CIPS Exam Report for Learner Community:

Qualification:
Unit:
Exam series:

Advanced certificate in procurement and supply operations

AC3 - P&S Workflow
July 2013

INFORMATION FOR CANDIDATES

The Principal Markers report is written in order to provide the learner community with feedback relating to
the examination. It is designed as a tool for candidates - both those who have sat the examination and those
who wish to use as part of their revision for future examinations.
Candidates are advised to refer to the Examination Techniques Guide on the CIPS website as well as this
Principal Markers report.
The Principal Markers report aims to provide the following information:
An indication of how to approach the examination question
An indication of the points the answer should include
An indication of candidate performance for the examination question
Each question has a syllabus reference which highlights the learning objectives of the syllabus unit content
that the question is testing. The unit content guides are available to download at the following link:
http://www.cips.org/studyqualify/cipsqualifications/syllabuses/
ADDITIONAL SOURCES OF INFORMATION
The Supply Management magazine is a useful source of information and candidates are advised to include it
in their reading during their study. Please see the following link to the Supply Management website:
http:/www.supplymanagement.com/

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Question 1 Learning Outcome 1

Q1 (a) Describe TWO ways in which the organisation can ensure that the process for
requesting quotations from suppliers and awarding contracts is fair and equitable.

(4 marks)

Q1 (b) Based on the machine purchase price; suggest which machine should be purchased. (1 mark)

Q1 (c) Based on the total costs for expected lifespan of the machines, suggest which
machine should be purchased.

(1 mark)

Q1 (d) Explain what is meant by the total cost for expected lifespan and show how it is (2 marks)
calculated in this case.
(2 marks)
Q1 (e) Explain why it is important for the organisation to understand both the initial
purchase price and the total cost for expected lifespan of the machine.
(7 marks)
Q1 (f) Using Fig 1.1, select the supplier for the purchase of the production machine and
explain TWO reasons for your selection.
(8 marks)
Q1 (g) Explain TW0 additional criteria, not included Fig 1.1, which the organisation might
consider when evaluating which suppliers to purchase the machine from.

Q1 (a) Candidates on the whole generally answered this well and scored half marks and in the majority full
marks. Weaker candidates simply listed different types of tendering, rather than explaining the need for all
tender bids to be the same, to be evaluated on the same criteria for example.
Q1 (b) & (c) Was straightforward and most candidates scored full marks simply identifying the information
from the table.
(d) Here candidates lost marks for not quoting the equation used to calculate total expected cost over a
lifespan. Weaker candidates simply repeated the question and scored zero.
(e) This was on the whole answered well, candidates lost marks for simply repeating the answer to question
(d). Marks were awarded when candidates made the distinction that purchase price is only one element of
the cost that a machine may have the lowest purchase price but the running costs could be the highest of all
the options.
(f) The majority of candidates attracted the full 7 marks through simply repeating the benefits in the table.
Very few candidates scored less than 4 marks on this question.

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(g) Once again candidates generally scored highly on this question, with a large majority scoring the full 8
marks. Weaker candidates lost marks for simply repeating areas from the original table which did not attract
marks.

Question 2 Learning Outcome 2

Q2 (a)

Explain to the managers the purpose of having cost centres.

Q2 (b)
Outline FOUR reasons it is important for an organisation, such as the
hospital, to have a clear budget process.
Q2 (c)
The hospital wishes to raise a purchase order for cleaning services. Identify
TEN fields which should be included on the purchase order and provide an example
of the content for each field.
Q2 (d)
For each of the following categories of purchase, identify which method of
contracting would be most appropriate and explain why.

(2 marks)
(4 marks)

(10 marks)

(9 marks)

(a) Was answered well with the majority of candidates scoring full 2 marks. Those that didnt failed to
identify the need to control expenditure and identify which departments are spending money on
certain items. This brings clarity of spending and further control.
(b) The majority of candidates did not score full marks on this question, with many only giving two
reasons out of the 4 required. Stronger candidates identified four clear reasons, such as improving
the budget forecasting system, identifying areas of overspend and helping plan proactively for the
future to manage this overspending. Unfortunately some candidates merely mentioned that the
hospital must manage its funds.
(c) Straightforward question with many scoring full marks. Candidates lost marks for repeating the
supplier name example, and also weaker candidates believed that the table was asking them to
repeat different supplier names with examples.
(d) This was a question that many candidates struggled with. The most common way of losing marks was
candidates selecting blanket orders for category 1 and purchase cards for category 2. The first
category required purchase cards, the second category required individual purchase orders and the
third category required blanket orders. Candidates who correctly identified all three scored full
marks.

