CIPS L4M1 問題集

質問 1：
What is a P2P system (5 points)? Explain the impact that using IT systems can have on the way the Procurement department of an organisation functions (25 points).
正解：
See the solution in Explanation part below.
Explanation:
- Definition of P2P - Purchase to Pay or Procure to Pay is the process an organisation takes from ordering a product to paying for it. The main stages of this process are product ordering, supplier requisition to pay, budget authorisation, receipt of delivery, and invoice processing.
- Impact of using IT Systems - can include the use of these systems: EPOS, barcodes/ RDIF, e-commerce systems such as POs and invoicing, and electronic communications such as email. Impacts can be; increased productivity, quicker processes, higher levels of visibility, increased responsiveness to demands, cost savings, less paper used, supplier relationships are managed virtually rather than in person. Generally the impacts are positive, but you could also discuss some disadvantages or challenges a department might face as the question is quite open.
Example Essay
A Procure-to-Pay system is a comprehensive solution that automates and integrates the procurement process within an organization, covering the entire lifecycle from requisitioning goods or services to making payments to suppliers.
The P2P process includes the following: a buyer requests an item, they put in a requisition, it is accepted by the supplier, the item is delivered and the item is then paid for. The order of the steps may be different depending on the industry / requirement (e.g. sometimes payment is made before delivery), or sometimes there are additional steps such as getting the requisition approved by a manager.
Nowadays the P2P process is mainly digitalised- orders are made online or via a PO system and payment is made via BACS. It is not common to pay for items in cash or by cheque any more. This digitalisation has had many effects on the way the procurement department functions. The P2P system streamlines and standardizes the purchasing process, enhancing efficiency, transparency, and control.
The integration of Information Technology (IT) systems has a profound impact on the functioning of the Procurement department within an organization. This digital transformation brings about significant improvements in efficiency, transparency, collaboration, and decision-making processes. Some of the key impacts include:
- Raised productivity - using IT systems results in quicker processes and they're often more accurate and consistent than humans doing the tasks manually. For example, an electronic requisition system can flag when a requisition isn't completed properly (e.g. part of the requisition is missing or a supplier name has been spelled incorrectly). When doing this manually the errors may not be spotted.
- Innovation - the use of IT means new avenues can be explored in terms of new product markets and new supply chains. Without the use of IT, procurement may be limited to working with local suppliers or those they can find in the phone book. Using IT systems such as e-auctions and even just the internet to complete research, opens up more opportunities to make purchases. This could involve working with international supply chains and result in cost savings for the business.
- Improved business processes - the use of IT means there is more transparency as everything is recorded and it is easier for managers to oversee. This results in less risk exposure for the business, particularly in fraud.
The use of IT also standardises processes which makes it easy for everyone to know what to do.
- When IT is used, there is an increased responsiveness of the procurement function - it allows for 24/7/365 ordering compared to making purchases in person in a shop which may only be open 9-5. Moreover , there are paperless communications when IT is used- this has a positive environmental impact
- Supplier Relationship Management (SRM) - IT systems support Supplier Relationship Management by providing tools to assess and manage supplier performance. This can include logging KPIs and tracking supplier performance. SRM functionalities enhance communication, collaboration, and visibility into supplier relationships.
In summary, the integration of IT systems into the Procurement department transforms traditional practices, making processes more streamlined, data-driven, and strategically focused. The impact is not only on operational efficiency but also on the ability of the procurement function to contribute strategically to the organization's overall objectives.
Tutor Notes
- The word impact is quite vague. I've mainly talked about advantages but you could discuss the impact that the use of IT has had on the department, not just in how it functions, but in how it is perceived. IT has professionalised the procurement industry as a whole- it's no longer seen as 'purchasing' but as a vital function within a business that contributes to added value and strategic goals.
- You could also talk about the impact it's had on ways of working. The use of IT has allowed for innovative procurement and manufacturing techniques such as Just-In-Time.The use of IT also ends silo-working, instead allowing for more collaboration with other business departments and the supply chain as a whole.
