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CIPS Level 2 Unit: Inventory, Logistics and Expediting (L2M5)

The unit Inventory, Logistics and Expediting (L2M5) focuses on the fundamental principles of inventory control, logistics management, and expediting processes in procurement and supply chain operations. It enables learners to understand effective inventory management techniques, cost implications, logistics strategies, and expediting methods that ensure seamless procurement processes.

By completing this unit, learners gain the knowledge to optimize stock levels, improve supply chain efficiency, and reduce operational costs while maintaining high service levels. This unit is particularly beneficial for individuals working in supply chain, procurement, and warehouse management who need to develop expertise in managing inventory, transportation, and supplier coordination.

Unit Objectives

The main objectives of this unit are:

• To equip learners with the essential knowledge of inventory classifications, cost implications, and control techniques to maintain efficient stock levels.
• To develop an understanding of logistics principles, transportation methods, and international sourcing regulations for effective supply chain operations.
• To provide insights into expediting strategies, forecasting techniques, and supplier payment processes to ensure smooth procurement and supply chain management.

Learning Outcomes

The significant learning outcomes of the unit CIPS Level 2 Inventory, Logistics, and Expediting (L2M5) are demonstrated below:

LO1: Know the key elements of effective inventory control

This learning outcome focuses on understanding inventory management and its impact on procurement operations. Learners will explore the different classifications of inventory, including opening stock, work-in-progress, safety stock, finished goods, and redundant stock. The outcome also covers inventory control techniques such as MRP, ERP, Just-In-Time (JIT), barcoding, and forecasting methods. Additionally, learners will identify the cost implications of holding inventory and strategies to reduce costs while maintaining service levels. By mastering this outcome, learners will enhance their ability to effectively manage inventory, minimise waste, and optimise stock levels.

LO2: Understand the principles and processes associated with effective logistics control

Learners will develop knowledge of logistics and supply chain operations, focusing on warehousing, freight transportation, and international logistics. This outcome covers the key principles of warehouse management, including inventory flow, cost reduction, and space optimisation. Learners will explore different modes of transportation—road, rail, air, sea, and pipelines—along with their strengths and weaknesses. Additionally, they will examine Incoterms, international sourcing regulations, and transportation documentation such as bills of lading, waybills, consignment notes, and financial documents like letters of credit. By attaining this learning outcome, learners will be able to select appropriate logistics strategies, ensure compliance with international regulations, and manage transportation efficiently.

LO3: Know how effective expediting can be achieved in procurement and supply

This learning outcome focuses on managing inventory levels, preventing stockouts, and ensuring timely deliveries. Learners will explore cost assessment techniques for inventory and stockouts, along with forecasting methods to maintain optimal stock levels. The outcome also covers the planning process for expediting deliveries, including problem-solving techniques and milestone tracking. Additionally, learners will understand the significance of supplier payments and cash flow management, ensuring financial stability in procurement operations. By mastering this outcome, learners will be able to effectively track deliveries, mitigate supply chain disruptions, and maintain smooth procurement workflows.

Assessment Criteria

The assessment criteria for this unit align with the learning outcomes and include:

LO1 Know the key elements of effective inventory control

1.1 Identify the classifications of different types of inventory

• Understanding different inventory categories such as opening stock, work-in-progress, safety stock, and finished goods.
• Recognizing obsolete, redundant, direct, and indirect stock classifications and their impact on supply chain efficiency.
• Exploring ABC analysis for inventory prioritization based on value and usage.
• Differentiating between dependent demand and independent demand stock to improve stock replenishment planning.

1.2 Identify the direct and indirect costs of holding inventory

• Evaluating direct costs (e.g., storage, handling, insurance) and indirect costs (e.g., obsolescence, shrinkage, opportunity costs).
• Exploring cost-reduction strategies such as lean inventory management and just-in-time (JIT) approaches to minimize holding costs.

1.3 Identify techniques associated with inventory control

• Applying inventory management techniques such as reorder levels, reorder quantities, and material requirements planning (MRP/MRP II) for efficient stock management.
• Exploring Enterprise Resource Planning (ERP) systems, barcoding, and forecasting methods for real-time inventory tracking.

1.4 Identify the key aspects associated with handling, packaging, and storage of supplies

• Understanding the role of materials handling equipment, palletization, and automation in warehousing operations.
• Exploring packaging techniques and storage best practices to maintain product integrity and reduce damage risks.

LO2 Understand the principles and processes associated with effective logistics control

2.1 Identify the key principles of stores and warehousing facilities

• Understanding inventory flow optimization, cost reduction strategies, and warehouse space utilization for efficient logistics operations.

2.2 Identify the strengths and weaknesses associated with modes of freight transportation

• Evaluating road, rail, air, sea, and pipeline transportation methods based on cost, speed, reliability, and environmental impact.

2.3 Identify types of Incoterms in international logistics

• Understanding E, F, C, and D Incoterms and their role in defining buyer and seller responsibilities in international trade.
• Exploring the significance of Incoterms incorporation in sales contracts for risk mitigation.

2.4 Identify legislative regulations that affect international sourcing

• Ensuring compliance with import/export regulations, trade restrictions, and international procurement laws to avoid legal issues.

2.5 Describe the documentation used in transportation of supplies

• Understanding essential documents such as waybills, consignment notes, bills of lading, packing lists, and certificates of origin in global logistics.
• Exploring the role of letters of credit and financial documentation in securing payments and supplier relationships.

LO3 Know how effective expediting can be achieved in procurement and supply

3.1 Explain the assessment of costs of inventory and the cost of stock-outs

• Monitoring inventory levels to prevent overstocking and minimize stock-out risks.
• Implementing forecasting techniques to ensure timely delivery and stock replenishment.

3.2 Explain the planning process associated with expediting delivery

• Utilizing problem-solving techniques and milestone planning to improve delivery timelines and supplier coordination.

3.3 Explain the significance of payment to suppliers and cash flow

• Tracking supplier payment schedules and mitigating disruptions caused by cash flow difficulties.
• Ensuring timely financial transactions to maintain strong supplier relationships and avoid supply chain delays.

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