Pass the CIPS CIPS Level 6 Professional Diploma in Procurement and Supply L6M1 Questions and answers with CertsForce

Overall explanation

Below you will find how you can plan and draft the essay. Remember this is an example of one wayyou could approach the question. At Level 6 the questions are much more open so your response may be completely different and that's okay.

Essay Plan

Introduction- what is due diligence – assessing and evaluating suppliers.

Section 1 – how to do due diligence: risk assessments, supplier selection, audits, contracts, continuous processes, communication

Section 1 – why – quality issues, risk to business continuity, ethical reasons, customer/ stakeholder requirements

Conclusion: it’s essential for Delicious Ltd (relate back to case study).

Example Essay

Supplier due diligence is a critical process for organizations like Delicious Ltd, which rely on complex international supply chains to source commodity items. Due diligence involves assessing and evaluating the performance, reliability, and ethical practices of suppliers to ensure they meet the company's standards and requirements.

Here's how supplier due diligence can be implemented:

Risk Assessment: Begin by identifying the potential risks within the supply chain. This may include geopolitical risks, natural disasters, economic instability, and even supplier-specific risks like production delays or quality issues. It should also look at ethical considerations such as the use of forced or child labour in the supply chain and the working conditions of those employed by suppliers.

Supplier Selection: Carefully select suppliers based on criteria such as their track record, reputation, financial stability, quality control processes, and ethical practices. Delicious Ltd should consider multiple sources for critical raw materials such as sugar and flour to diversify risk. This means if one supplier goes bust, or is unable to provide the required quantities, Delicious Ltd can source materials elsewhere. The Kraljic Matrix would be a useful tool here.

Audits and Inspections: Delicious Ltd can conduct regular audits and inspections of suppliers' facilities and practices to ensure they meet the company's standards. These audits can include quality checks, ethical compliance checks, and supply chain continuity assessments. They can use an independent 3rd party to do this.

Contractual Agreements: Delicious Ltd should define clear terms and conditions in supplier contracts, specifying quality requirements, delivery schedules, pricing structures, and dispute resolution mechanisms. These contracts should reflect the results of due diligence assessments.

Continuous Monitoring: Establish a system for ongoing monitoring of suppliers' performance. This includes regular communication, feedback mechanisms, and performance reviews to ensure suppliers maintain the desired standards. Delicious Ltd could use the Demming Plan Do Check Act cycle here.

Contingency Planning: Develop contingency plans for potential supply chain disruptions. This could involve identifying alternative suppliers or establishing safety stock levels for critical raw materials. For example, by holding a surplus stock of flour in it’s own warehouse, Delicious Ltd mitigates the risk of late deliveries interrupting production.

Transparency and Reporting: Delicious Ltd should be transparent about supplier due diligence efforts with stakeholders, including customers, investors, and regulatory bodies. They should regularly report on compliance with ethical and sustainability standards and can publish findings on their website.

For Delicious Ltd, implementing supplier due diligence is essential for several reasons:

Quality Assurance: Ensuring the quality of raw ingredients is crucial for a cake manufacturing organization like Delicious Ltd. By conducting due diligence, the company can verify that suppliers meet specific quality standards, which is essential for producingconsistent and high-quality products. If an ingredient such as flour was contaminated, this may result in Delicious Ltd’s customers falling ill. This is a risk that needs to be eliminated.

Supply Chain Reliability: International supply chains can be susceptible to disruptions, such as natural disasters, political instability, or economic fluctuations. Supplier due diligence helps identify potential risks within the supply chain and allows the company to develop contingency plans to minimize disruptions.

Ethical Sourcing: Customers and stakeholders increasingly demand transparency and ethical sourcing practices. Due diligence enables Delicious Ltd to assess whether suppliers adhere to ethical standards, such as fair labour practices and environmental sustainability, which can protect the company's reputation and market position. Delicious Ltd risk losing customers, and thus profit, if they fail to conduct due diligence.

Cost Control: By evaluating suppliers' financial stability and pricing structures, the company can negotiate better deals, optimize costs, and avoid unexpected price hikes or financial risks associated with supplier instability.

In conclusion, implementing supplier due diligence is essential for Delicious Ltd due to its complex international supply chains. It helps ensure quality, reliability, and ethical practices among suppliers, while also mitigating risks associated with the supply chain. By effectively implementing due diligence processes, the company can enhance its reputation, protect against disruptions, and maintain cost control.

Tutor Notes

- Remember that due diligence isn't just about ethics. That's a big part of it (checking supply chains for modern day slavery etc). Due diligence is about getting the 5 Rights of Procurement (remember this from Level 4?), it's about ensuring supply chain security and continuity, and about risk aversion too.

- To improve on the essay above you could talk more in detail about where you can get information on suppliers, such as D&B and Companies House for financial information, customer references and checking registrations such as ISO14001. Some of these are specific to the UK, so Delicious Ltd may need to look at international equivalents. You don’t have to know what these are for the exam though so don’t worry!

- How deep you conduct supplier due diligence depends on how important the supplier is to you. You could mention this in your conclusion and bring it back to Delicious Ltd – the flour supplier is probably very important, but the supplier of stationary for the workers in the office is probably less so. So Delicious need to do thorough due diligence on the flour supplier and less on the stationary guys. Kraljic is the tool for this.