- LO 3.4 P. 171

質問 2：
Explain what is meant by Corporate Governance and why having Corporate Governance structures is important. Discuss 2 obstacles which may impede an organisation achieving high levels of Corporate Governance. (25 points)
正解：
See the solution in Explanation part below.
Explanation:
- Firstly start with a definition of Corporate Governance - this means the rules, policies, processes and organisational structures that ensure an organisation adheres to accepted ethical standards, good practices, the law and regulations. It's the systems put in place which directs and controls organisations to do 'the right thing'.
- Then move on to discuss why having this is important - I'd maybe think of 3-4 examples here such as:
protects the interest of shareholders, reduces risk, moral obligations, legal obligations
- The last part of your essay should talk about the 2 obstacles - describe two from the following list: lack of executive support, poor stakeholder co-operation, lack of clarity and / or resources, having poor IT systems, lack of co-ordination of procurement responsibilities. Because you're only talking about 2 here, you'll need to go into detail about them. So pick 2 you know well. Don't be tempted to talk about more than 2. You won't get extra marks.
Example Essay:
Corporate governance refers to the system of rules, practices, processes, and structures by which a company is directed and controlled. It encompasses the relationships among a company's management, its board of directors, shareholders, and other stakeholders. The primary objective of corporate governance is to ensure that the company operates in an ethical, transparent, and accountable manner, safeguarding the interests of shareholders and promoting long-term value creation. Corporate governance can be defined internally (by shareholders/ managers) or externally (by governments and international standard-setting bodies such as ISO) and is important for all organisations Corporate governance is needed because you can't assume everyone will act ethically- rules and procedures need to be written down and the organisation needs to have recourse for dealing with behaviour that falls outside of what is accepted. Procurement's role in Corporate Governance includes control over finance and expenditure, ensuring the supply chain is 'clean' (i.e. not involved in unethical business practices such as child labour) and risk management.
Why having a corporate governance structure is important:
1) The procurement department has a 'stewardship' role - it controls large sums of organisation's funds.
There are many opportunities to commit fraud, make unethical or biased decisions so it's important that there are corporate governance structures in place to prevent this. It protects the organisation from individuals with bad intent, scandal, and legal repercussions.
2) Strong Corporate Governance is required to successfully manage a supply chain. It's important to ensure good relationships- suppliers need to see you as a 'good customer'. If your organisation is seen to be unethical or underhand, suppliers may not want to work with you.
3) Financial impact - where corporate governance isn't implemented, there may be financial costs for the organisation. For example, in the Public Sector if a supplier successfully challenges a tender award, the buyer may have to award the value of the tender - so there's financial impact on a company if corporate governance isn't followed.
Obstacle 1 - lack of senior management support
Unless there is buy-in from the senior leadership team it will not be possible for departments such as Procurement to implement sound Corporate Governance procedures. Corporate Governance needs to be directed from the top of an organisation to ensure all departments and staff give importance to this. If Senior Leadership are seen not to care about implementing or following Corporate Governance, other staff won't care either. They need to lead by example to ensure the whole organisation 'buys into' the processes.
Obstacle 2 - Poor IT infrastructure.
For Corporate Governance to be effective, an effective IT system must be implemented. For example, to avoid fraud it's not just necessary to have a written anti-fraud policy, there must be ways of checking that fraud isn't being committed. The way to do this is to have an effective IT system which can flag anomaly payments and procurement activities outside of what is considered 'normal'. Therefore, having a poor IT infrastructure is a barrier to effective Corporate Governance.
In conclusion, corporate governance is essential for building trust among stakeholders and contributing to the overall success and sustainability of a company. Effective governance structures and practices instil confidence in investors, enhance the company's reputation, and foster a culture of responsibility and accountability throughout the organization. Good corporate governance is a cornerstone of sound business management and contributes to the long-term prosperity of the company.
Tutor Notes
- Corporate Governance became a big thing in the 70s and 80s following high profile scandals and the collapse of several companies. Investors were concerned about what companies were doing which led to increased control on the powers of directors and greater transparency of corporate actions.
