CIPS Exam Report for Learner Community:

Qualification: Diploma in Purchasing Diploma in procurement and supply

and Supply
Unit: D1 - Contexts of P&S
Exam series: November 2013

Question 1 – Learning Outcome 1

LO1.1 Explain the categories of spend that an organisation might purchase.

This question tests candidate’s knowledge and understanding of different types of spends distinguishing
between direct and indirect procurement and services. For both parts the command word and mark
allocation indicate a depth of answer beyond a simple statement or description.

Part (a) required an explanation of the differences between direct and indirect purchases; typically, direct
purchases are materials for production (in a manufacturing organisation) or for resale (in a retail
organisation) where the procurement and supply function is providing an operational service for the
production team. Examples include raw materials, components or goods bought in and sold directly to
customers without any transformation (retail or distributors). Indirect purchases are often described as
support (HR, marketing, telecoms, IT, stationery etc), operational or Maintenance Repair and Operational
(MRO) items.
Further explanation about these two areas of spend and the impact on procurement methods, costs,
quality, stock and the bottom line would gain further marks.
Higher marks might also be gained by referring to Michael Porter’s value chain model.

Answers failed to gain higher marks where explanations were brief and some answers mistakenly
interpreted ‘direct ‘ as meaning purchases that are bought straight from the manufacturer rather than an
‘indirect;’ purchase through a middleman/outsourcing.

Basic marks in part (b) could be gained by identifying three distinctive features of services such as
intangibility, inseparability, heterogeneity, perishability and ownership, however to gain a pass grade the
question required an explanation of these in procurement terms for example:
Intangibility – it is difficult to inspect or measure performance before purchasing which makes elements
service level agreements, personnel, process and price key to evaluating a service.
Many answers stated that services could not be measured; a more accurate description is that they are
difficult to measure.

NOVERMBER 2013_(D1)_EXAM_REPORT_LEARNER_COMMUNITY_FV 1/4

Leading global excellence in procurement and supply

Weaker answers failed to gain marks where they identified three features without putting them in the
context of procurement. Some answers gave more than three features, these gained no extra marks and
used up valuable examination time, it is key that candidates read the questions carefully. Occasionally a
feature was identified but a different feature explained and repetition occurred at times.

Question 2 – Learning Outcome 2

(a) LO 2.2 Explain the main aspects of sourcing processes.
(b) LO 2.3 Explain how electronic systems can be used at different stages of the sourcing process.

Part (a) required a focus on defining needs in the early part of the sourcing process which can add value.
Good answers included explanations about considering options of what is needed and why to ensure the
most cost effective solution is found, communicating requirements to suppliers to ensure the right
quotations are received, suppliers can also then suggest alternatives. Risk is minimised if any ambiguity is
removed and it provides a base to evaluate performance and conformance. Standardisation, consistency
and benchmarking are all possible.

Answers focussing on cost avoidance and not value gained some marks. The structure of the answer is
also important because assessors need to able to distinguish ‘three’ reasons. Some answers explained all
or some of the ‘five rights’ which gained marks if answers were in the context of the question.

Part (b) generated a range of answers which generally demonstrated a good knowledge of technology in
procurement such as internet, e-tendering (RFI/RFP/RFQ/RFX), e- catalogues, e-auctions and reverse
auctions and intranet. However, the question was about electronic systems in the ‘sourcing process’,
which is pre contract award. Answers failed to gain marks where systems not associated with the sourcing
process were described such as MRP, ERP and P2P.
It is important for candidates to carefully read questions and extract the key points required, planning
answers is time well spend to ensure the entire question is addressed. For 4 marks each some answers fell
short of full marks with a short answer that lacked a proper description.

NOVERMBER 2013_(D1)_EXAM_REPORT_LEARNER_COMMUNITY_FV 2/4

Leading global excellence in procurement and supply

Question 3 – Learning Outcome 3
LO 3.1 Explain the main aspects of corporate governance of a procurement or supply chain function.

