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Procurement Topics and Skills

Stay up to date with new thinking and current guidelines through the CIPS Knowledge area. The Knowledge content has been mapped against relevant books, events and other key procurement topics to provide you with the knowledge you need.

Brexit

On the 23 June 2016, the UK public voted to leave the European Union; a relationship that had lasted for more than 40 years.

‘Brexit’ has already had economic and political effects as measured by CIPS Risk Index powered by Dun & Bradstreet, and the Markit/CIPS Purchasing Managers’ Indices (Markit/CIPS PMI®) and will continue to create waves in procurement and the wider business community, around the world.

Soon after the result, the CIPS Risk Index (2016 Q3 results) showed global supply chain risk grew for the third consecutive quarter, as the Brexit result raised questions about the future of globalisation and had a negative impact on trade and business in the UK and across Western Europe.

The flash Markit/CIPS PMI® in July showed that the UK economy had contracted at the steepest pace since 2009 and that both new orders and output fell for the first time since the end of 2012. Though the PMIs subsequently recovered their strength, the CIPS Risk Index has still registered underlying risk in part because of the continuing uncertainty over global trade and what the new landscape could look like.

Continuous Improvement

Continuous Improvement also known as 'Kaizen' means 'change for the better' and encompasses all people, products, services and processes in an organisation.

Continuous Improvement consists of making continual small improvements rather than big changes at irregular intervals, requiring close monitoring and control and ideally inbuilt in the organisations culture.

There are a number of related topics, best practice guides and white papers which can contribute towards continuous improvement that can be considered including Benchmarking, Total Quality Management and BPR.

Developing and Managing Contracts

Developing the contract allows both parties to fully understand their obligations and key success criteria as part of the agreement, forming the foundation to manage the contract and relationship effectively.

There are a number of related topics, best practice guides and white papers when developing and managing contracts that can be considered including demand management, purchase order cycle, performance analysis and management, setting key performance indicators, cost reduction, terms and conditions and developing of contracts, contract management and intellectual property and potentially for if things go wrong conflict resolution.

eCommerce / Systems

E-Commerce systems are an effective and efficient way of communicating and a convenient way of conducting business.

E-Commerce systems, including  E-Sourcing and E-Procurement, are widely used by organisations to buy and sell products and can utilise technologies such as mobile commerce, electronic funds transfer, supply chain management, Internet marketing, online transaction processing, electronic data interchange (EDI), inventory management systems and automated data collection systems. 

There are a number of related topics, best practice guides and white papers surrounding E-commerce systems that can be considered including E-sourcing/ E-procurement systems P2P, application of technology, MRP/CRP and coding and classification.

Efficiency

Efficiency is the degree to which something is done well or without wasted energy or effort. By definition it is therefore typically a measurable concept, quantitatively determined by the ratio of output to input.

There are a number of related topics, best practice guides and white papers that may have a positive impact on efficiency that can be considered including collaborative working, BPR and value generation.

External Environment

A business does not exist in isolation and can be influenced by other factors outside of their control; this is typically referred to as their ‘external environment’.

The external environment consists of competitors, the economic, social, monetary system and the political/legal system.

There are a number of related topics, best practice guides and white papers surrounding the external environment that can be considered, including legislation and carbon/climate.

Game Theory

Economists call this game theory and they think about such interaction as a ‘ply-by-ply’ game, where each player is trying to find an optimum strategy.

Game theory is the scientific modelling of interactions between different parties each pursuing their own interests. The parties interact and choose their action in view of what the other parties might think and do.

Operations Management

Operations Management is responsible for the design and management of products, processes, services and supply chains.

It is their responsibility to ensure that business operations run efficiently, using as few resources as possible whilst achieving their customer requirements. Operations management controls the process that converts inputs such as material, labour and energy into outputs in the forms of good and/or services.

There are a number of related topics, best practice guides and white papers surrounding operations management that can be considered including warehousing, stock control, logistics and incoterms.

People and Skills

People are the key and most important resource in the organisation and translate other resources into added value.