- Because this is a case study question, you don’t have to bring in any real life examples. But if the question was more open e.g. discuss how a procurement manager can do Due Diligence, you could talk about a real life example, so have one in your back pocket for the exam

- For a really high score you could mention this: Home - KnowTheChain

Management by Objectives (MBO) and Measuring Leadership Effectiveness

Part 1: How a Leader Can Use Management by Objectives (MBO) (10 Points)

Definition of Management by Objectives (MBO)

Management by Objectives (MBO)is a leadership approach whereleaders and employees set specific, measurable goalsthat align with the organization's strategic objectives. Developed byPeter Drucker, MBO emphasizes cleargoal setting, performance tracking, and employee involvement.

How a Leader Can Use MBO Effectively

Setting Clear Objectives

Leaders work with employees to establishSMART goals (Specific, Measurable, Achievable, Relevant, Time-bound).

Example: A procurement leader may set an objective toreduce supplier costs by 10% within six months.

Aligning Individual and Organizational Goals

Ensures employees understandhow their goals contributeto the company’s success.

Example: ACPO (Chief Procurement Officer)aligns procurement cost-saving goals with thefinance department's budget objectives.

Regular Performance Monitoring

Leaders conductperiodic reviewsto track progress and provide feedback.

Example: Monthlyprogress check-insensure employees stay on track toward procurement efficiency goals.

Providing Support and Resources

Leadersremove obstaclesand providetraining or toolsto help employees achieve their objectives.

Example: Implementingnew procurement softwareto improve efficiency.

Performance Evaluation and Rewards

Employees areevaluated based on objective achievements, and success isrewarded(e.g., bonuses, promotions).

Example: Procurement staff meeting targets could receiveperformance-based incentives.

Evaluation of MBO’s Effectiveness

✔Pros:Improvesgoal clarity, accountability, and motivation.✘Cons:Can be rigid if objectives aretoo fixed, ignoring external changes.

Part 2: Three Ways to Measure Leadership Effectiveness (15 Points)

A leader's effectiveness is crucial forteam performance, motivation, and achieving strategic objectives. Below arethree key waysto measure leadership effectiveness.

1. Employee Engagement and Satisfaction

Definition:The level of motivation, commitment, and job satisfaction employees have under a leader.

How to Measure:

Conductemployee engagement surveys(e.g., usingLikert scale questions).

Measureretention rates—low turnover indicates effective leadership.

Trackemployee feedbackin performance reviews.

Why It’s Important:✔A highly engaged workforce ismore productive and innovative.✔Employees who trust leadershipstay longer and contribute more.

2. Achievement of Organizational and Team Goals

Definition:The ability of a leader to drive the team toward achieving company objectives.

How to Measure:

Compareactual vs. target performance metrics(e.g., cost savings in procurement).

Analyzekey performance indicators (KPIs)like project completion rates.

Trackefficiency improvementsin processes under the leader’s direction.

Why It’s Important:✔Demonstrates how well a leader canset, communicate, and execute strategic goals.✔Ensures leadership is focused ontangible results, not just employee relationships.

3. Adaptability and Problem-Solving Ability

Definition:A leader’s ability tonavigate challenges, handle change, and innovateunder pressure.

How to Measure:

Assesshow a leader handles crises or disruptions(e.g., supply chain breakdowns).

Reviewdecision-making effectivenessduring uncertain situations.

Gather360-degree feedbackfrom peers, subordinates, and senior leaders.

Why It’s Important:✔Business environments change—leaders mustadapt quicklyto remain effective.✔Ensures that leadership isproactive rather than reactivein problem-solving.

Conclusion

A leader can useManagement by Objectives (MBO)to drive performance throughgoal-setting, alignment, monitoring, and evaluation. Leadership effectiveness can be measured throughemployee engagement, goal achievement, and adaptability, ensuring that leadersnot only set objectives but also inspire teams, navigate challenges, and deliver measurable success.

Overall explanation

Below you will find how you can plan and draft the essay. Remember this is an example of one way you could approach the question. At Level 6 the questions are much more open so your response may be completely different and that's okay.

Essay Plan

Intro – what is an ethical culture?

P1 – create values and principles – put into writing

P2 – Lead by example

P3 – Transparency, whistleblowing

P4 – Decision making

P5 – Laws

P6 – having consequences for failing to follow the culture

Conclusion – culture isn’t static, Banana Ltd needs to constantly update and review

Example Essay

An ethical culture in the workplace refers to the prevailing set of values, norms, principles, and practices within an organization that prioritize and promote ethical behaviour and decision-making among employees and stakeholders. It represents the collective commitment of an organization to conduct its business in a manner that is morally responsible, socially acceptable, and legally compliant. An ethical culture sets the tone for how employees interact with each other, make decisions, and engage with customers, suppliers, and the broader community. Banana Ltd can achieve this in the following ways:

Ethical Values and Principles: An ethical culture is built on a foundation of clear and well-defined ethical values and principles. These values guide employees in their actions and decisions, helping them distinguish between right and wrong. Banana Ltd should engrain these values and principles in writing by creating a vision statement and creating a formal CSR policy detailing expected behaviour from all employees and stakeholders.

Leadership and Accountability: Ethical leaders play a crucial role in fostering an ethical culture. They set an example by consistently demonstrating ethical behaviour and holding themselves accountable for their actions. Leaders also ensure that ethical standards are consistently applied throughout the organization. Therefore the leaders of Banana Ltd should lead by example. This may be in gaining MCIPS qualifications and other certifications that prove their loyalty to ethical issues.

Transparency and Open Communication: Ethical cultures encourage open and transparent communication. Employees are encouraged to speak up about ethical concerns or violations without fear of retaliation. Transparent processes and reporting mechanisms promote accountability. Banana Ltd could implement a Whistleblowing policy for example, so that if any employee knows of areas of concern, they can escalate this to management, without fear of repercussions.

