IMPROVING SUPPLY CHAIN PERFORMANCE - CIPS

1 Advanced Diploma in Purchasing and SUPPLY IMPROVING SUPPLY CHAIN PERFORMANCE L5-03/Nov09 MARKING SCHEME November 2009 GPX LEVEL 5 L5-03: Nov09: GPX SECTION A GPX Motorcycles Q1: MARK SCHEME Produce an informal report to the board of GPX to outline the managerial actions in the establishment of a new SUPPLY CHAIN for automotive products Question aims: - to test candidate understanding of the structural and managerial actions in the development of a suitable SUPPLY CHAIN Syllabus Reference(s): , , , , , , , Answer content might include: This is a very broad ranging question and as such candidates will have to balance developing aspects in depth and coverage. Some consideration of the SUPPLY market will have to be made and it would be appropriate to consider market research to gather required information.

2 It may be appropriate also to review existing suppliers for their potential to contribute and candidates may consider how this is conducted. For new suppliers consideration should be given to a process of selection tendering, appraisal, selection criteria (10C s, 5R s) and their capacity to meet current and future plans. Supplier segmentation would be appropriate to allow selection and focus upon critical areas. Negotiation with suppliers and resulting types of relationships ( partnering) or contractual arrangements are appropriate and candidates may discuss the preparation and tactics for such events. The introduction of appropriate supplier management approaches is also relevant with consideration of how to monitor, control and develop appointed organisations ( SLAs, KPIs, Kaizen etc) Structural aspects may also be considered central/ decentralised control, sponors, lead buyers and other such arrangements Total 25 marks L5-03/Nov09/GPX/LCB Page 2 of 6 L5-03: Nov09: GPX Q2: MARK SCHEME Examine the relationship issues between the organisation and CarbonLite and propose solutions and their implementation for GPX in the future Question aims: - To examine candidate knowledge and application of SUPPLY relationship analysis and development Syllabus Reference(s).

3 , , , , , , , Answer content might include: Key potential problem areas within the relationship are: Incompatibility of systems previously Power relationship Divergence of sector interest Solutions could be considered in the following areas: Win-win solutions Co-destiny or gainshare Systems resolution Contractual arrangements Short and long-terms tactics ( compliance with supplier terms until own capability developed) Negotiation of these is imperative and objectives and tactics will be important within this including leadership, reading of NVC, requirement for a BATNA (any other suppliers available?), preparation for the event (inc historical insight) etc. Managerial solutions are also valid post agreement monitoring and review systems and associated.

4 Total 25 marks L5-03/Nov09/GPX/LCB Page 3 of 6 L5-03: Nov09: GPX SECTION B Q3: MARK SCHEME Explore the case for and against a move to Lean SUPPLY techniques in organisations Question aims: - To test candidate understanding of lean SUPPLY benefits and limitations Syllabus Reference(s): , Answer content might include: Candidates may include a definition of lean SUPPLY and will consider some of the related aspects such JIT, quality improvement ( Kaizen, TQM) and partnership working. The benefits and limitations will be outlined reduced inventory, problem solving, inventory management gains (storage, receiving, overhead costs, obsolescence reduction etc), risk and vulnerability Exploration should broadly include the managerial consideration such as relationships (partnership working, long-term arrangements), suitability of processes (volume, variety, rationalisation), co-destiny, contractual aspects.

5 Overall a final judgement should capture the rationale for the proposal and provide a suitable synopsis and may consider contra and co-arguments relating to agility in summary Total 25 marks Q4: MARK SCHEME Determine the rationale for the use of a TQM-based approach in managing suppliers Question aims: - To test application of knowledge of the importance of quality philosophy and systems in managing suppliers Syllabus Reference(s): , , , , , Answer content might include: Candidates may provide a suitable definition of TQM, briefly or more expansively by indicating philosophical underpinnings Candidates may present related models ( Oakland s 1st and 2nd, EFQM, Deming s 10 points etc) to help to define constituent parts.

6 Each of these have a number of areas that may form the basis of discussion Candidates in the main should clearly outline the advantages of TQM from relationship and managerial aspects in respect of suppliers. This may be related back to the models presented and developed to present the rationale Total 25 marksL5-03/Nov09/GPX/LCB Page 4 of 6 L5-03: Nov09: GPX Q5: MARK SCHEME Explore how the purchasing function can add value to an organisation Question aims: - To test application of knowledge of the broader role of the purchasing function in relation to an organisation s overall PERFORMANCE Syllabus Reference(s): , , , , Answer content might include: This is a relatively broad question and candidates can draw upon a large number of areas including (but not exclusively) aspects such as.

7 O SUPPLY market intelligence o Technical development (materials, technology, systems) drawn from suppliers o SUPPLY CHAIN optimisation (lower costs, market access, mitigate risk, QE etc) o Contractual and relationship issues o Cash-flow/ finance influencing through use of capital and control of purchasing o Strategic initiatives ( internationalisation of SC) o Monitoring and control It is important throughout that candidates make the case for the association with the function rather than merely producing a loosely assembled list. Total 25 marks L5-03/Nov09/GPX/LCB Page 5 of 6 L5-03: Nov09: GPX Q6: MARK SCHEME Examine how leadership styles may be used to support supplier development Question aims: , , - To test application of knowledge of leadership styles and their use in a supplier development context Syllabus Reference(s): , , Answer content might include.

8 Candidates may provide a suitable definition of leadership Candidates should within their answers include relevant underpinning theory such as trait or contingency ( Hersey Blanchard, Tannenbaum Schmidt), or other suitable models (ACL, etc) Candidates may like to explore the role of a leader ( establishing and communicating the vision, influencing groups and individuals etc) and types of leadership stances taken ( autocratic, laissez faire, collaborative etc) Within consideration of suppliers then it would be appropriate to indicate the type of relationship (extent, power, duration etc variables) and from this consider what the objectives may be with the supplier (control, improvement, alignment, education etc) Candidates may consider supplier development approaches and the linkages to the above.

9 These will include for example the introduction and usage of systems and procedures, the development of initiatives to cut costs and improve quality, the use of particular relational arrangements to facilitate new development. Candidates should consider how appropriate leadership styles may fit with particular situations that may arise and may give examples to support their arguments introduction of KPIs, progression of SPCs techniques, development of TQM philosophies etc. Total 25 marks END OF MARKING SCHEME L5-03/Nov09/GPX/LCB Page 6 of 6