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Level 2 -
Certificate in procurement and supply operations
Qualification number: 600/7209/X
Procurement and supply
principles
(NC1)
Unit Purpose and Aim(s)
On completion of the
unit, candidates will be
able to describe
fundamental principles of
procurement, supply and
supply chains.
In any organisation, a
significant proportion of
costs are accounted for by
the purchases of
products, services or
constructional works.
Equally, any organisation
will also be supplying
products, services or
works to their customers
whether these are other
organisations, consumers
or the public.
LEARNING OUTCOMES
1.0 Know the roles of procurement and supply within organisations
1.1 Define 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
1.2 Describe the roles of procurement and supply in organisations
• The typical proportion of costs accounted for by procurements 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
1.3 Describe the benefits of effective procurement for organisations
• How effective procurement impacts on profitability - The profit
contribution effect
• Creating savings and improving efficiency
• Budgets and budget monitoring
• How effective procurement helps achieve targets
1.4 Identify 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
2.0 Know how products and services are received from suppliers and
delivered to customers
2.1 Describe 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
2.2 Describe 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
3.0 Know the main stages of the sourcing process
3.1 Describe the main stages of a sourcing process
• Identification of needs
• Producing specifications
• Requesting quotations
• Receiving quotations
• Assessing suppliers 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
4.0 Understand what makes up the main components of a supply chain
4.1 Explain the main 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
[Top]
Procurement and supply functions NC2
On completion of this
unit, candidates will be
able to identify:
A) The main types of
organisations
B) The main elements of
a procurement and
supply function
C) The main market
factors and their
impact on the
procurement and
supply function.
LEARNING OUTCOMES
1.0 Know the main types of organisations and how they operate
1.1 Identify the main types of organisations
• Private public and third sector organisations
• Production and service organisations
1.2 Describe how organisations operate
• People, objectives and structure in organisations
• The formal and informal organisation
1.3 Identify the main operating functions within organisations
• Differentiation and integration in organisations
• Typical functions in organisations such as production, operations,
marketing and sales,
customer support, human resources, personnel, finance, IT, and
technical functions
• Differentiating procurement and supply
2.0 Know the main elements of a procurement and supply function
2.1 Describe the use of mission and vision statements and objectives
by a procurement and
supply function
• Objectives of procurement and supply functions
• Targets for procurement and supply functions
• Use of mission and vision statements for procurement and supply
functions
2.2 Describe the main roles and structures of a procurement and
supply function within an
organisation
• Links to organisational goals
• Competition and regulatory roles
• Advice and guidance that a procurement and supply function
can provide to other functions
• Procurement and supply as a service function
• Centralised, devolved and lead buying structures of procurement
and supply functions
2.3 Define the main procedures that
can be created by a procurement and supply function
• Delegations of authority and approvals
• Procedures that apply to running competitions between suppliers
• Auditing compliance with internal procedures
3.0 Know the main market factors that impact on a procurement and
supply function
3.1 Identify the main economic sectors that impact on a procurement
and supply function
• Public, private and not for profit or third sector
• Primary, secondary and tertiary sectors
3.2 Describe the impact of demand and supply on markets
• Demand and supply curves
• How demand and supply factors can change
• How demand and supply factors can impact on pricing and
availability
3.3 Describe how market factors impact on the procurement and supply
activities of an
organisation
• The level of competition: perfect competition, imperfect
competition, oligopoly, duopoly
and monopolies
• The impact of demand on sales
• Market growth and decline
• Competitive forces on organisations
[Top]
Procurement and supply processes NC3
Unit Purpose and Aim(s)
On completion of this
unit, candidates will be
able to identify:
A) The fundamentals of
the contract formation
process
B) The use of systems in
procurement and
supply
C) The sources of
information about
potential suppliers.
LEARNING OUTCOMES
1.0 Know the main components of contractual agreements
1.1 Describe the main types of contracts
• Spot purchases
• Term contracts
• Framework arrangements/ blanket orders/panel contracts and call
offs
1.2 Identify the main kinds of pricing arrangements applied in
commercial contracts
• Fixed pricing, lump sum pricing and schedule of rates
• Cost reimbursable and cost plus arrangements
• Variable pricing arrangements
• Target pricing arrangements
• Risk and reward pricing arrangements
1.3 Describe the different documents that compose a contract for the
purchase or supply of
goods or services
• Defining contracts and agreements
• The use of tendering and quotations
• The documents that comprise a contract - the specification, key
performance indicators
(KPIs), contract terms, pricing and use of other schedules
• Contracts for the supply of goods or services
2.0 Know the main sources of information on suppliers and customers
2.1 Describe the use of the Internet to locate details about
suppliers and customers
• The use of Internet search engines to locate details about
suppliers and customers
• The types of information presented by suppliers and customers on
their websites
2.2 Describe the use of credit rating
agencies
• The role of credit rating agencies and credit rating scores
• Publications on individual organisations and markets
• The use of credit rating scores
2.3 Describe the use of intranet, extranet and internet sites to
publicise information
• Distinguishing between the intranet, extranet and internet sites
• Information for help and advice on an intranet site
• The information for the wider community on company websites
3.0 Know the main types of systems for supplier selection, ordering
and payment
3.1 Describe the use of electronic sourcing systems for supplier
selection
• Defining esourcing
• Attracting quotations or tenders through an etendering or
esourcing system
• The publication of enotices
3.2 Identify systems used in procurement and supply
• Systems for purchase ordering
• Capturing data on expenditures
• The use of portal sites to locate suppliers or customers
• Examples of supplier database systems
3.3 Describe P2P (purchase to pay) systems for ordering from
suppliers and payment to
suppliers
• The P2P process from the creation of requisitions, to raising
requests for quotations or
tenders, receipt of quotations or tenders, delivery documentation,
invoicing and payment
• Examples of P2P systems
[Top]
Procurement and supply administration NC4
Unit Purpose and Aim(s)
On completion of this
unit, candidates will be
able to explain how
effective administration
can ensure that timely
deliveries are achieved by
suppliers.