Organisations achieve their objectives through people therefore strategic and operational management and development of this resource is crucial to ensure people feel valued and businesses retain the right skill set.

There are a number of related topics, best practice guides and white papers surrounding people and skills that can be considered including leadership and promotion of people and skills management, influencing skills, financial analysis and reporting for purchasers, marketing for purchasers, change management, project/programme management and career development.

 
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Procurement Organisation

Procurement topics related specifically to the procurement organisation

There are a number of related topics, best practice guides and white papers surrounding procurement organisation that can be considered including supply chain governance and carbon/climate.

Risk / Mitigation

Risk management within the procurement arena involves understanding risks that can impact an organisation and implementing strategies to mitigate and manage those risks.

There are a number of related topics, best practice guides and white papers surrounding risk and mitigation that can be considered including risk analysis and management, diligent procurement and fraud and transparency.

SRM and SC Management

Supplier relationship management (SRM) involves managing the interfaces between organisations supplying goods and/or services to an organisation in order to maximize their value. Supply chain management (SCM) involves managing the flow of goods.

SRM involves creating closer, more collaborative relationships with key suppliers in order to reveal and recognise new value and reduce risk.

SCM includes the movement and storage of raw materials, work-in-process inventory and finished goods from source to consumption with the objective of creating value, building a competitive infrastructure, leveraging worldwide logistics, synchronising supply with demand and measuring performance.

SRM is an important part of SCM to ultimately create the right relationship and environment to make supply chain efficiencies and increase the organisations profitability.

There are a number of related topics, best practice guides and white papers that can be considered including supplier relationship management supplier development, models such as supply chain, sourcing, procurement and cost, global supply chains, agile supply, lean, supplier coordination and association along with supplier positioning.

Strategy and Policy

A procurement policy refers to a statement or set of guiding rules or principles covering how procurement should be managed within an organisation.

A procurement strategy is an action plan from which the direction of resources will be organised and utilised to implement that policy and achieve the desired objectives.

There are a number of related topics, best practice guides and white papers surrounding strategy and policy that can be considered including feasibility study development, procurement policy development, procurement strategy development, models such as supply chain, sourcing, procurement and cost, balanced scorecard, BCM/BCP, complex procurement, cost reduction, setting key performance indicators (KPI’s), category management, business case development, whole life costing, negotiation.

Supplier / Bid / Tender Evaluation

Supplier evaluation is a procurement process of evaluating and approving existing and potential suppliers by quantitative assessment against specific business criteria.

This process can be a carried out with current suppliers in order to measure and monitor their performance typically providing the required management information to drive cost reductions, mitigate supply chain risk and deliver continuous improvement activities.  Similarly the process can be carried out with new suppliers at a pre-qualifying stage prior to a tender or as part of the tender evaluation stage. Once the tenders are submitted, they must be evaluated in order to select the preferred supplier. Whether tendering contracts for the supply of goods or services, tender evaluation should be carried out in a structured, disciplined and transparent manner.

There are a number of related topics, best practice guides and white papers surrounding supplier/bid/tender evaluation that can be considered including supplier evaluation and appraisal and sourcing and tendering.

Sustainability

Sustainability in procurement terms takes into account social, economic and environmental factors alongside the typical price and quality considerations when procuring products and services.

Sustainable procurement helps organisations to eliminate waste, become more energy efficient and inevitably save money.

There are a number of related topics, best practice guides and white papers surrounding sustainability that can be considered including sustainable and ethical procurement and corporate social responsibility (CSR).

Understand Need - Market and Options Assessment

It is integral for procurement to understand the needs of the business and the status of the supply market, an in depth internal analysis and market analysis is therefore required.

There are a number of related topics, best practice guides and white papers surrounding understanding the need/market and options assessment that can be considered including commodity specific knowledge, market development, market analysis, sourcing, specification development, data analysis/business intelligence, mergers and acquisitions, cartels/competition, outsourcing/offshoring and insourcing and commissioning.