Learning outcomes, assessment criteria and indicative content
1.0 Understand and apply tools and techniques to measure and develop contract performance in procurement and supply
1.1 Assess the application of key performance indicators (KPIs) in delivering contract performance
- 1.1.1 Effectiveness of supplier relationships
- 1.1.2 Cost
- 1.1.3 Quality
- 1.1.4 Delivery
- 1.1.5 Safety
- 1.1.6Environmental, Social, and Governance (ESG) considerations
- 1.1.7 Product development
1.2 Evaluate methods of measuring and improving contract performance
- 1.2.1 Sources of data and analysis of data in relation to cost, quality, delivery, safety, and ESG (Environmental, Social, and Governance) considerations
- 1.2.2 Measures supporting the improvement of ESG (Environmental, Social and Governance) considerations
- 1.2.3 Measures supporting the improvement of innovation in procurement and supply
- 1.2.4 Measures assessing product development time to market
- 1.2.5 Role of qualitative and quantitative data to measure and improve contract performance
- 1.2.6 Calculate and analyse return on investment for the use of data in measuring contract performance
- 1.2.7 Assess opportunities for data systems integration across supply chains
1.3 Examine approaches available for supplier contract performance
- 1.3.1 Context and scope for supplier contract development
- 1.3.2 Supplier capability assessments
- 1.3.3 Learning, knowledge, and technology transfer between and across organisations
- 1.3.4 Collaborative product/service development: cross functional working, early supplier involvement, supplier networks, supplier co-ordination and supplier forums
- 1.3.5 Continuous improvement strategies, action plans, and reviews
1.4 Assess scope and developments to improve ESG (Environmental, Social, and Governance) considerations in supply chains
- 1.4.1 Environmental measures
- 1.4.2 Social and social value measures
- 1.4.3 Governance measures
- 1.4.4 New supply chain finance
2.0 Understand and apply the concept of strategic sourcing
2.1 Assess the market factors that influence strategic sourcing
- 2.1.1 Industry dynamics
- 2.1.2 Pricing behaviour
- 2.1.3 Financial data relating to suppliers
- 2.1.4 Market demand and supply factors
- 2.1.5 Business motivations, cost margins, and working practices of key suppliers
- 2.1.6 Internal stakeholder involvement
- 2.1.7 ESG (Environmental, Social, and Governance) considerations
2.2 Examine the assessment of sourcing options and trade-offs for strategic supply of products and/or services
- 2.2.1 Contract type and duration
- 2.2.2 Competitive vs. non-competitive sourcing
- 2.2.3 Number of suppliers and vetting strategies
- 2.2.4 Marketplace competition and the role of competition regulators
- 2.2.5 Direct negotiation
- 2.2.6 Joint proposition improvement
- 2.2.7 Supply chain visibility
2.3 Analyse a strategic assessment plan for a key supplier using modelling and analytical techniques
- 2.3.1 Capacity and capability
- 2.3.2 Planning
- 2.3.3 Quality control systems
- 2.3.4 Security
- 2.3.5 Technical expertise
- 2.3.6 Reputation and time established
- 2.3.7 Trading with competitors
- 2.3.8 Future expansion opportunities – partnership potential
- 2.3.9 Sensitivity analysis and calculation of investment outcomes based on a range of assumptions
- 2.3.10 Supplier performance based on financial data: calculate percentage change in revenues, costs, and profits
- 2.3.11 Sales forecast data and calculation of variances when comparing sales forecast data with the wider market
3.0 Understand and apply financial techniques that affect supply chains
3.1 Analyse how finance can impact on supply chains
- 3.1.1 Role of financial management in supply chains
- 3.1.2 Options and risks of working capital funding and the role of credit insurance
- 3.1.3 Project funding options and assessment of cost of capital using weighted average cost of capital (WACC)
- 3.1.4 Medium and long-term financing options
- 3.1.5 Financing of investments, corporate financing options, and the role of dividends
3.2 Appraise methods for managing the volatility of currencies in supply chains
- 3.2.1 Calculation of changes in indices to inform cost analysis
- 3.2.2 Fixed and floating exchange rates
- 3.2.3 Demand and supply factors in foreign exchange and the reasons for exchange rate volatility
- 3.2.4 Spot, forward, and derivative instruments in foreign exchange
- 3.2.5 Services provided by the banking sector in foreign exchange
3.3 Analyse methods for managing the volatility of commodities
- 3.3.1 Types of commodities
- 3.3.2 Operation of commodity markets
- 3.3.3 Role of speculation in commodity markets
- 3.3.4 The operation of spot, forward, futures, and hedging in the buying and selling of commodities
- 3.3.5 The operation of Contract for Difference (CFD) in commodity markets
4.0 Analyse and apply financial and performance measures that can affect the supply chain
4.1 Assess financial measures that can be applied to the performance of the supply chain
- 4.1.1 Calculation and evaluation of performance measures linked to cost, time, quality, and customer satisfaction
- 4.1.2 Calculation and evaluation financial measures of efficiency (ROCE), cash flow, sales growth, investment (IRR and NPV), and variances over time
- 4.1.3 Assessment of measures: stock turn, share yield, and earnings per share
- 4.1.4 Use, interpretation, and limitations of balanced scorecards
4.2 Examine the impact of stakeholder feedback on the supply chain performance
- 4.2.1 Purpose of stakeholder feedback in developing supply chain performance
- 4.2.2 Devising metrics of performance including feedback from third parties and suppliers, and other stakeholders
- 4.2.3 Receiving feedback, reporting structures, and processes
4.3 Analyse approaches to benchmarking that can be applied to measuring supply chain performance
- 4.3.1 Use and limitations of benchmarking in supply chains
- 4.3.2 Supplier involvement in performance improvement
- 4.3.3 Ethical approach the collection, storage, and use of benchmarking data