Ethical Decision-Making: Ethical decision-making is central to an ethical culture. Employees are encouraged to consider the ethical implications of their choices, even when faced with challenging decisions that may have financial or competitive implications. For example with Banana Ltd, this may be actively severing ties with suppliers who are known to employ child labour in the mining of rare metals.

Compliance with Laws and Regulations: Ethical cultures emphasize strict adherence to laws and regulations. Banana Ltd should ensure that all activities are carried out within the boundaries of legal requirements, and violations are not tolerated. For example they shouldensure that their HR policies are in line with the Equalities Act. As a large organisation they should also publish a statement about removing Modern Slavery from their supply chain, as per the Modern Slavery Act.

Accountability and Consequences: There are clear consequences for unethical behaviour. Banana Ltd should ensure that accountability mechanisms are in place to address ethical violations, and individuals who breach ethical standards may face disciplinary actions. For example if a supply chain manager is caught accepting an ‘acceleration payment’ or ‘ kickback’ they should be fired.

An ethical culture in the workplace is essential not only for maintaining a positive organizational reputation but also for fostering a healthy, inclusive, and socially responsible work environment. It contributes to employee morale, customer trust, and long-term business sustainability. It is important for Banana Ltd to not only implement this culture, but to maintain it and constantly review it. The area of ethics and sustainability is constantly evolving so Banana Ltd should look to reassess its policies and processes regularly, and continue to strive to achieve more.

Tutor Notes

- You may have guessed that this question was loosely based on Apple. Apple is a good example of ethics and supply chain issues and is worth looking into as it’s an excellent example to bring into an essay on the subject. Here are some links:

- Apple’s Supply Chain Is on a Collision Course With Climate Change (bloomberg.com)

- Apple sees bigger supply problems after strong start to year | Reuters

- Will Supply-Chain Issues Kill the Low-Cost Apple Vision Pro? (pcmag.com)

- Other areas you could have mentioned include: cultures are not static; they are constantly evolving and improving. So Banana Ltd needs to regularly assess and refine their ethical practices to stay aligned with changing societal norms and expectations (I.e. what is ethically acceptable one day, may not be the next). You could have also talked about Banana Ltd's responsibility to the environment and local communities (particularly concerning the mining of metals). Mining is a really bad industry for Child Labour.

Managing in Four Directions as a Procurement Professional and the Role of Active Listening

In procurement, leadership is not limited to managing subordinates; it extends tomanaging in four directions:managing upward (superiors), managing downward (subordinates), managing laterally (peers), and managing externally (suppliers and stakeholders). Each direction presents unique challenges and requires tailored strategies. Additionally,active listeningplays a crucial role in effective management, fostering better communication, trust, and decision-making.

Managing in Four Directions (15 Points)

1. Managing Upward (Superiors)

Procurement professionals must manage relationships with senior executives, such asChief Procurement Officers (CPOs), Chief Financial Officers (CFOs), and CEOs, who set strategic goals and approve procurement budgets.

Key Strategies:

Aligning procurement goalswith company objectives (e.g., cost savings, sustainability).

Providing data-driven insightsto justify procurement decisions (e.g., total cost of ownership, supplier risk analysis).

Proactively communicating challengesand offering solutions (e.g., supply chain disruptions).

Example:A procurement manager presents abusiness casefor supplier diversification to mitigate risks, using data to persuade the CFO.

2. Managing Downward (Subordinates)

Procurement leaders must guide, motivate, and support their teams of buyers, category managers, and procurement assistants.

Key Strategies:

Setting clear objectives and expectationsfor procurement activities.

Providing mentorship and trainingon best practices, such as ethical sourcing.

Encouraging a culture of innovation and accountabilityin supplier negotiations.

Example:A procurement managerempowersa junior buyer bydelegatingresponsibility for a small contract, guiding them through the process, and offering feedback.

3. Managing Laterally (Peers and Colleagues)

Collaboration withother departmentssuch as finance, operations, legal, and marketing ensures procurement aligns with business needs.

Key Strategies:

Building cross-functional relationshipsto enhance collaboration.

Working closely with finance teamsto ensure cost-effectiveness.

Ensuring legal complianceby working with legal teams on contract terms.

Example:A procurement professionalpartners with the R&D departmentto source sustainable materials for a new product, balancingcost, quality, and ethical sourcing.

4. Managing Externally (Suppliers & Stakeholders)

Suppliers, regulatory bodies, and other external stakeholders require strong relationship management.

Key Strategies:

Negotiating contractsthat balance cost efficiency, quality, and supplier sustainability.

Ensuring ethical procurementby evaluating suppliers for compliance with human rights and environmental standards.

Managing supplier relationshipsthrough collaboration and risk assessment.

Example:A procurement professionaldevelops long-term partnershipswith ethical suppliers, securing better pricing and reducing supply chain risks.

The Role of Active Listening in Managing in Four Directions (10 Points)

Active listeningis a critical skill that enhances management effectiveness in all four directions. It involves fully concentrating, understanding, responding, and remembering what others say.

How Active Listening Supports Each Direction:

Managing Upward:Helps procurement professionalsunderstand leadership prioritiesand present solutions that align with strategic objectives.

Example: Listening to the CFO’sconcerns about cost overrunsand adjusting procurement strategies accordingly.

Managing Downward:Builds trust and engagement with procurement teams byvaluing their ideas and addressing concerns.