- Examples of Corporate Governance. Enron is a good real life example you could use: Impact of Bad Corporate Governance - Corporate Fraud and Corruption: A Holistic Approach to Preventing Financial Crises (ebrary.net)
- This is a really good real-life example of Public Sector procurement gone wrong: Flawed nuclear tender sees
£100m payout to firms - BBC News
- Adding in some real life examples will take your essay from a Merit result (50-70%) to a Distinction (70% +)
- Another way this topic can come up as a question is describing the elements of corporate governance, or asking what a procurement manager should do when corporate governance is broken/ not followed.
- LO 3.1 p.117

質問 3：
Describe the main characteristics of, and differences between, procuring goods, services and construction works (25 points)
正解：
See the solution in Explanation part below.
Explanation:
- there are a lot of components to this question so I would take a good 5 minutes to write out some bullet points on the characteristics of each one, and on some differences. Then from your notes make this into an essay. The mark scheme isn't 100% clear on how many characteristics and differences you need to name, so try and keep an equal split between the two areas. You would probably need 2-3 characteristics of each, and 3 differences for a good score.
- Characteristics of goods: tangible, homogeneous, items tend not to perish quickly, can be stored
- Characteristics of services: intangible, heterogenous, inseparable (produced and consumed at the same time), no transfer of ownership, perish upon use (i.e. cannot be stored)
- Characteristics of construction work: project-based procurement, includes procuring both goods and services, complex procurement which has its own set of regulations (CDM2015).
- Differences between these
1) goods are not usually outsourced and services can be.
2) Complexity of the supply chain (goods and construction may have a complex supply chains, but service contracts usually only involve 2 parties).
3) Timescales - construction work has a designated timescale but procurement of goods could be a one off or long-term contract, services is usually a long-term contract.
Example Essay
Introduction:
Procurement is a multifaceted field, and understanding the nuances between procuring goods, services, and construction works is pivotal for effective management. This essay explores the main characteristics that differentiate these categories.
Tangible / Intangible:
Goods are tangible items that can be physically seen and touched. For instance, raw materials like wheat and sugar in a manufacturing organization are tangible goods. On the other hand, services are intangible-though the results can be observed, the service itself cannot be touched. An example is a cleaning contract for a factory; while the effects of the cleaning are visible, the service itself remains intangible. Construction is usually a mixture of tangible and intangible procurement; the tangible is the construction materials such as bricks and windows, and the intangible aspect is the labour to complete the project.
Heterogeneous / Homogeneous:
Goods are generally homogeneous, meaning they are always the same. For example, steel purchased for manufacturing purposes will always be the same. In contrast, services are heterogeneous, varying each time they are rendered. Customer service, for instance, is inherently different each time due to the dynamic nature of customer interactions. Construction could be either heterogeneous or homogeneous depending on the project - is it a one off unique building, or is it a large housing estate of same-build properties?
Transfer of Ownership:
When goods are procured, there is a transfer of ownership. The product becomes the property of the buyer upon delivery and payment. In contrast, services do not involve a transfer of ownership as there is no physical entity to transfer. In construction the transfer of ownership is extremely complex and varies depending on the project. Usually the buyer will retain ownership of the land throughout the project, but on some occasions the construction company may take ownership for insurance purposes.
Storable (Separable/ Inseparable):
Goods are storable, allowing for purchase on one day and use on another. For example a factory can buy in plastic to be used to manufacture toys and this is stored in inventory until the time comes to make the toys.
However, services are consumed at the point of purchase, making them inseparable. The service is bought and utilized simultaneously. Services cannot be stored. This is the same for construction.
Ability to Outsource:
Goods are rarely outsourced, as they are typically purchased directly from suppliers. Services, on the other hand, can be easily outsourced-examples include outsourcing finance, cleaning, or security services.
Construction works are commonly outsourced, with external companies hired to execute projects.
Complexity of the Supply Chain:
Service contracts often involve a simple two-party relationship between the buyer and the supplier. Goods and construction, however, may have complex supply chains. For example, procuring a pen involves a supply chain with various steps, including the raw material supplier, manufacturer, and possibly a wholesaler.