Question 3 was in two parts. Part (a) asked for a definition for 5 marks and part (b) asked for four reasons
governance standards are important in procurement for 5 marks for each.

Good content for part (a) was a brief definition of governance. The rules, policies, processes and
organisational structures by which organisations are operated, controlled or regulated, ensure that they
adhere to accepted ethical standards, good practices, law and regulation.

Higher marks were gained for depth of answer. There was often a focus on sustainability or ethical issues
instead of the wider range of governance. A few answers described external regulation/legislation without
putting this in context of the question.

Part (b) - good content, which achieved a pass grade, included avoiding fraud, supplier influence,
stewardship role, credibility and reputation and maintaining ethical performance. However, a lack of
depth and variety in answers failed to gain the opportunity for higher marks.
As a 20 mark question candidates should gauge the detail/content required. Some answers provided more
than four answers, and those beyond the first four did not gain marks. Some answered in terms of the five
rights, which did not address the question.

Question 4 – Learning Outcome 4

LO 4.2 Analyse the impact of the public sector on procurement or supply chain roles.
LO 4.3 Analyse the impact of the private sector on procurement or supply chain roles.
LO 4.4 Analyse the impact of the not for profit or third sector on procurement or supply chain roles.

Part (a) is further split into three parts with each answer therefore worth five marks each. The command
word is key in this question, ‘compare’ which draws out the similarities and differences between private
and public sector organisations.

Good content was clearly structured to identify the comparison as well as a description. Good content
included:
(i) Legal and regulatory environment - private sector organisations are regulated to offer protection to
consumers, within a market, to maintain competitive markets and to maintain national interests and public
welfare. In the public sector this is similar but it exists to protect national interests and institutionalised
standards. A key legal distinction is that the public sector has to follow strict tendering rules, such as EU

NOVERMBER 2013_(D1)_EXAM_REPORT_LEARNER_COMMUNITY_FV 3/4

Leading global excellence in procurement and supply

procurement directives.

(ii) Organisational objectives – profit maximisation is the most commonly quoted objective of the private
sector but higher marks were gained by explaining other objectives such as survival, growth, brand
development, market share and return to shareholders. The public sector is becoming more
commercialised but the over riding objective is to provide a public service and fulfil economic and social
goals rather than make profit.

(iii) Corporate social responsibility – here the difference between the two sectors is becoming less. It is
becoming an essential part of corporate governance in both sectors. In the private sector this still does
conflict with the profit motive and relationships with suppliers to maintain competition. The public sector
is in a good position to drive CSR within governance and EU requirements and CRS is a good fit with
organisational objectives.

Weaker content lacked depth in answers (perhaps being the last question time keeping was an issue). The
comparison might not have been evident or answers concentrated on one or the other sector. The legal
section appears to have caused most difficulty with a lack of detail. Candidates stopped at profit as a
motive for private sector and could have gained further marks for describing other objectives. Many
answers on CSR were very lengthy and perhaps planning answers before hand might help to allocate
timing more appropriately.

Some answers to part (a) were not structured particularly well and written as a simple table not a written
comparison, however the content of the table was marked appropriately. Answers to the first two parts
were sometimes too brief and lacked the content for a total 15 mark question.

Part (b) required five descriptions for 10 marks. 2 marks for each description, so shorter answers were
acceptable, however the whole question needed to be addressed in terms of demonstrating an
understanding of the charity (not for profit) sector and how the distinguishing features of this sector
impacts procurement.

Stronger content might include a clear understanding of limited budgets and donations, accountability to
trustees, regulators and members. Also answers might cover accountability, probity, ethical standards,
ensuring the continuation of the charities objectives, transparency and regulatory compliance.

Some answers missed the opportunity of higher marks by not putting the answer in context of either
procurement or a charity organisation which reflects a lack of understanding of the not for profit sector.

NOVERMBER 2013_(D1)_EXAM_REPORT_LEARNER_COMMUNITY_FV 4/4

Leading global excellence in procurement and supply