Example: Actively listening to a procurement assistant’sstruggles with a new systemand providing additional training.

Managing Laterally:Improves collaboration with other departments byunderstanding their needs and constraints.

Example: Listening to theoperations team’s challenges with supplier delivery delaysand adjusting procurement plans.

Managing Externally:Strengthens supplier relationships byshowing respect, understanding concerns, and negotiating effectively.

Example: Listening to a supplier’slogistics challengesand working together to find a solution.

Conclusion

Managing in four directions requires acombination of leadership, communication, and strategic thinking. Bymanaging upward, downward, laterally, and externally, procurement professionals align their activities with business goals while fostering collaboration.Active listeningenhances these management skills, ensuring clarity, reducing misunderstandings, and building trust across all levels of engagement.

Overall explanation

Below you will find how you can plan and draft the essay. Remember this is an example of one way you could approach the question. At Level 6 the questions are much more open so your response may be completely different and that's okay.

Essay Plan

Divide into two separate answers

1) Internal changes; personnel, systems, structure. External changes; STEEPLED and Porter – legislation, economy, technology, competitors.

2) Intro: what is a forcefield analysis? Explain how to do one. Then How can it help? Define objectives, impact on communication strategy

Example Essay

Change is a constant in the business world, and organizations must adapt to various internal and external forces to remain competitive and relevant. Understanding the sources of change is crucial for managing transformations effectively. In this essay, we will explore the distinction between internal and external sources of change and discuss how they impact personnel, processes, and company structure.

Sources of Internal Change within a Business:

People Changes: Changes in personnel, such as hiring, firing, promotions, and retirements, can have a profound impact on an organization. New hires may require training and onboarding, potentially affecting productivity during the transition. Terminations or layoffs may lead to temporary disruptions and workload adjustments for remaining employees. Moreover personnel changes can influence the organization's culture. New employees may bring different values and perspectives, while the loss of experienced employees can result in a shift in the workplace culture. Promotions and changes in leadership positions can influence decision-making, team dynamics, and the overall direction of the organization.

Systems Changes: Implementing or modifying systems, including software, technology, or operational procedures, can significantly affect how an organization operates. Well-planned systems changes can lead to increased operational efficiency, reduced errors, and improved decision-making, but employees may need time to adapt to new systems, potentially causing a temporary decrease in productivity. Moreover, systems changes can impact data storage, retrieval, and analysis, influencing how information is utilized within the organization.

Company Structure Changes: Altering the organization's structure, including hierarchies, departments, or reporting lines, can reshape how work is organized and executed. Employees who experience shifts in job roles, responsibilities, or reporting relationships, can affect job satisfaction and performance. It may also require adjustments in communication processes, potentially impacting the flow of information within the organization. A well-designed company structure can enhance efficiency and adaptability, while a poorly structured one may lead to inefficiencies and bureaucracy.

Sources of External Change Impacting a Business:

Legislation Changes: Changes in laws and regulations can have immediate and long-term consequences for businesses. Adapting to new regulations may require financial investments in compliance measures, training, or legal counsel. Businesses may need to modify processes and practices to ensure adherence to updated legal requirements. Companies that can proactively adapt to legislative changes may gain a competitive advantage by being compliant and avoiding penalties. An example of this is the upcoming changes to Public Sector Procurement Regulations which will take place in 2024, following the UK’s departure from the EU.

Economic Changes: Economic shifts, such as recessions, inflation, or economic growth, can affect an organization's financial health and market position. Economic downturns can lead to decreased consumer spending and reduced revenue, requiring cost-cutting measures like layoffs or budget reductions. Conversely economic growth can present new market opportunities, prompting expansion, product diversification, or investment in research and development. Economic fluctuations can also disrupt supply chains, affecting inventory management, pricing, and delivery times.

Technological Changes: Rapid advancements in technology can drive changes in how businesses operate and compete. Embracing technological advancements can enhance operational efficiency, reduce costs, and improve customer experiences. Employees may require training to adapt to new technologies, and organizations may need to invest in digital infrastructure. Technology-driven innovations can disrupt traditional industries and create new competitive threats or opportunities. For example the music industry has seen huge changes in the past 10 years due to the increasingpopularity of streaming platforms such as Apple Music and Spotify.

Competitor Actions: Actions taken by competitors, such as new product launches, marketing campaigns, or market entries, can influence an organization's market share and strategy. This may require adjustments in pricing, product offerings, or marketing strategies. An organisation should look at Porter’s 5 Forces and STEEPLE analysis to fully understand potential external sources of change.

In the dynamic business environment, both internal and external sources of change play significant roles in shaping organizations. Recognizing these sources of change and effectively managing them are essential for organizations to succeed.

Forcefield Analysis

Lewin's Force Field Analysis is a valuable tool that can help a leader plan for change by providing a structured framework for understanding the forces at play in an organization when considering a change initiative. Developed by psychologist Kurt Lewin in 1951, this model helps leaders assess the driving forces that promote change and the restraining forces that resist it.

Identifying Driving and Restraining Forces:

Driving Forces: These are factors that push for change and support the desired change initiative. Identifying these forces helps leaders understand what is propelling the organization toward change. Examples of driving forces include market opportunities, customer demands, and performance improvement goals.

Restraining Forces: These are factors that oppose or hinder change. Recognizing these forces is crucial as they represent obstacles that need to be addressed or overcome. Restraining forces can include employee resistance, existing processes, or budget constraints.

