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NEW QUESTION # 10
Discuss the importance and role of an organisation's branding in procurement and supply operations (25 marks)
Answer:
Explanation:
See the solution in Explanation part below.
Explanation:
How to approach the question
- This is a very open question so your essay could discuss
o the functions of a brand; e.g. advertising, marketing, creating trust, identity o What is effective branding? Strong image, convincing people to purchase, shared values with customers, offering a solution to a problem.
o The impact for procurement and supply chain isn't explained in the study guide so tailor this however you like. The best thing to do would be to think about some companies where branding is important, such as luxury goods, cars, or the brand is synonymous with a particular aspect such as Apple being associated with innovative technology. From there you could argue the importance of selecting the right suppliers to work with in order to keep up the brand image. Another example could be an ethical company needing to ensure their supply chain is 'clean', so as not to damage their branding. Possibilities are endless with this one.
Example Essay
In the contemporary business landscape, the significance of branding extends far beyond marketing and consumer perception. In procurement and supply operations, an organization's brand plays a pivotal role in shaping relationships with suppliers, determining the quality of goods and services that are procured, and influencing overall supply chain efficiency. This essay delves into the importance of branding in procurement and supply, exploring how a strong brand image can drive competitive advantage, foster trust and collaboration, and impact an organization's bottom line.
Building Competitive Advantage Through Brand Reputation:
The reputation of an organization's brand is a key determinant in attracting and retaining high-quality suppliers. A strong brand often correlates with financial stability, market presence, and business ethics, making such organizations more appealing to work with. This advantage is critical in procurement as it can lead to preferential treatment, such as priority access to scarce resources, better payment terms, and opportunities to collaborate on innovative products. For example, a well-regarded technology company might receive earlyaccess to cutting-edge components from suppliers eager to be associated with a market leader.
Enhancing Supplier Relationships and Negotiations:
Branding extends into the realms of trust and reliability, essential components in building long-term relationships with suppliers. A well-respected brand often implies a history of fair dealings, prompt payments, and mutual respect, which can make suppliers more willing to negotiate favourable terms. This trust can be particularly vital in times of supply chain disruptions or market volatility. Suppliers are more likely to extend credit or expedite orders for trusted partners, which can be invaluable for maintaining uninterrupted operations.
Influencing Quality and Sustainability Standards:
An organization's brand also communicates its commitment to quality and sustainability, which are increasingly crucial in procurement decisions. Suppliers aligning with brands that emphasize high-quality standards are often more diligent in maintaining these standards in their products and services. Additionally, a strong brand committed to sustainability can drive supply chain practices that align with environmental and social governance (ESG) principles. This commitment can lead to long-term cost savings, risk mitigation, and enhanced brand loyalty among environmentally conscious consumers.
Brand Image and Consumer Perception:
The procurement function directly impacts the final product quality, which in turn affects consumer perception of the brand. An organization's ability to procure high-quality, ethically sourced materials can significantly enhance its brand image and appeal to a broader customer base. For instance, a fashion brand's commitment to ethical sourcing and procurement of sustainable materials can bolster its image as an environmentally responsible brand, appealing to a growing demographic of eco-conscious consumers. The reverse is also true, brands associated with child or forced labour where this is found to be in their supply chains can suffer from loss of customers, revenue and reputation as well as potentially even legal consequences.
Internal Branding and Employee Engagement in Procurement:
Internal branding, the way an organization's values and culture are perceived by its employees, plays a crucial role in procurement. Employees who are proud of their organization's brand are more likely to engage deeply with their work, leading to better performance in procurement roles. This engagement can result in more innovative procurement strategies, improved vendor management, and a greater focus on aligning procurement practices with the organization's overall strategic goals.
Conclusion:
The role of an organization's branding in procurement and supply operations is deeply impactful. A strong brand can create competitive advantages, foster better supplier relationships, influence quality and sustainability standards, enhance consumer perception, and drive employee engagement. In the modern business world, where supply chains are complex and consumer expectations are high, branding is not just a marketing tool but a strategic asset in procurement and supply operations. Organizations that recognize and leverage the power of their brand within these operations are poised to achieve greater efficiency, sustainability, and overall success.
