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CIPS Level 4 Ethical and Responsible Sourcing (L4M4)

The CIPS Level 4 Unit: L4M4 Ethical and Responsible Sourcing provides procurement professionals with a comprehensive understanding of ethical considerations, sourcing strategies, and compliance issues when acquiring goods and services from suppliers. This unit focuses on responsible procurement practices, ensuring that sourcing decisions align with legal, environmental, and social governance (ESG) principles.

Learners will develop skills in evaluating supplier options, analyzing financial viability, assessing ESG performance, and ensuring regulatory compliance across different sectors, including private, public, and not-for-profit organizations.

Unit Objectives

This unit aims to:

• Equip learners with knowledge of sourcing strategies and pre-contract processes in procurement.
• Enable learners to analyze supplier selection criteria and evaluate financial viability.
• Develop understanding of ethical, environmental, and social governance (ESG) considerations in sourcing.
• Provide insights into legislative and compliance issues in both domestic and international sourcing.
• Explore methods for monitoring supplier compliance with ESG and responsible sourcing practices.

Learning Outcomes

The significant learning outcomes of the unit CIPS Level 4 Ethical and Responsible Sourcing (L4M4) are demonstrated below:

LO1: Understand options for sourcing requirements from suppliers

This learning outcome focuses on the sourcing process in procurement, covering the pre-contract stages of the CIPS Procurement Cycle. Learners will explore sourcing and outsourcing, make-or-buy decisions, and the costs and benefits of outsourcing. They will differentiate between single, dual, and multiple sourcing methods and understand tendering and negotiation processes. Additionally, learners will assess supplier selection criteria, including financial viability, technical capabilities, and ethical considerations such as environmental and social responsibility. By mastering this learning outcome, learners will be able to evaluate sourcing strategies and make informed decisions that align with organisational goals.

LO2: Understand the key processes that can be applied to the analysis of potential external suppliers

This learning outcome focuses on analysing supplier market data and assessing financial and operational viability. Learners will explore sources of market information, including economic indices, credit rating agencies, and supplier spend data. They will also gain knowledge of quotation and tendering processes, including the advertisement of procurement opportunities, requests for information, and formal tendering methods. Furthermore, learners will understand how to assess supplier proposals, applying weighted point systems, environmental and ethical evaluations, and value-added considerations. This learning outcome ensures that learners develop skills in supplier evaluation and risk assessment, supporting responsible procurement decisions.

LO3: Understand compliance issues when sourcing from suppliers

This learning outcome covers regulatory, legislative, and organisational requirements in procurement across private, public, and non-profit sectors. Learners will examine national and international regulations, including environmental, social, and governance (ESG) factors, human rights, modern slavery, bribery, corruption, and fraud. Additionally, learners will explore challenges in international sourcing, such as import regulations, tariffs, customs controls, and payment mechanisms. By mastering this learning outcome, learners will be equipped to ensure compliance in procurement practices and mitigate risks associated with unethical sourcing.

LO4: Understand environmental, social, and governance (ESG) practices in responsible sourcing

The focus of this learning outcome is to provide learners with the knowledge and skills to apply ESG principles in procurement. Learners will explore the CIPS Code of Conduct, codes of practice, and contractual provisions that support ESG goals. They will also understand the role of audits and supplier dialogue in ensuring compliance with ethical standards. Additionally, learners will compare different reporting frameworks and organisational strategies to achieve sustainable and responsible sourcing. By mastering this outcome, learners will develop the ability to integrate ethical considerations into procurement and contribute to sustainable business practices.

Assessment Criteria

Upon completing this unit, learners will be able to:

LO1: Understand options for sourcing requirements from suppliers

1.1 Identify the sourcing process in relation to procurement (Pre-contract stages 1-8 in CIPS Procurement Cycle)

This section introduces the fundamentals of sourcing, covering:

• Definitions of sourcing and outsourcing
• Make-or-buy decisions and intracompany trading
• Strategic vs. tactical sourcing approaches
• Costs and benefits of outsourcing
• Impacts of outsourcing core and non-core services

1.2 Differentiate between approaches to sourcing requirements from suppliers

Learners will explore different sourcing strategies, including:

• Single, dual, and multiple sourcing arrangements
• Types of tendering and their applications
• Direct negotiations with suppliers

1.3 Define the options and trade-offs when sourcing from external suppliers

This section covers key supplier selection factors:

• Criteria for selecting external suppliers
• Impact of selection criteria on procurement decisions
• Use of financial indicators (profitability, liquidity, gearing, cash flow) in supplier viability assessment

1.4 Define common award criteria in supplier selection

Learners will analyze criteria for supplier selection, including:

• Price and whole-life asset management costs
• Technical merit and added-value solutions
• Environmental, social, and governance (ESG) considerations

LO2: Understand the key processes that can be applied to the analysis of potential external suppliers

2.1 Analyse sources of market data that impact supplier sourcing

Procurement professionals use various sources to assess suppliers, including:

• Compiling supplier spend data
  
• Indices measuring economic activity and commodity pricing
  
• Secondary market research on suppliers
  
• Limitations of using financial statements in supplier assessments
  
• Role of credit rating agencies in supplier evaluation
  

2.2 Identify key processes for obtaining quotations and tenders

This section explores how procurement teams obtain supplier proposals through:

• Advertising procurement requirements
• Requesting information and quotations from suppliers
• Managing tendering processes
• Formalized tendering arrangements

2.3 Identify processes used to assess quotations or tenders

Procurement teams assess supplier bids using:

• Evaluation of supplier proposals
• Weighted point systems for bid assessment
• Assessing ESG compliance in supplier proposals
• Added value considerations in supplier selection
• Recommendation-making for contract awards
• Contract award procedures

LO3: Understand compliance issues when sourcing from suppliers

3.1 Compare key legislative, regulatory, and organizational requirements for sourcing in different sectors

This section examines procurement compliance in:

• Not-for-profit, private, and public sector procurement
• Impact of regulatory frameworks on sourcing processes
• ESG considerations in procurement, including bribery, corruption, fraud, human rights, and modern slavery
• Procurement regulation and accountability in different sectors

3.2 Compare regulatory requirements in international sourcing

Learners will explore challenges in global procurement, including:

• Import regulations, documentation, duties, and tariffs
• Customs control and exchange rate fluctuations
• International sourcing risks and Incoterms®
• Payment mechanisms (credit accounts, bills of exchange, letters of credit)
• Applicable laws and jurisdiction in cross-border contracts

3.3 Identify and apply ESG practices that support responsible sourcing

This section explores responsible sourcing practices such as:

• CIPS Code of Conduct and ESG compliance
• Ethical codes of practice for procurement
• Supplier contracts, monitoring, and ESG-related KPIs

3.4 Compare the use of audits and feedback mechanisms to evaluate supplier ESG standards

Procurement professionals use audits and feedback tools to monitor supplier compliance, including:

• Supplier audits for ethical compliance
• Collaborative supplier dialogues for ESG improvements

3.5 Contrast organizational processes for meeting ESG goals

This section focuses on sustainable procurement strategies, including:

• Triple Bottom Line approach (Profit, People, Planet)
• ESG reporting standards and frameworks
• Defining organizational value-for-money, incorporating ESG considerations
  

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