Assessing the Balance:

After identifying driving and restraining forces, leaders can assess the balance between them. This analysis provides a clear picture of the overall readiness for change within the organization. If driving forces outweigh restraining forces, it suggests a favourable environment for change, while an imbalance in the other direction may require more effort to gain buy-in and overcome resistance.

Prioritizing Action Steps:

Once the forces are identified and their balance is assessed, leaders can prioritize action steps accordingly. For driving forces, leaders can focus on leveraging them further and ensuring that they continue to support the change. For restraining forces, strategies can be developed to mitigate or overcome them. This may involve addressing concerns, providing training, or reallocating resources.

How this can help a leader plan for change:

Force Field Analysis provides a foundation for developing a comprehensive change management plan. Leaders can use the insights gained to structure the plan, including defining specific objectives, timelines, and key performance indicators (KPIs) to measure progress.

Understanding the forces at play allows leaders to tailor their communication and engagement strategies. They can target communication efforts toward addressing the concerns and motivations of employees, stakeholders, and other relevant parties. By addressing restraining forces through effective communication, leaders can build support for the change.

The analysis doesn't end with the initiation of change; it continues throughout the change process. Leaders can continuously monitor the balance of forces and adjust their strategies as needed. If new restraining forces emerge or driving forces weaken, the change plan can be adapted accordingly to maintain momentum.

In summary, Lewin's Force Field Analysis provides leaders with a structured approach to understanding the dynamics of change within an organization. By identifying driving and restraining forces, leaders can better plan, execute, and manage change initiatives, ultimately increasing the likelihood of successful implementation and achieving desired outcomes.

Tutor Notes

- I have split my answers here and clearly signposted this to the examiner. A top tip is to consider the examiner’s first look at your essay. By doing this, they can clearly see within the first 10 seconds that I’ve understood the question and I’ve answered all parts. It’s a way to set yourself up for success. So, use all the headings and spacings you can. I don’t think you can use bold in the exam, but you could use capital letters instead.

- A way to improve on the above would be to give more examples. For the Forcefield analysis you could talk about a potential change at company X being the introduction of a new product line, and say what the forces for and against would be. This would really hammer-home to the examiner you know your stuff.

- Sources of change – p. 224 (note the study guide says internal sources are people, structure and processes, I used the word system in my essay above rather than processes but it’s the same thing). External sources of change are anything from STEEPLED and Porter. Remember the question is only worth 10 points, so 3 or 4 internal and 3 or 4 internal is more than enough. Don’t do a full STEEPLED. You don’t have time.

- Forcefield analysis is p. 232

Overall explanation

Below you will find how you can plan and draft the essay. Remember this is an example of one way you could approach the question. At Level 6 the questions are much more open so your response may be completely different and that's okay.

Essay Plan

Intro – ethical supply chain management = environment, society and wellbeing of stakeholders

P1 – corporate governance

P2 – bribery and corruption

P3 – insider trading

P4 - discrimination

Conclusion - Upholding these ethical principles not only benefits the organization but also contributes to a more just and responsible global business environment.

Example Essay

Ethical supply chain management involves the integration of ethical principles and practices into every aspect of a supply chain's operations. It focuses on ensuring that the supply chain not only meets its goals of efficiency, cost-effectiveness, and profitability but also operates in a manner that is socially responsible and aligned with moral values. Ethical supply chain management aims to create value while considering the impact on the environment, society, and the well-being of all stakeholders involved, particularly those that have traditionally been exploited or marginalised. Supply chain managers play a pivotal role in establishing and upholding ethical standards within the supply chain.

Corporate Governance:

Corporate governance refers to the framework of rules, practices, and processes by which a company is directed and controlled. It encompasses the relationships among the company's management, its board of directors, shareholders, and other stakeholders. Supply chain managers should ensure that their organization's corporate governance practices are transparent, accountable, and aligned with ethical standards.

For example, the Enron scandal in the early 2000s serves as a stark reminder of the consequences of poor corporate governance. Enron's executives engaged in unethical and fraudulent practices, leading to the company's collapse. This scandal highlighted the importance of transparent corporate governance to prevent such lapses.

Supply chain managers can contribute to ethical corporate governance by establishing mechanisms for transparency, accountability, legal compliance, and ethical oversight within the supply chain.

Bribery and Corruption:

Bribery involves the offering, giving, receiving, or soliciting of something of value with the aim of influencing the actions of an official or other person in a position of authority. Corruption, on the other hand, encompasses a broader range of dishonest or unethical behaviour, including bribery, embezzlement, and abuse of power. Supply chain managers must actively combat bribery and corruption within the supply chain.

One prominent example of bribery and corruption in the supply chain is the case of the Brazilian construction giant Odebrecht. The company was involved in a vast bribery scheme across Latin America, implicating high-ranking politicians and business leaders. This case underscores the far-reaching consequences of unethical practices within the supply chain.

To mitigate the risk of bribery and corruption, supply chain managers should implement anti-bribery policies, conduct due diligence on suppliers, establish reporting mechanisms, and regularly audit and monitor the supply chain for compliance.

Insider Trading:

Insider trading involves trading securities based on non-public, material information. It is a form of market abuse that undermines fairness and transparency in financial markets. Supply chainmanagers should address insider trading risks within the organization.

A well-known example of insider trading is the case of Martha Stewart, the American businesswoman and television personality. Stewart sold her shares in a pharmaceutical company, ImClone Systems, based on non-public information about the FDA's impending rejection of the company's drug application. She was later convicted of insider trading.