Tutor Notes
- This is a really random section of the study guide and doesn't really relate to the rest of the content.
Branding comes up on p.226 - 228. It therefore can come up as a question, but because it's such as small part of the syllabus, don't focus too much effort on this subject.
- If you remember one line from this topic it's this: "branding is not just a marketing tool but a strategic asset in procurement and supply operations"
- This type of question could come up as a scenario / case study. E.g. How does the branding of X Company impact upon their supply chain.
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NEW QUESTION # 11
(a) Outline FIVE procedures that could be included in the
procurement policy manual. (15 marks)
(b) Analyse how TWO Of these procedures can positively
influence procurement activities and organisational outcomes
for BetaCo. (10 marks)
BetaCo Inc.
BetaCo Inc. is a medium-sized electronics design and manufacturing
company that sells audio equipment to event management customers for
use in stadiums and festivals. BetaCo has significantly increased its sales over the last five years and is now looking to establish more contracts with new customers. BetaCo Inc. is aware that new customers will require it to have robust procurement processes in place that minimise organisational risk.
Currently, all procurement activities are dealt with by BetaCo's small, customer-orientated project teams. Each project team makes its own procurement decisions with limited central oversight and does not follow standardised processes. This type of activity has resulted in BetaCo frequently encountering overspending on projects, and senior management is concerned that there is a lack of control over what products and services the project teams buy. In addition, suppliers regularly complain that their invoices are not paid on time, which has caused issues for future purchases.
To address these challenges, BetaCo has decided to create a centralised procurement and supply management department. BetaCo has recently appointed Pat Kennedy as its procurement and supply manager. BetaCo has also recruited three senior buyers, five buyers and two assistant buyers, who will join the company in the next few months.
Pat's first task is to establish a procurement policy manual. The manual will contain a set of procedures that can be followed by the new procurement team and it will control the company's procurement activities to ensure that the issues BetaCo is facing are effectively managed.
Answer:
Explanation:
See the solution in Explanation part below.
Explanation:
(a) Five Procedures to Include in BetaCo's Procurement Policy Manual
* Purchase Requisition and Approval Procedure
* All procurement requests must be formally submitted through standardized purchase requisition forms and approved by designated authorities before any purchase action is taken.
* This ensures control over spending and adherence to budgets.
* Supplier Selection and Evaluation Procedure
* A structured process to identify, assess, and approve suppliers based on criteria such as quality, reliability, price, and compliance with BetaCo's standards.
* Supplier performance should be regularly reviewed to maintain quality and reliability.
* Purchase Order (PO) Management Procedure
* Clear guidelines on raising, issuing, and tracking purchase orders to suppliers, ensuring orders are placed only after necessary approvals and conform to agreed terms.
* Purchase orders serve as formal contracts protecting both BetaCo and suppliers.
* Invoice Processing and Payment Procedure
* Defines steps for receiving, verifying, and authorizing supplier invoices, followed by timely payment according to agreed payment terms.
* This avoids late payments and maintains good supplier relationships.
* Conflict of Interest and Ethics Compliance Procedure
* Policies requiring employees to declare any conflicts of interest and adhere to ethical standards in procurement activities to ensure transparency and fairness.
* This prevents fraud, corruption, and protects BetaCo's reputation.
(b) Analysis of How TWO Procedures Positively Influence Procurement Activities and Organisational Outcomes for BetaCo
1. Purchase Requisition and Approval Procedure
* Positive Influence on Procurement Activities:Introducing a formal purchase requisition and approval procedure provides BetaCo with much-needed control and oversight over spending, addressing the current issue of overspending by project teams. It ensures that all procurement requests are validated against project budgets and company policies before any purchase commitment is made.
* Impact on Organisational Outcomes:This procedure supports financial discipline and accountability, reducing uncontrolled expenditures and improving cost management. It also creates a clear audit trail for procurement decisions, helping senior management monitor and enforce compliance, thus reducing organisational risk.
