Procurement and Supply Environments (L3M1)


Module purpose
On completion of this module, learners will be able to identify the range of environments in which procurement and supply is expected to operate and the external factors that canimpact on overall success.

Module aim(s)
Procurement and supply is to operate in a varied range of environments. As well as the public and private sectors, those responsible for the procurement and supply function mayfind themselves working with those in not-for-profit organisations. This module is designed for those who are involved in the procurement and supply function, who must recognise the wider environment in which they work and the impacts that different types of organisations can have on successfully meeting with overall organisational needs. They must know the importance of the external environment and also identify the procedures that regulate procurement and supply.

Next steps
Joining a CIPS qualification programme means you will join the largest Institute in the world for those working in procurement and supply. You can join as a member online today. Once you've become a CIPS member you can book your examinations online.

    Learning outcomes

    1.0  Know the different sectors of procurement and supply 

    1.1  Define the different types and functions of the private sector 

    • Definitions and different types of private sector organisations – sole traders, partnerships, registered companies, incorporated and unincorporated companies, SME, multinational corporations
    • The size and scope of the private sector in different economies
    • Functions of private sector organisations such as profit, growth, market share, share price, other financial measures, corporate and social responsibility

    1.2  Describe the role and scope of procurement and supply in the private sector 

    • Sole trade, partnerships, registered companies, incorporated and unincorporated companies
    • Small and medium sized organisations (SMEs)
    • Multinational organisations
    • The roles of procurement and supply in the private sector

    1.3  Describe the role and scope of procurement and supply in the public sector 

    • Defining the public sector
    • Central and local government
    • The functions of public sector organisations
    • The roles of procurement and supply in the public sector
    • Commissioning and procurement
    • Achieving budget savings and other sources of added value
    • Providing access to services
    • Regulating organisations and individuals

    1.4  Describe the role and scope of procurement and supply in the not-for-profit and third sector 

    • Defining the not-for-profit and third sector
    • Public accountability for the not-for-profit and third sector
    • Define the role of procurement and supply in the not-for-profit and third sector

    2.0  Understand types of pricing arrangements in commercial agreements 

    2.1  Explain how pricing arrangements are used in commercial agreements to ensure effective price and cost management 

    • Pricing schedules
    • Fixed pricing arrangements
    • Cost plus and cost reimbursable pricing arrangements
    • Indexation and price adjustment formulae
    • Incentivised gain share pricing
    • Payment terms
    • The use of open book costing and adjustments

    3.0  Know the external environment and its impact on procurement and supply

    3.1  Identify the impact of the external environment on procurement and supply

    • The use of environmental scanning
    • The use of PEST (political, economic, social and technological) criteria or STEEPLED (social, technological, economic, environmental, political, legislation, ethical and demographic) criteria that impacts on organisations’ external environment
    • The five forces model
    • Competitive market forces
    • Demand and supply
    • Market factors
    • Product life cycles

    3.2  Describe how the implications of economic criteria impact on procurement and supply

    • Macro-economic criteria such as interest rates, inflation, exchange rates, level of economic activity (GDP/ GNP) that impacts on organisations
    • Micro-economic criteria such as demand and supply that impacts on organisations

    3.3  Describe how the implications of political and legislative criteria that impact on procurement and supply

    • Political criteria such as stability and instability that impacts on organisations, different economic sectors and on countries
      • Legislation that impacts on organisations such as on standards, health and safety, environmental standards and employment law

    3.4  Describe how the implications of environmental and ethical criteria impact on procurement and supply

    • Environmental criteria such as natural risks, waste emissions, pollution and energy efficiency that impact on organisations
    • Ethical and social criteria such as ethical codes, employment rights, community benefits, working conditions and standards that impact on organisations

    3.5  Describe how the implications of social criteria impact on procurement and supply

    • Changing societal preferences, tastes and fashions, demographics, labour and fair-trade standards and how these can impact on organisations
    • Corporate social responsibility

    4.0  Understand procedures that regulate procurement and supply

    4.1  Describe the types of documentation used in procurement and supply

    • Requisitions
    • Orders
    • Delivery notes
    • Invoices
    • Other documents typically used in procurement and supply

    4.2  Explain how documented policies and procedures are used within procurement and supply

    • The responsibilities for procurement
    • Regulations relating to competition
    • Levels of delegated authority
    • Responsibilities for the stages of the sourcing process
    • Responsibilities for ensuring invoice clearance and payment
    • Responsibilities for ensuring that requisitions, orders and invoices are clear and correct and clarify requirements for stakeholders
    • Corporate governance

    View other modules

    Select a module below for more information:

    Ethical Procurement and Supply (L3M2)Contract Administration (L3M3)Team  Dynamics and Change (L3M4)Socially Responsible Procurement (L3M5)Socially Responsible Warehousing and Distribution (L3M6)

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