To prevent insider trading, supply chain managers can limit access to sensitive information, educate employees about insider trading laws, establish monitoring and reporting mechanisms, and ensure legal compliance.

Discrimination:

Discrimination involves treating individuals unfairly or unequally based on their characteristics, such as race, gender, age, or disability. Discrimination within the supply chain can have detrimental social and legal consequences.

To combat discrimination, supply chain managers should promote equal opportunity, implement diversity initiatives, conduct training and awareness programs, and enforce non-discrimination policies throughout the supply chain.

In conclusion, ethical supply chain management is integral to an organization's overall sustainability and reputation. Supply chain managers should actively manage ethics in areas such as corporate governance, bribery, corruption, insider trading, and discrimination to ensure that the supply chain operates ethically, complies with legal standards, and aligns with moral values. Upholding these ethical principles not only benefits the organization but also contributes to a more just and responsible global business environment.

Tutor Notes

- For a higher score you should mention some of the legislation surrounding these areas:

- Corporate Governance = Companies Act 2006: This legislation lays out the statutory duties of company directors and officers, addresses corporate governance issues, and provides requirements for financial reporting, disclosure, and shareholder rights.

- Corporate Governance = UK Corporate Governance Code: Although not a law, this code issued by the Financial Reporting Council (FRC) sets out principles of good corporate governance that UK-listed companies are encouraged to follow. It provides guidelines on board composition, transparency, accountability, and more.

- Bribery and Corruption: Bribery Act 2010: This act is the primary legislation governing bribery and corruption in the UK. It introduced strict anti-bribery provisions, including criminal offenses related to bribery, both domestically and internationally.

- Insider Trading: Criminal Justice Act 1993: Part V of this act includes provisions related to insider dealing (insider trading) offenses. It criminalizes the misuse of insider information in relation to securities and other financial instruments.

- Discrimination: Equality Act 2010: This comprehensive legislation addresses discrimination on various grounds, including age, disability, gender, race, religion or belief, sexual orientation, and gender reassignment. It provides protection against discrimination in employment, education, housing, and other areas of public life.

Overall explanation

Below you will find how you can plan and draft the essay. Remember this is an example of one way you could approach the question. At Level 6 the questions are much more open so your response may be completely different and that's okay.

Essay Plan

Intro – what is contingency theory?

Each factor in a paragraph: external environment, technology, size, culture, goals, leader style, the people

Conclusion – there is no universally ‘right’ way to structure an organisation, and it can change over time.

Example Essay

The Contingency Model of organization is a management and organizational theory that suggests there is no one-size-fits-all approach to organizing and managing a company. Instead, it proposes that the most effective organizational structure and management style depend on various external and internal factors, often referred to as contingencies. The core idea behind this model is that the optimal way to organize and manage an organization is contingent upon the unique circumstances or contingencies it faces.

Key factors that should be considered in the Contingency Model of Organization include:

Environmental Factors: The external environment, including factors like the industry in which the organization operates, economic conditions, competition, and legal and regulatory requirements, can greatly influence the organization's structure and strategy. An organisation should consider STEEPLED factors and Porter’s 5 Forces when deciding which company structure would be most appropriate.

Technology: The nature of the organization's technology and the rate of technological change can impact its structure and processes. Some organizations may need to be more flexible and adaptive due to rapidly changing technologies, while others may rely on stable and proven technologies. For example, does the organisational structure allow people to work remotely from home?

Organizational Size: The size of the organization can affect its structure and management practices. Smaller organizations might have a more informal structure, while larger ones may require more formal hierarchies. For example a small organisation would not benefit from a bureaucratic structure, but a large organisation may need several levels ofmanagement and a degree of bureaucracy.

Organizational Culture: The culture of the organization, including its values, norms, and beliefs, can influence how it is structured and managed. For instance, an innovative and entrepreneurial culture may lead to a flatter, more decentralized structure.

Goals and Strategy: The goals and strategy of the organization play a crucial role in determining its structure and management style. Different strategies, such as cost leadership, differentiation, or innovation, may require different organizational structures and approaches.

Leadership Style: The leadership style of top management can impact the organization's structure and culture. Leaders with a preference for centralization may create a more hierarchical structure, while those who favour decentralization may opt for a flatter structure.

Human Resources: The skills, abilities, and motivation of the workforce can influence how an organization is structured and managed. A highly skilled and motivated workforce may require less supervision and a more decentralized structure.

The important thing to note with the Contingency Theory is that the organization's needs and circumstances can change over time, so what works best today may not be suitable in the future. Organizations must continuously assess and adapt their structures and management practices as contingencies evolve.

In essence, the Contingency Model recognizes that there is no universally optimal way to organize and manage an organization. Instead, managers must carefully assess and consider the various contingencies that affect their organization and make decisions accordingly. This approach promotes flexibility and adaptability in organizational design and management, allowing companies to better respond to changing circumstances and maximize their effectiveness.

Tutor Notes

- Another way this could come up as a question is related to a case study. You may be asked to pick out factors which would effect the way an organisation is structured.

- You could also be asked pros and cons of the contingency theory (pro: very flexible, highly responsive to changes con: people don’t know where they stand, harder to find accountability)

- It’s covered in detail in the studyguide but it’s quite a simple concept – the best structure for an organisation depends on lots of different factors.

Overall explanation

Below you will find how you can plan and draft the essay. Remember this is an example of one way you could approach the question. At Level 6 the questions are much more open so your response may be completely different and that's okay.