2. Invoice Processing and Payment Procedure
* Positive Influence on Procurement Activities:By implementing a standardized invoice verification and timely payment procedure, BetaCo can resolve the existing problem of late payments to suppliers.
This ensures invoices are matched to purchase orders and delivery notes, approved promptly, and paid within agreed terms.
* Impact on Organisational Outcomes:Timely payments strengthen supplier relationships, enhancing trust and reliability in supply continuity, which is critical for BetaCo's growing customer base and production needs. It also helps avoid disputes or disruptions caused by delayed payments, contributing to smoother operations and better supplier cooperation.
Conclusion:
For BetaCo, incorporating structured procurement procedures into the policy manual is essential for centralising control, improving transparency, and reducing risks associated with decentralized procurement activities. Specifically, purchase requisition and approval alongside invoice processing procedures will directly address current challenges, leading to improved financial control, supplier relationships, and operational efficiency, ultimately supporting BetaCo's growth ambitions and reputation.
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NEW QUESTION # 12
What is meant by Stakeholder Mapping? Describe a tool that can be used by a Procurement Professional to map the stakeholders at their organisation (25 points)
Answer:
Explanation:
See the solution in Explanation part below.
Explanation:
How to approach this question:
- Define stakeholder mapping - completing an analysis of the stakeholders of an organisation and dividing them into categories depending on certain characteristics. This is often represented visually on a graph or matrix.
- Describe a Stakeholder mapping tool - the most common tool is Mendelow's Stakeholder Matrix so I would recommend using this one. It is explained in detail in the study guide. However, the question is open so you could choose to describe another tool such as Edgar's Stakeholder Position Analysis if you so wished. You wouldn't be wrong choosing this, but honestly, I'd just go for Mendelow. You can't go wrong with Mendelow. Because the Matrix has 4 sections you can imagine you'd get 5 points for the definition of stakeholder mapping, and 5 points for each of the quadrants of the matrix.
Essay Plan:
Introduction - The reason why stakeholder mapping is important is because interests and expectations of stakeholder groups will be different and possibly conflicting. Mapping this allows an organisation to see the variety and decide on an appropriate management style for each stakeholder group.
Paragraph 1 - Mendelow's Power / Interest Matrix maps stakeholders based on their influencing power and the strength of their motivation to use that power. It uses a 2x2 grid and defines power as high or low and interest and high or low. It then provides four strategies for managing the stakeholders based on which quadrant of the grid the stakeholder falls into. These 4 categories are:
Paragraph 2 - Keep satisfied - high power but low interest. If the stakeholder becomes dissatisfied or concerned their interest may peak. Examples include regulatory bodies, shareholders, senior management.
The best approach is to keep them up to date so they are informed of what is going on, but do not burden them with information they do not need.
Paragraph 3 - Manage Closely - AKA Key players - includes major customers, key suppliers, partners, senior management. These stakeholders need to know everything that is going on and approve of what is going on.
The recommended strategy is early involvement and participation, and integrating their goals with yours. This group requires regular communication and meetings. You should take their opinions on board.
Paragraph 4- Monitor - minimum effort required - this is the low priority group as they have low power and low interest. Includes small volume suppliers and other organisational functions with no direct interest in your activities. This group does not need to receive regular communication.
Paragraph 5 - Keep informed - high interest, but low power. If they're not kept in the loop and understand the need for decisions, they may lobby together to protect their interest if they feel threatened. Employee groups, suppliers and community groups may be in this category. This group should receive regular communication.
Conclusion - Mendelow created the matrix in 1991 and it is still used today. It is a popular management tool due to its simplicity. It's important to notes that stakeholders can move through the matrix- it isn't stagnant.
For example, at the beginning of a project a manager in another department may be classed as 'low priority' because they are seen to have no interest and no power in the project. However, as the project progresses the manager may become interested. They will then transfer into the keep informed category. Therefore, the matrix should be redone regularly throughout the lifetime of a project to capture any movements. The matrix should also be redone for each individual project - it cannot be assumed that a stakeholder who had interest in one project would be interested in another.