Question 3 Learning Outcome 3

Q3 (a) Categorise each of the organisations costs in Fig 3.1.
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( 6 marks)
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Q3 (b) Identify the term given to the total of indirect costs.

(1 mark)

Q3 (c) Explain TWO reasons why it is important for the organisation to understand its
different categories of cost when considering the cost of the bottles it manufactures.

(4 marks)

Q3 (d) Explain the difference between mark-up and margin when setting a selling price for
the bottles.

(2 marks)

Q3 (e) Calculate the mark-up and margin percentages for the following example.
2
marks Forecasting can be either on qualitative or quantitative. Provide two examples of
each forecasting approach.

(4 marks)
(6 marks)

Q3 (f) Explain THREE reasons why the organisation needs to forecast demand for its
products.
(6 marks)
Q3 (g) Explain THREE reasons why the organisation needs to forecast demand for its
products.

(a) This question was generally poorly answered with many candidates failing to score even half marks
due to not answering the question or placing the categories in the wrong box. Candidates simply
listed different types of overheads. The question required candidates to understand the difference
between direct and indirect costs
(b) The majority of candidates did not score on this question. Many simply mentioned variable costs or
indirect costs and failed to identify that these were overheads.
(c) This question was generally well answered with candidates identifying a variety of different reasons,
such as to help set prices, to help budgetary control and to manage stock. Weaker candidates just
outlined the differences between indirect and direct costs.
(d) Candidates on the whole answered this well clearly identifying the difference between mark up and
margin. The key area of difference is that the mark-up is the percentage for profit ADDED to cost to
arrive at the selling price and the margin is the profit expressed as a percentage of the selling price.
(e) Very few candidates correctly identified both the mark up and the margins correctly. The mark up was
50% while the margin was 33.33%
(f) Strong candidates correctly identified four examples of forecasting approaches such as time series
trend analysis, moving average, Delphi method and questionnaires. However the majority of

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candidates did not correctly identify 4 and weaker candidates simply did not answer or list types of
costs.
(g) This question was well answered by candidates with the majority scoring at least 4 marks if not the
full six. Candidates identified reasons such as:
To plan the production required to meet demand
To identify and plan the amount of stock ( and other resources) required to meet the forecast
To ensure the form has the capacity to meet forecast demand

Question 4 Learning Outcome 4

Q4 (a) Identify THREE appropriate ways in which the procurement team can communicate
with the new supplier and explain why each is appropriate.

(6 marks)

Q4 (b) Explain how the new supplier can demonstrate its customer service excellence in
accessibility and credibility in this situation

(4 marks)
(4 marks)

Q4 (c) Explain TWO benefits for the new supplier of demonstrating excellent customer
service.
Q4 (d) Identify the most appropriate method the procurement team might use to
communicate Project Switch progress with each of the stakeholder groups identified in
Fig 4.1 below and explain why the chosen method is appropriate in each case.
Q4 (e) Outline TWO potential barriers to successful communication between the new
supplier and the procurement team in Project Switch.

(9 marks)

(2 marks)

(a) This question was very straightforward and most candidates scored full marks. Weaker candidates
listed techniques such as databases or EDI, not fully answering the questions
(b) The majority of candidates scored full marks, weaker candidates lost marks through lack of
explanation. Stronger candidates identified issues such as customer service teams being available
24/7, previous customer references, transparency etc.
(c) The majority of candidates scored full marks, weaker candidates lost marks for describing benefits for
the buyer rather than the supplier benefits such as enhanced reputation, repeat business and better
relationships.
(d) Many candidates struggled with this question with little or no explanation why the methods chosen

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should be used. Stronger candidates identified that face to face meetings with the senior
management team were required, focus groups or team briefings were necessary for the
procurement team and that temporary staff may be satisfied with information in newsletter or on the
intranet.
(e) This question was well answered by most candidates, weaker students simply listed types of
communication, rather than stating barriers such as jargon, cultural issues and wrong mode of
communication being used.

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