Construction works often feature a tiered supply chain with subcontractors playing crucial roles.
Construction as a Hybrid:
Construction procurement represents a hybrid, incorporating elements of both goods and services. It involves hiring a service, such as a bricklayer for laying bricks, while also procuring the tangible goods-bricks.
Separating goods from services in construction is challenging, as they are often intertwined, and both aspects are paid for simultaneously.
Conclusion:
In conclusion, distinguishing between the procurement of goods, services, and construction works is essential for effective supply chain management. The tangible or intangible nature, heterogeneity, transfer of ownership, storability, outsourcing potential, and supply chain complexities offer a comprehensive framework for understanding the unique characteristics of each category. Recognizing these distinctions empowers organizations to tailor their procurement strategies to the specific challenges and dynamics associated with goods, services, and construction works.
Tutor Notes
- What a characteristic is can also be a difference. So for example you can say tangible is a characteristic of goods but tangibility is also the main difference between goods and services. So don't worry too much about which order to write stuff in, or doing clear sections for this type of essay. It all comes out in the wash.
- Other differences in procuring these include:
- Costs: procuring goods such as stationary for an office will be low-cost so may not require approval, but a service contract may require management sign off. Procuring construction projects tend to be huge sums of money
- Where the budget comes from: goods and services may be operational expenditure and construction works capital expenditure.
- The level of risk involved in the procurement: goods tends to be quite low risk and construction high risk.
- Types of contract involved: procuring goods may be very simple and just require a PO, services is more complex so may require a formal contract or Deed of Appointment. Construction projects will require a contract due to the high value and high risk of the purchase
- Legislation - Goods = Sale of Goods Act, Construction - CDM Regulations 2015. Construction is much more heavily regulated than services or goods. Note CDM regulations isn't part of CIPS. It's occasionally referenced in various modules but you don't have to really know what it is. Just know it's the main legislation governing the construction industry. Construction - Construction Design and Management Regulations 2015 (hse.gov.uk)
- Study guide LO 1.3.1 p. 40, but mainly p. 52 for services. NOTE the title of this learning outcome includes construction and it is hardly mentioned in the study guide. Most of the above information on construction comes from my own knowledge rather than the book.

質問 4：
Explain the following terms: outsourced procurement, shared service unit (SSU) and consortium procurement.
What are the advantages and disadvantages of each approach to procurement? (25 points)
正解：
See the solution in Explanation part below.
Explanation:
How to approach this question:
- There are 3 terms and an advantage and disadvantage for each you need to talk about. So that's 9 things. Out of 25 points you can see you'll probably only get 1-2 points for each aspect of the question. That shows you the level of detail you need to include - not that much!
- In terms of structure feel free to use headings and bullet points for this one Example Essay Outsourced procurement, shared service units (SSUs), and consortium procurement are distinct approaches to managing procurement activities within organizations. Each method carries its own set of advantages and disadvantages, catering to different organizational needs and circumstances.
Outsourced Procurement: Outsourced procurement involves engaging a procurement consultant or an external organization to provide advice or handle the entire procurement process on behalf of the company. The advantages of outsourced procurement are that it frees up internal resources, allowing them to focus on other tasks. The expertise and skills brought by external consultants can also fill gaps in the organization's capabilities. Moreover, this approach is flexible, adapting well to irregular procurement needs. However, drawbacks include a potential loss of control, higher costs, the need for an additional management layer, and the risk of losing intellectual property (IP).
Shared Service Unit (SSU): A Shared Service Unit is an internal procurement support function within an organization that various divisions can access for assistance, resembling the outsourcing concept but within the organizational structure. The advantages of SSUs lie in potential cost savings, the ability to aggregate demand, and the establishment of common standards and processes across the company. The expertise utilized is internal, providing a sense of familiarity. The disadvantage is that measuring the success of an SSU can be challenging, and there is a risk of stifling innovation. The unit may also be perceived as remote from end users, and procurement processes might be slower due to serving multiple departments.
