Aim

To provide an understanding of supply market analysis and its importance to the purchasing process.

Rationale

In order to be able to maximise the efficiency and effectiveness of the purchasing operation and enhance its ability to add value to their company, buyers need to understand how suppliers' organisations interact with the economy as a whole. Buyers also need to be aware of how the business activities of suppliers are shaped by the external environment and of how suppliers' marketing activities are likely to be focused on them. In addition, buyers need to have an understanding of some of the specific selling activities that will face them and an awareness of their own behaviour patterns when making purchasing decisions.

1. Framework for market analysis

1. Types of supply market
2. Theories of the firm
3. The national economy
4. International trade

Learning outcomes

In the assessment the candidate may be required to:

1.1 Identify the reasons why it is important to analyse supply markets

1.2 Explain the basic concept of the theory of supply and demand and its effect on supply markets

1.3 Describe the theory of the firm and how the theory explains a company's basic objectives

1.4 Explain the workings of the national economy and its impact on a company

1.5 Explain the importance of international trade and the effect of trade barriers

2. Analysing the environment

1. Political factors
2. Economic factors
3. Social factors
4. Technological factors

Learning outcomes

In the assessment the candidate may be required to:

2.1 Explain and describe in detail the 'environment' in which a company operates and the effect of political, economic, social and technological factors on a company

3. Suppliers' marketing

1. Marketing in the modern organisation
2. Pricing policies
3. Product mix
4. Sales promotion
5. Buying behaviour

Learning outcomes

In the assessment the candidate may be required to:

3.1 Describe the role of marketing and its basic elements and the policies deriving from it

3.2 Explain the process of targeting buyers that may be employed by suppliers

3.3 Give a brief explanation of the factors underpinning buyer behaviour

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Aim

To provide an introduction to strategic purchasing and supply issues, showing the importance of the alignment of purchasing and supply strategy to overall corporate objectives, and their impact on organisational success.

Rationale

In order to be able to maximise the effectiveness of the purchasing operation, it is important for purchasing professionals to understand the links between purchasing and supply strategy and overall corporate strategy. They need to appreciate the importance of developing purchasing strategies for the success of the organisation, and the common purchasing objectives and strategies, recognise common techniques used in purchasing strategies and understand different strategies for buying different products and services.

1. Corporate strategy and purchasing and supply

1. Corporate strategy

2. Linking corporate strategy with purchasing and supply

3. The contribution of purchasing and supply to the organisation

Learning outcomes

In the assessment the candidate may be required to:

1.1 Explain the nature and formation of corporate strategy

1.2 Describe the keys to competitive advantage

1.3 Explain why organisations group their activities on a functional basis

1.4 Identify the role and value-added contribution that purchasing and supply can make

2. Objectives of supply chain management

1. Reducing costs
2. Reducing risks
3. Improving quality
4. Improving supply
5. Reducing lead times

Learning outcomes

In the assessment the candidate may be required to:

2.1 Outline the various sources of cost efficiency

2.2 Explain how to recognise, assess and manage risk when making a purchasing arrangement with a supplier

2.3 Explain the position of quality to an organisation and its suppliers and customers

2.4 Describe the supply chain and the means of improving the supply of products and services

2.5 Analyse the components that comprise a lead time and the means of reducing this

3. Elements of the overall supply strategy

1. Procurement systems, procedures and processes
2. Standardisation of purchased goods and services
3. Total cost of ownership
4. Reducing the number of suppliers
5. Developing suppliers' capabilities

Learning outcomes

In the assessment the candidate may be required to:

3.1 Describe the purchasing cycle

3.2 Demonstrate an understanding of the costs of diversity of products

3.3 Assess the value of a product or service

3.4 Describe the various elements that constitute the cost of a product or service

3.5 Identify the benefits to an organisation that wishes to rationalise its supplier base

3.6 Analyse the reasons for pursuing supplier development programmes

4. Dealing with individual purchases

1. Analysing expenditure and risk
2. The supply positioning model
3. Positioning products and services
4. Supply strategy implications

Learning outcomes

In the assessment the candidate may be required to:

4.1 Outline the reasons for analysing purchasing expenditures

4.2 Distinguish between different categories of products and services

4.3 Explain the different types of purchasing strategies relating to various types of products and services 

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Aim

To provide an understanding of issues surrounding the preparation and management of contracts, and the implications of these for the organisation.

Rationale

Buyers need to have an understanding of how and when a contract comes into existence and the problems that may face them along the path to contract agreement. Buyers also need to be aware of the main methods for dealing with the pricing of contracts and price adjustment in the light of inflation and other dynamic forces. Contracts need to be managed effectively, and buyers should understand how this process works.

Contracts negotiated in the area of international trade need special consideration.

1. Legal aspects of contract

1. Contracts and the law

2. The formation of contracts

3. The impact of legislation

4. Contractual conditions and warranties

Learning outcomes

In the assessment the candidate may be required to:

1.1 Describe the basic purpose of a contract

1.2 Describe how contracts fit into the overall legal framework of a country

1.3 Recognise and describe how a contract is formed, including the steps that must be in place before a contract can be legally binding and the duties of both buyer and seller.

1.4 Outline the provisions of significant English legislation that may affect the formation and operation of contracts

1.5 Distinguish between conditions of a contract and warranties

2. Contract pricing methods

1. Fixed price contracts
2. Variable price contracts
3. Cost plus and cost reimbursable contracts

Learning outcomes

In the assessment the candidate may be required to:

2.1 Distinguish between the major methods of contract pricing and explain how each operates

2.2 Recommend appropriate pricing methods for different contracts

3. Contracts management

1. The objectives of contracts management

2. Identifying and managing risks in contracts

3. Payment terms

4. Dealing with supplier failure and settling disputes

Learning outcomes

In the assessment the candidate may be required to:

3.1 Explain the objectives of contract management and the methods available to the buyer of successfully managing contracts

3.2 Demonstrate knowledge of the key commercial terms which can be incorporated into commercial contracts, and of how these are drafted and included in contracts with suppliers

3.3 Explain the advantages to the buyer of identifying risks in advance.

3.4 Describe the main methods of payment

3.5 Distinguish between the methods open to the buyer for dealing with supplier failure, should it occur, including recourse to law

4. International issues

1. Applicable law
2. INCOTERMS

Learning outcomes

In the assessment the candidate may be required to:

4.1 Identify the effect on contract formation and operation of some of the major international variations on the theme of contract law

4.2 Describe the main purpose of INCOTERMS and distinguish between the provisions of each of them 

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