Tutor Notes
- The above essay plan is basically the entire essay, I got carried away. The only thing you'd need to add into that is an example of a stakeholder for each of the sections! (e.g. the CEO is high power, but low interest stakeholder for the procurement department. He/ She doesn't care about the day to day operations but should be kept informed of any big news). For your examples you could use your own place of work.
- At level 4 you don't have to analyse the model, you just have to be able to memorise it and repeat it.
Mendelow comes up again at Level 5 and 6 in a bit more detail. If you want to score super bonus points you could mention in your conclusion that the main disadvantage of Mendelow's Matrix is that it doesn't take into consideration the stakeholder's position on the project - whether they're for it or against it. Therefore, it doesn't provide the full picture or provide much help on how to manage stakeholders. E.g. two stakeholders might both be in 'manage closely' section, but one is for the project and the other against - they'd need to be handled very differently!
- Study guide p. 65
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NEW QUESTION # 13
Describe 3 stages of the sourcing cycle that occur in the post-contract award stage (25 marks) See the solution in Explanation part below.
Answer:
Explanation:
How to approach the question
Your answer should provide details on 3 of the following:
- Contract Award and Implementation
- Warehouse Logistics
- Contract performance and Improvement
- Supplier Relationship Management
- Asset Management
Because the question is only asking for 3 stages, you're going to have to go much more into detail for each stage, giving lots of information about why each stage is important and examples. You could consider thinking of an example procurement you have done recently and explaining the stages for that. Or you could take a hypothetical procurement too. Either will get you the same marks. Pick the three that you can write the most about.
Essay Plan
Introduction - explain that sourcing of goods and the role of Procurement doesn't end once a contract is signed. There is ongoing management and processes which must be carried out to ensure success.
Paragraph 1 - Contract Performance and Improvement
This is about ensuring contract obligations are fulfilled. Contract administration includes P2P procedures, database management, budgeting / costs monitoring, reporting and dispute resolution
Procurement's role may be in managing contract performance through the use of SLAs and / or KPIs. This can be done via reporting, using a Supplier Scorecard and meeting regularly to discuss.
It's important KPIs are measured and that there are consequences for failing to meet them. An example of consequences could be using a Performance Improvement Plan.
Contract Management also includes updating the contract where required - e.g. issuing variations to contract and updating the change control log
Another important aspect of this is ensuring the costs remain within scope of the budget
Contract performance can be compared if you have several suppliers delivering the same goods- could use a Factor Rating Method.
Performance could be measured against several criteria such as on time deliveries, response time of supplier, number of complaints.
Paragraph 2 - Supplier Relationship Management
There is a difference between managing the contract and managing the supplier relationship. It's possible to have excellent contract performance and a terrible relationship. However, the two are generally linked- where there is a good relationship, the contract often performs well.
The supplier management approach depends on where the relationship falls on the relationship spectrum (e.
g. transactional or collaborative)
This involves; maintaining regular contact with the supplier, motivating the supplier, working collaboratively with them (e.g. on performance issues or resolving any disputes)
Incentivising the supplier leads to collaboration and mutual support
To assess or rank suppliers you could use a vendor rating method or supplier evaluation forms
Supplier relationship management may involve investing in the supplier- e.g. through training or technology sharing Paragraph 3 - Asset Management
Includes creating a post contract 'lessons-learned'
Assessments should be carried out to determine if business requirements have changed, whether the agreement is still required and fit for purpose, what can be learnt from the process and how improvements can be incorporated next time.
This is the final stage of the Procurement Cycle and takes us back to the start of cycle, which begins again when the item needs to be reprocured
Whole life costing should be considered at this stage: this is the total cost of ownership over the life of an asset. The concept is also known as life-cycle cost (LCC) or lifetime cost, and is commonly referred to as
"cradle to grave" or "womb to tomb" costs.
Generally used on large purchases such as machinery and vehicles. Full Asset Management may not necessary for direct cost items such as raw materials incorporated into final goods.
Considerations may include; costs of running the asset, how long it will perform, insurance, maintenance, opportunity costs, disposing of the asset.
Also consider environmental and social impacts of the procurement.
Conclusion - it is important that procurement are involved at every stage of the cycle, not just in the pre- award stages. Procurement can add value at every stage.
