9am each day
• Deliver 24 each day
• Ensure correct health and safety regulations
are in place
• Send an invoice every Friday
Slide 39
(4.1) Expediting
Expeditors:
• Check order acknowledgements from suppliers
• Track and monitor progress of an order from
creation through to delivery
• Resolve issues that may result in delays
Slide 40
4.1 Pre- and post-award processes
Figure 4.4 The two halves of the procurement cycle

Slide 41
Recommended reading

Guide
Slide 42
Learning exercise: Afshaan’s KPIs
1. Make a list of the information that Afshaan would

need to find out in order to write the specification.
2. Write some KPIs that Afshaan could include in the

contract for the housekeeping service. Tip: think
about the five rights of procurement. What other
metrics could you include?
Slide 43
Learning Outcome (LO)5: Understand the need

for the effective and efficient administration of
purchases made with external suppliers
anyCIPS Approved
and may foraltered,
purpose of teaching
Slide 44
Learning outcome 5: Understand the need for the effective and efficient
administration of purchases made with external suppliers
5.1 Describe and explain effective and efficient administration

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

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 pre-qualification questionnaires
• Submitting quotations or tenders for requirements, and assessing 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, and levels of delegated authority for contracts
• Ensuring an efficient approval process
Slide 45
(5.1) Administration
Administration – managing resources, people and
processes
Efficiency – performing a task competently with the

least amount of waste
Effectiveness – the degree to which tasks are carried

out and problems solved.
Slide 46
(5.1) Forming an agreement with suppliers
Figure 5.5 Contractual terms
Slide 47
(5.2) Requisitions
Figure 5.3 Manual requisition
Slide 48
(5.2) Stages in the tendering process
Figure 5.6 Four stages in the tendering process
Slide 49
(5.3) Delivery notes
Figure 5.8 Delivery note (Source: adapted from © Kolibree)
Slide 50
5.3 Receiving invoices
Figure 5.9 Invoice clearance

Slide 51
(5.4) Approvals and authorisation
Figure 5.10 Administration in the procurement team
Slide 52
Recommended reading

Guide
Slide 53
Learning exercise: Contract renewal
Person A: explain to your partner (Graham):

• What each of the following roles are responsible for: Buyers, Supplier
Relationship Managers, Procurement and supply director.
• Why there is a separation of duties.
Person B: explain to your partner:

• Why purchases over a certain amount need to be authorised by someone
else.
• The stages and elements that need to be checked before an invoice can
be paid.
Slide 54
Learning Outcome (LO)6: Know the importance

of ethics and responsible procurement in
organisations and supply chains
anyCIPS Approved
and may foraltered,
purpose of teaching
Slide 55
Learning Outcome 6: Know the importance of ethics
and responsible procurement in organisations and
supply chains
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
Slide 56
(6.1) CIPS Code of Conduct
The CIPS Code of Conduct has five key principles:
• Integrity
• Professionalism
• High standards
• Optimal use of resources
• Compliance with legal and other obligations
Slide 57
(6.1) Codes of ethics
Figure 6.1 Ethics in procurement and supply example
Slide 58
(6.1) CSR policies and ethical codes
Figure 6.2 How CSR policies work alongside ethical codes
Slide 59
(6.1) Policies and procedures
• What is the difference between a policy and

a procedure?
• What would happen if we didn’t have policies

and procedures?
• So… why do we need policies and

procedures?
Slide 60
(6.1) Principles of corporate governance
Figure 6.4 Corporate governance

Slide 61
(6.1) Exploitative labour in supply chains
Figure 6.5 Bonded labour in a brick-making factory
Slide 62
Recommended reading

Guide
Slide 63
Learning exercise: Kendra’s suggestion
1. Does this represent a conflict of interest?

2. Regardless of your answer to Q1, does Kendra need
to inform her manager about her friendship with the
salesperson?
3. Do conflicts of interest matter in TSOs, or is it ok
because they are benefiting people rather than
making a profit, as in the private sector?
Slide 64

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CIPS Level 2 Certificate in Procurement and Supply Operations

Leading global excellence in procurement and supply

Learning Outcome (LO)1: Understand the

1.3 Define components of a supply chain and their customers

Figure 1.4 The three sectors of the economy

Discuss with a partner to make a list of:

• All the stages involved in obtaining supplies

• The price of the product • Supplier’s reputation

Figure 1.5 Subjects that could be included in a CSR policy

Figure 1.7 The supply chain

Figure 1.8 Supply tiering

Level 2 Introducing Procurement and Supply Study

1. What sector does ChicCheap Furniture Ltd

Learning Outcome (LO)2: Understand the

2.2 Define the five rights of procurement and supply

Figure 2.2 5S Framework based on kaizen Figure 2.3 Lean wastes

Figure 2.3 Lean wastes

Figure 2.5 TCO components

Figure 2.6 Centralised and devolved procurement (Source: www.spendmatters.com)

Figure 2.8 The Five Rights of procurement and supply

Figure 2.3 (Source: www.nao.org.uk)

Level 2 Introducing Procurement and Supply Study

2. Anton has been told the shop floor needs the

Learning Outcome (LO)3: Know how

Figure 1.3 The Outsource Matrix,

Figure 3.1 The make-or-buy decision (Source: Linton,

Figure 1.7 The supply chain

Figure 3.2 Supply chain failure

Figure 3.3 Customers along the supply chain

Level 2 Introducing Procurement and Supply Study

Products and services to discuss:

Learning Outcome (LO)4: Know the stages of

4.1 Indicate stages of a sourcing process

Figure 4.1 The simplified procurement cycle

What information needs to be included on a requisition?

Figure 4.3 How a framework operates

Figure 4.4 The two halves of the procurement cycle

Level 2 Introducing Procurement and Supply Study

1. Make a list of the information that Afshaan would

2. Write some KPIs that Afshaan could include in the

Learning Outcome (LO)5: Understand the need

5.1 Describe and explain effective and efficient administration

Efficiency – performing a task competently with the

Effectiveness – the degree to which tasks are carried

Figure 5.5 Contractual terms

Figure 5.3 Manual requisition

Figure 5.6 Four stages in the tendering process

Figure 5.8 Delivery note (Source: adapted from © Kolibree)

Figure 5.9 Invoice clearance

Figure 5.10 Administration in the procurement team

Level 2 Introducing Procurement and Supply Study

Person A: explain to your partner (Graham):

Person B: explain to your partner:

Learning Outcome (LO)6: Know the importance

Figure 6.1 Ethics in procurement and supply example

Figure 6.2 How CSR policies work alongside ethical codes

• What is the difference between a policy and

• What would happen if we didn’t have policies

• So… why do we need policies and

Figure 6.4 Corporate governance

Figure 6.5 Bonded labour in a brick-making factory

Level 2 Introducing Procurement and Supply Study

1. Does this represent a conflict of interest?