Essay Plan

Introduction – definition of power and Max Weber

P1 – charismatic power

P2 – rational/ legal

P3 – using power responsibly: training others, accountability/ setting procedures, ethical sourcing

Conclusion – procurement has a lot of power in an organisation. The key to using power is ‘balance’ and using it responsibly

Example Essay

Power, in the context of organizations, refers to the ability of individuals or departments to influence decisions, actions, and outcomes. Max Weber, a German Sociologist, identified three types of power: charismatic, traditional, and rational/legal. In this essay, we will focus on two types of power relevant to the Procurement department – charismatic power and rational/legal power. Additionally, we will explore how Procurement can responsibly use these powers to help the organization achieve its strategic objectives.

Charismatic power refers to a type of influence or authority that is based on the personal qualities, charisma, and appeal of an individual leader. This form of power arises from the compelling and magnetic personality of a leader, which inspires and motivates followers to willingly and enthusiastically support their vision and goals. One well-known example of a charismatic leader is Steve Jobs, the co-founder of Apple. Charismatic leaders have the ability to inspire and motivate their followers to achieve goals that might seem challenging or even impossible. They often articulate a compelling vision for the future and communicate it in a way that resonates with others. Moreover, they exude confidence and enthusiasm, which can be contagious. Their passion and belief in their vision can energize and mobilize their followers. For this reason, this type of power is often linked with Transformational Leadership styles.

Rational/legal power is derived from established policies, procedures, and regulations that govern business processes. It relies on adherence to legal and ethical standards, ensuring fairness, transparency, and accountability. Rational/legal power is typically exercised in an impersonal and formal manner. Rather than being contingent on the personal qualities of an individual as with charismatic power, rational/ legal power is derived from a person’s position within a formal organizational hierarchy. Weber associated rational/legal power with bureaucratic structures, where authority is distributed hierarchically, and individuals hold positions based on their qualifications, expertise, and adherence to established rules. For example, in the Procurement department of an organisation, the Head of Procurement would hold Rational/ Legal power through their ability to sign-off on the activities of others. This form of power emphasizes predictability and consistency in decision-making. Weber points out the downside to this type of power: that leaders with this type of power can be inflexible and rigid.

In an organisation, the Procurement department would use a mixture of charismatic and rational/ legal power in order to help the organisation achieve their strategic objectives. Some ways this could materialise include:

Training: Procurement can use a mixture of charismatic and rational power responsibly by providing training to other departments on aspects of procurement, especially compliance with legislation (which is critical in the public sector) and achieving value for money. This ensures that the organization's practices align with legal requirements and maximize cost-efficiency. Delivering training requires rational power (the training leader needs to know what they’re talking about and have experience in this), but also charismatic power in orderto engage learners. By training other departments, this will help the organisation achieve its strategic objectives.

Accountability and Reporting: Procurement can responsibly exercise rational/legal power by establishing clear accountability and reporting mechanisms. This includes ensuring that procurement decisions are documented, transparent, and in compliance with relevant laws and regulations. An example of this is creating Standard Operating Procedures, or ensuring Junior members of the team get approval from a Line Manager to conduct certain activities. This helps the organisation achieve strategic goals by eliminating (or significantly reducing) its exposure to risk.

Ethical Sourcing: Procurement can use power to address critical issues such as human trafficking within the supply chain. By setting and enforcing ethical sourcing standards, they contribute to responsible procurement practices. Procurement can use charismatic power to convince senior leadership and supply partners of the importance of ethical sourcing, and legitimate power to ensure that all stakeholders are complying with CSR policies. This could involve the use of gain-share mechanisms in contracts with supply partners.

In conclusion, Procurement departments wield considerable power within organizations, and the key to using this power is balance and responsibility. Charismatic and rational/legal powers can be harnessed to drive and achieve strategic objectives by ensuring ethical, compliant, and efficient procurement practices. By training, identifying vulnerabilities, and promoting responsible sourcing, Procurement contributes to the organization's overall success.

Tutor Notes

- You could bring in many different theories when describing two types of power. I’ve chosen two by Max Weber (he talks about 3 – charismatic, traditional and rational/ legal). But you could have used some from French and Raven (expert, legitimate, coercive, reward, referent) or Yukl (2010) – connection power and negative power. There are others too, these are just the main ones explored in the study guide

- A similar question was asked in March 22 but power is a big topic so may come up again, either with or without a case study. Another way they could use this topic is discussing ways of using the different power types to overcome issues.

- Weber’s Types of Power – p. 171. How procurement can use power responsibly – p.177

Stakeholder Classification: Using Mendelow’s Matrix

Stakeholders play a crucial role in the success of an organization, influencing decisions, resources, and operations. To effectively manage stakeholders, organizations need a model that helpsclassify and prioritize stakeholdersbased on their influence and interest. One widely used framework isMendelow’s Stakeholder Matrix.

This essay describesMendelow’s Matrix, evaluates its effectiveness, and discusses itsadvantages and limitations.

Mendelow’s Stakeholder Matrix

Mendelow’s Stakeholder Matrix (1991) is astrategic toolthat classifies stakeholders based ontwo key factors:

Power– The ability of a stakeholder to influence the organization’s decision-making.

Interest– The level of concern a stakeholder has about the organization’s activities.

Based on these factors, stakeholders are placed intoone of four quadrants:

Stakeholder Group

Power

Interest

Management Strategy

Key Players

High

High

Actively engage and involve

Keep Satisfied

High

Low

Monitor closely, engage when necessary

Keep Informed

Low

High

Provide regular updates, listen to concerns

Minimal Effort

Low

Low

Monitor but minimal engagement

1. Key Players (High Power, High Interest)

These stakeholders havesignificant influenceover the organization andstrong interestin its operations.