Consortium Procurement: Consortium procurement involves a collective effort where separate organizations join forces to purchase goods, thereby increasing their bargaining power. The advantages of this approach are in the aggregated demand, resulting in more economical purchases. Pooling knowledge and expertise within the consortium enhances the collective capabilities of its members, providing a sense of safety in numbers.
However, disadvantages include a potential loss of individual organizational power, prolonged decision- making processes within the consortium, challenges in responding quickly to demands, and the potential hindrance to small and medium-sized enterprises (SMEs) competing if demand is aggregated.
In conclusion, organizations must carefully consider their specific needs, priorities, and the nature of their procurement requirements when choosing between outsourced procurement, SSUs, or consortium procurement. Each approach offers unique benefits and challenges, and the decision-making process should align with the organization's overall goals and strategies.
Tutor Notes:
- I've named lots of advantages and disadvantages for each of the models. 1-2 advantages and disadvantages of each is all you need to secure you the marks. Remember you only have 35 minutes to write this. A danger with this type of question is spending too long on one aspect of the question and running out of time to answer the rest of it.
- A good idea is to pace yourself and give yourself 10 minutes per term (outsourced, SSU and consortium) then 5 minutes at the end to review and edit your response.
- Some further details you may wish to include:
- Outsourced procurement - this is often used when the organisation doesn't have the expertise to procure the item they need. This often happens for complex / technical procurements or highly regulated industries. An example may be a housing provider who runs a block of flats where the lift has just broken down and cannot be fixed. They need to procure a new lift but have no idea how to write a specification for this as they don't have the technical knowledge of how lifts work. Hiring a consultant who is experienced in tendering for lifts, although expensive, may actually save money by reducing the risk of procuring the wrong thing.
- SSU - a Shared Service Unit acts as a support function for the organisation. This is described in Porter's Value Chain- all other departments can call on the SSU when they require assistance. The SSU is responsible for managing its own costs, employs its own resources and may have contractual agreements with other divisions. The main aim of the SSU is to add value. SSUs are common in large organisations where the core activities don't revolve around procurement (such as finance and service industries).
- Consortium - Consortium buying is encouraged in the public sector in order to maximise value for money.
Consortiums can create their own Frameworks. There is a risk that large consortia can abuse their dominant market position.
- LO 3.3 p. 161

質問 5：
In the supplier selection part of the Procurement Cycle, what criteria can a Procurement Manager use to ensure they award to the best supplier? (25 points)
正解：
See the solution in Explanation part below.
Explanation:
How to approach this question:
- This is quite an open question and there are many different things you could mention. One way to approach it would be to use Carter's 10 Cs- discuss a couple of these. OR just give a couple of criteria in different paragraphs. Some ideas include: Supplier financial status, Reputation / References, Quality, Availability, CSR Policies / Ethics / Environmental considerations, Accreditations, Added Value. This list is not exhaustive.
- If you're going for Carter's 10 Cs you could name a couple of these: competency, consistency, capability, control, cost, cash, clean, communication, culture, commitment
- I don't think either approach is better or worse. Choose the criteria you know the most about and write about those.
- The question doesn't tell you how many criteria to name, so you have to make a judgement call here. I would aim for 5-6. But if you can only remember 4 that's fine. The main thing they're looking for is that you explain for each one 1) what it is 2) how procurement can check 3) why procurement would look at that criteria 4) an example. If you do too many you risk not going into enough detail on each. It's a balance. 5 is always a good number to aim for if the question doesn't state.
Example Essay
In the procurement cycle, the supplier selection phase is a critical juncture that demands consideration.
Procurement Managers shoulder the responsibility of identifying and awarding contracts to suppliers who not only meet immediate needs, but contribute to the long-term success of the organization. This essay explores various criteria a Procurement Manager can employ to ensure the selection of the best supplier: financial stability, reputation, quality, availability, CSR policies, and added value.