Tutor Notes
- Depending on the examples you choose to use, you could talk about how the type of item procured could impact on the different stages. For example, high risk purchases may require more contract management than low risk purchases, and capital expenditure items such as new machinery may require more attention to the Asset Management stage.
- You could also think about how procurement adds value at each of the stages.
- Study guide p. 79
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NEW QUESTION # 14
Describe 3 stages of the sourcing cycle that occur in the post-contract award stage (25 marks)
Answer:
Explanation:
See the solution in Explanation part below.
Explanation:
How to approach the question
Your answer should provide details on 3 of the following:
- Contract Award and Implementation
- Warehouse Logistics
- Contract performance and Improvement
- Supplier Relationship Management
- Asset Management
Because the question is only asking for 3 stages, you're going to have to go much more into detail for each stage, giving lots of information about why each stage is important and examples. You could consider thinking of an example procurement you have done recently and explaining the stages for that. Or you could take a hypothetical procurement too. Either will get you the same marks. Pick the three that you can write the most about.
Essay Plan
Introduction - explain that sourcing of goods and the role of Procurement doesn't end once a contract is signed. There is ongoing management and processes which must be carried out to ensure success.
Paragraph 1 - Contract Performance and Improvement
This is about ensuring contract obligations are fulfilled. Contract administration includes P2P procedures, database management, budgeting / costs monitoring, reporting and dispute resolution
Procurement's role may be in managing contract performance through the use of SLAs and / or KPIs. This can be done via reporting, using a Supplier Scorecard and meeting regularly to discuss.
It's important KPIs are measured and that there are consequences for failing to meet them. An example of consequences could be using a Performance Improvement Plan.
Contract Management also includes updating the contract where required - e.g. issuing variations to contract and updating the change control log
Another important aspect of this is ensuring the costs remain within scope of the budget
Contract performance can be compared if you have several suppliers delivering the same goods- could use a Factor Rating Method.
Performance could be measured against several criteria such as on time deliveries, response time of supplier, number of complaints.
Paragraph 2 - Supplier Relationship Management
There is a difference between managing the contract and managing the supplier relationship. It's possible to have excellent contract performance and a terrible relationship. However, the two are generally linked- where there is a good relationship, the contract often performs well.
The supplier management approach depends on where the relationship falls on the relationship spectrum (e.
g. transactional or collaborative)
This involves; maintaining regular contact with the supplier, motivating the supplier, working collaboratively with them (e.g. on performance issues or resolving any disputes)
Incentivising the supplier leads to collaboration and mutual support
To assess or rank suppliers you could use a vendor rating method or supplier evaluation forms
Supplier relationship management may involve investing in the supplier- e.g. through training or technology sharing Paragraph 3 - Asset Management
Includes creating a post contract 'lessons-learned'
Assessments should be carried out to determine if business requirements have changed, whether the agreement is still required and fit for purpose, what can be learnt from the process and how improvements can be incorporated next time.
This is the final stage of the Procurement Cycle and takes us back to the start of cycle, which begins again when the item needs to be reprocured
Whole life costing should be considered at this stage: this is the total cost of ownership over the life of an asset. The concept is also known as life-cycle cost (LCC) or lifetime cost, and is commonly referred to as
"cradle to grave" or "womb to tomb" costs.
Generally used on large purchases such as machinery and vehicles. Full Asset Management may not necessary for direct cost items such as raw materials incorporated into final goods.
Considerations may include; costs of running the asset, how long it will perform, insurance, maintenance, opportunity costs, disposing of the asset.
Also consider environmental and social impacts of the procurement.
Conclusion - it is important that procurement are involved at every stage of the cycle, not just in the pre- award stages. Procurement can add value at every stage.
Tutor Notes
- Depending on the examples you choose to use, you could talk about how the type of item procured could impact on the different stages. For example, high risk purchases may require more contract management than low risk purchases, and capital expenditure items such as new machinery may require more attention to the Asset Management stage.
- You could also think about how procurement adds value at each of the stages.
- Study guide p. 79
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NEW QUESTION # 15
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