Examples:✔Senior executives,major shareholders, government regulators.✔Large customers orstrategic suppliers.

Management Strategy:✔Actively involve them in decision-making.✔Consult regularlyand address their concerns immediately.

Evaluation:✔Managing this group well ensuresstrong support for company initiatives.✘Ignoring them can lead tosignificant resistance and business risks.

2. Keep Satisfied (High Power, Low Interest)

These stakeholders havehigh power but low interest, meaning they canaffect the organization significantlyif ignored.

Examples:✔Government bodiesthat enforce regulations but do not intervene unless necessary.✔Wealthy investorswith minimal involvement in daily operations.

Management Strategy:✔Engage periodicallyto keep them satisfied.✔Provideupdates on key decisionswithout overwhelming them.

Evaluation:✔Proper management preventsunexpected opposition.✘If engagement is too frequent, they maylose interestor disengage.

3. Keep Informed (Low Power, High Interest)

These stakeholdersdo not have direct powerbut arehighly interestedin the company’s actions.

Examples:✔Employees, local communities, NGOs concerned about sustainability.✔Small-scale suppliers who depend on the company.

Management Strategy:✔Communicate regularlythrough reports, newsletters, or meetings.✔Listen to concernsand provide transparency.

Evaluation:✔Keeping them engaged buildspositive public relations and internal morale.✘If ignored, they mayescalate concerns to higher-power stakeholders.

4. Minimal Effort (Low Power, Low Interest)

These stakeholders havelittle influence and low interest, meaning theydo not require significantattention.

Examples:✔General publicwho have no direct impact on the company.✔Non-core supplierswith small contracts.

Management Strategy:✔Monitortheir concerns occasionally.✔Avoidunnecessary engagementunless their influence changes.

Evaluation:✔Avoiding excessive engagement savestime and resources.✘If theirinterest or power grows, they may requirereclassification.

Evaluation of Mendelow’s Stakeholder Matrix

Advantages of the Model

✔Simple and Practical– Easy to understand and apply in various industries.✔Helps Prioritize Stakeholders– Ensurescritical stakeholders receive appropriate attention.✔Supports Strategic Decision-Making– Guides communication and engagement efforts.✔Adaptable– Can be used formergers, change management, procurement, and public relations.

Limitations of the Model

✘Does Not Capture Stakeholder Dynamics– Stakeholder power and interestchange over time, requiring constant reassessment.✘Overlooks Stakeholder Relationships– Some stakeholdersinfluence others(e.g., media can amplify employee concerns).✘Power and Interest Can Be Subjective– Classifying stakeholders requiresjudgment and regular review.

Conclusion

Mendelow’s Stakeholder Matrix is apowerful tool for classifying and managing stakeholdersin any organization. By categorizing stakeholders based onpower and interest, leaders candevelop effective engagement strategiesandmitigate risks associated with key stakeholders. However,stakeholder influence is fluid, soongoing analysisis necessary for long-term success. Despite its limitations, this model remainsa fundamental framework for strategic stakeholder management.

(A) Difference Between Mentoring and Coaching (10 Points)

Bothmentoring and coachingare essential for employee development, but they serve different purposes. Below is a structured comparison:

A screenshot of a coaching AI-generated content may be incorrect.

Key Takeaways:

Mentoringislong-term, relationship-driven, and focused onpersonal/career development.

Coachingisshort-term, performance-driven, and focused onspecific skill enhancement.

(B) Other Activities Completed by a Manager (10 Points)

Apart from mentoring and coaching, managers in procurement and supply chain roles performseveral key functions, including:

Strategic Planning and Decision-Making(2 Points)

Managers align procurement strategies with business goals, ensuringcost savings, risk management, and supplier selection.

Example: Deciding whether tosource locally or internationallybased on cost, lead time, and risk factors.

Performance Management & Employee Development(2 Points)

Managers conductperformance reviews, set KPIs, and ensure employees meet procurement objectives.

Example: Monitoringcontract complianceand assessing supplierdelivery performance.

Supplier and Stakeholder Relationship Management(2 Points)

Managers negotiate contracts, build relationships with suppliers, and collaborate with internal stakeholders.

Example: Engaging insupplier development programsto improve quality and efficiency.

Problem-Solving and Conflict Resolution(2 Points)

Managers handlesupplier disputes, contract issues, and logistical challengesin procurement operations.

Example:Managing disputes with suppliersover late deliveries or non-compliance.

Compliance and Ethical Procurement Practices(2 Points)

Managers ensure adherence toprocurement regulations, ethical sourcing policies, and sustainability goals.

Example: Implementing ananti-bribery and corruption policyin procurement operations.

(C) Skills Required for These Activities (5 Points)

To successfully carry out these responsibilities, a manager needs the followingkey skills:

Leadership & People Management(1 Point)

Ability tomotivate, mentor, and coach employeeswhile fostering a productive work environment.

Negotiation & Communication(1 Point)

Strong skills tonegotiate contracts, resolve supplier disputes, and manage stakeholder expectations.

Strategic Thinking & Decision-Making(1 Point)

Capability toanalyze procurement dataand make informed strategic decisions to reduce costs and risks.

Problem-Solving & Conflict Resolution(1 Point)

Skill inaddressing supply chain disruptions, supplier conflicts, and operational inefficiencies.

Ethical and Compliance Knowledge(1 Point)

Understanding ofprocurement laws, ethical sourcing, and corporate governance.