Financial stability is a foundational criterion in supplier selection. Assessing a supplier's financial status involves a multifaceted evaluation, with liquidity and gearing ratio taking center stage. The acid test, comparing short-term assets to liabilities, offers insights into a supplier's ability to settle debts promptly, with a ratio exceeding 1 indicating financial health. Meanwhile, the gearing ratio, reflecting the proportion of capital funded by loans, aids in gauging financial risk, with a ratio below 50% considered low-risk. Relying on published Profit and Loss statements and income statements, along with financial credit checks from platforms like Dun and Bradstreet, empowers Procurement Managers to make informed decisions. This financial scrutiny is imperative to avoid entering contracts with suppliers facing imminent financial struggles, safeguarding against potential disruptions to the supply chain.
Reputation and references are another pivotal criterion. Seeking references from previous contracts allows Procurement Managers to gauge a supplier's track record in successfully delivering on similar commitments.
Independent reviews and informal market inquiries supplement this information, providing a holistic understanding of a supplier's performance. However, caution is advised in overreliance on past performance, as variables like personnel changes or contract scale differences may impact outcomes. Recognizing that past shortcomings may have been addressed internally further emphasizes the need for a balanced approach to reference evaluation.
Thirdly, Quality. Beyond the product itself, considerations extend to the supplier's technological capabilities, manufacturing processes, and relevant accreditations such as ISO 9001. Physical visits to supplier sites may be warranted, especially for products like raw materials where samples can be requested. Adhering to recognized safety standards and assessing factors like fire retardancy ensures that the quality of manufactured goods aligns with established benchmarks.
Next, Availability is another important criteria to consider. Procurement Managers must evaluate a supplier's capacity and capability to meet specific requirements. Inquiries about existing contracts and flexibility in response to demand fluctuations provide insights into a supplier's commitment and responsiveness. Assessing the supplier's workload and the significance of the buyer in their client portfolio helps determine the level of attention and service the buyer can expect. A buyer may wish to avoid working for a supplier who is already stretched very thinly with other contracts.
Corporate Social Responsibility (CSR) policies and ethical considerations have gained prominence in supplier selection. Beyond legal compliance, Procurement Managers may scrutinize a supplier's history for convictions or negative press related to corruption, bribery, or fraud. The presence of a Modern Slavery Policy and Environmental Policy, along with relevant accreditations like ISO14001 or Fair Trade certification, attests to a supplier's commitment to ethical and sustainable practices. Procurement would likely seek to appoint a supplier who's CSR vision aligns with their own company's.
Lastly, added value is an important criteria to consider. This is particularly so for Public Sector Organizations governed by the Social Value Act. In addition to meeting contractual requirements, suppliers may offer knowledge sharing, training, improved processes, or contribute to social value by employing local community members or providing apprenticeships. This criterion aligns procurement decisions with broader organizational goals, enhancing the overall impact of supplier relationships and benefitting the local community.
In conclusion, a careful combination of financial scrutiny, reputation assessment, quality evaluation, availability considerations, CSR policies, and added value analysis forms the bedrock of effective supplier selection in the procurement cycle. Procurement Managers, armed with a holistic understanding of these criteria, should seek not only to fulfil immediate needs, but also consider the long-term impact of supplier appointments.
Tutor Notes
- A 'good' scoring answer (50-70%) will explain the criteria well and give examples. If you're looking for a distinction level answer (70% +) you could also mention advantages, disadvantages and risks associated with each of the criteria. For example, when looking at references and reputation it's important to know that a supplier would only ever provide a good reference to you, they would never tell you of a contract that failed.
Another example is that financial data may be skewed- a supplier may have a low score if they are just starting up or have recently remortgaged a property. It's therefore important to get a commentary as well as the figures / scores.
- You could also mention that criteria could be weighted e.g. more importance given to quality than financial status and also consider how easy or difficult it would be to get the information e.g. a supplier may say they have lots of availability to deliver the service you require, but they may just be saying this to win business.
How do you know for sure?
- Social Value Act isn't in this syllabus. If you work in Public Sector procurement it's something you'll be very familiar with. If you don't or you're outside of the UK do not worry about this. I've just included it to show how you can bring in your own knowledge to questions like this. You could think of particular criteria that's important to your industry and write about that. The Social Value Act: What is it, and why is it important? (samtaler.co.uk)
- Study guide p.77