This unit will explain the
necessary documentation
and administrative
processes that are
involved in forming
agreements with external
suppliers.
1.0 Understand the need for the
effective and efficient administration
of purchases made with
external suppliers
1.1 Define effective and efficient administration
• Defining administration
• Reviewing the steps taken to forming agreements made with
suppliers
• Defining effectiveness and efficiency
1.2 Explain 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
1.3 Explain 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
1.4 Describe 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
2.0 Know the main techniques used for
ordering supplies
2.1 Describe what is meant by direct and indirect supplies
• Definitions of direct and indirect supplies
• Examples of direct and indirect supplies
• Goods for resale and goods not for resale
2.2 Identify the main costs associated with holding inventories
• Analysing the costs of inventory
• The costs associated with stock outs and excess inventories
2.3 Describe techniques commonly used for ordering inventories
• Re-order point control and re-order quantities
• MRP and MRPII systems
• Just in time approaches
• Enterprise resource planning systems
3.0 Know the main approaches to achieving timely deliveries of products
or services
3.1 Define the processes that should be used when expediting supplies
• Defining expediting
• Problem solving
• Tracking the relevant documentation
• Obtaining written confirmations
• Review agreements made
3.2 Describe the importance of effective communication with
suppliers and customers to
achieve timely deliveries
• The perceptual process
• Interacting with other people and building rapport
• Effective communication
3.3 Describe the use of forecasting to achieve timely deliveries of
supplies
• The use of forecasting
• Subjective and objective techniques in forecasting
• The difficulties associated with forecasting
[Top]
Procurement and supply stakeholders NC5
Unit Purpose and Aim(s)
On completion of this
unit, candidates will be
able to:
A) Explain how effective
relationships can be
formed with suppliers,
customers and other
stakeholders
B) Identify the main
principles of quality
management.
LEARNING OUTCOMES
1.0 Know the main stakeholders in procurement and supply
1.1 Identify the main external stakeholders in procurement and
supply
• Defining stakeholders
• Typical stakeholders such as suppliers, customers, consumers,
communities, government
and other groups
• The distinction between customers and consumers
1.2 Identify the main internal stakeholders that can be involved in
purchases from suppliers and
supplies delivered to customers
• The role of procurement and supply in dealing with other business
functions such as
marketing, sales, production, operations, human resources, finance,
design and
development, distribution, facilities, senior management and the
board of management
2.0 Know the main approaches for conflict resolution with
stakeholders in procurement and
supply
2.1 Describe how conflict can arise in the work of procurement and
supply
• Defining workplace conflict
• The sources of conflict in organisations and between personnel
• The sources of conflict between organisations and their personnel
2.2 Describe approaches to conflict
resolution with stakeholders in procurement and supply
• Approaches to conflict resolution
• Clarifying roles and responsibilities
• Group cohesion
• Achieving buy in from stakeholders
2.3 Explain the contribution that effective teamwork can make when
dealing with conflict with
stakeholders in procurement and supply
• Group cohesiveness and performance
• The characteristics of an effective work group
• The stages of team development
3.0 Know why quality management is important in procurement and
supply
3.1 Define the main components of quality management in procurement
and supply
• Definitions of quality, quality control, quality assurance
and total quality management
• Quality as a philosophy
• Getting things right first time
3.2 Identify the costs of quality
• Prevention and appraisal costs
• The internal and external costs of quality
• Organisational reputation
3.3 Describe the main techniques associated with quality assurance
and quality management
• From quality inspection to quality assurance
• Quality circles
• The use of control charts
• Achieving continuous improvement
4.0 Know why clear ethical codes of practice should be used in
procurement and supply
4.1 Describe the role of ethical codes in procurement and supply
• The scope of business ethics
• Treatment of stakeholder groups
• Behaviours towards suppliers, customers and competitors
4.2 Describe the details that should
be included within standard ethical codes
• The use of ethical codes such as the CIPS Code of Ethics
• Regulations in ethical standards
• Codes for sustainable procurement
4.3 Describe the impact of corporate governance on a procurement and
supply function
• The principles of corporate governance
• Mechanisms and controls in the corporate governance of procurement
and supply
MCG - CIPS Exam Centre Number - 005031578
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