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CIPS Level 5 – Achieving Competitive Advantage Through the Supply Chain (L5M7)

Achieving a competitive advantage through the supply chain is a critical aspect of modern procurement and logistics management. This unit explores the principles and strategies that enhance the efficiency, resilience, and value of supply chains in an organisational context. Learners will gain insights into supply chain dynamics, value creation, organisational infrastructure, and various approaches to optimising supply chains.

Unit Objectives

  • To equip learners with a comprehensive understanding of supply chain structures, including supply networks and supply chain management.
  • To analyse how effective supply chain management contributes to organisational success by enhancing quality, reducing costs, and minimising risks.
  • To examine the role of organisational infrastructure and process management in optimising supply chain performance.
  • To compare different approaches for improving supply chains, including collaborative and competitive models.

Learning Outcomes

The significant learning outcomes of the unit CIPS Level 5 Achieving Competitive Advantage Through the Supply Chain (L5M7) are demonstrated below:

LO1: Understand the dynamics of supply chains

This learning outcome focuses on defining and differentiating supply chains, supply networks, and supply chain management. Learners will explore the use of supplier tiering and network sourcing to enhance procurement efficiency. Additionally, the outcome highlights the value-added benefits of effective supply chain management, such as quality improvement, cost reduction, faster time-to-market, innovation, and risk mitigation. Learners will also analyze the connection between organisational infrastructure, process management, and supply chain efficiency, incorporating theoretical perspectives, value chain analysis, and process mapping techniques. Furthermore, learners will compare different approaches to improving supply chains, including collaborative models, competitive models, outsourcing, and global procurement strategies.

LO2: Understand improvement methodologies that can be used in supply chains

This learning outcome focuses on the application of Total Quality Management (TQM) methodologies to enhance supply chain performance. Learners will compare quality inspection, quality assurance, and total quality approaches while understanding the importance of supplier relationships in quality management. The outcome also emphasizes the role of statistical methods in supply chain improvement, covering performance measurement, key performance indicators (KPIs), statistical process control, Six Sigma methodologies, and continuous improvement strategies. Additionally, learners will critically appraise Just-in-Time (JIT) supply processes, lean thinking, agile methodologies, and the 5S methodology to optimize supply chain operations. The use of Business Process Re-engineering (BPR) and benchmarking will also be examined as tools to drive supply chain improvements.

LO3: Understand measures required to achieve competitive advantage in supply chains

This learning outcome explores the sources of competitive advantage in procurement and supply chain management. Learners will evaluate cost-based competitive advantage versus differentiation strategies that rely on innovation, product range, brand image, and customer service. Additionally, the outcome provides an in-depth analysis of pricing strategies, including fixed pricing, variable pricing, cost-plus arrangements, open book costing, and incentivisation mechanisms. Learners will also explore cost reduction activities, such as supplier rationalisation, single sourcing risks, price negotiations, and value engineering. Finally, the outcome focuses on fostering greater collaboration in supply chains by building strategic partnerships, developing trust with suppliers, and managing the supplier relationship life cycle to achieve sustainable competitive advantage.

Assessment Criteria

1.0 Understand the dynamics of supply chains

1.1 Compare supply chains, supply network and supply chain management

  • 1.1.1 Defining supply chains, supply networks and supply chain management
  • 1.1.2 The use of supplier tiering and network sourcing

1.2 Analyse the added value that effective supply chain management can deliver for the organisation

  • 1.2.1 Improving quality
  • 1.2.2 Reducing prices and total costs
  • 1.2.3 Reducing time to market and achieving deliveries to required timescales
  • 1.2.4 Creating innovation
  • 1.2.5 Reducing risk and supply chain vulnerability

1.3 Analyse the relationship between organisational infrastructure and process management in supply chain management

  • 1.3.1 Theoretical perspectives on added value
  • 1.3.2 Aspects of organisational infrastructure: culture, organisational structure, and systems
  • 1.3.3 Process management: the sourcing process in procurement and managing stages of the process
  • 1.3.4 Process mapping techniques
  • 1.3.5 Value chain analysis

1.4 Compare approaches to improving supply chains

  • 1.4.1 The spectrum of relationships in a supply chain
  • 1.4.2 The collaborative model of supply chain management: partnering and strategic relationship management
  • 1.4.3 The competitive model of supply chain management
  • 1.4.4 The outsourcing of work or services
  • 1.4.5 Off shoring, global procurement and low-cost country sourcing

2.0 Understand improvement methodologies that can be used in supply chains

2.1 Compare approaches to total quality management for supply chain improvement

  • 2.1.1 Defining quality and total quality management
  • 2.1.2 Approaches to quality: quality inspection, quality assurance and total quality
  • 2.1.3 Quality versus risk
  • 2.1.4 The importance of relationships in quality management

2.2 Analyse the use of statistical methods to achieve supply chain improvement

  • 2.2.1 Collating data for performance measurement
  • 2.2.2 Developing key performance indicators (KPIs) on aspects of supply performance
  • 2.2.3 Analysing data and an introduction to statistics
  • 2.2.4 The use of the normal distribution
  • 2.2.5 Developing statistical process control
  • 2.2.6 The 6 sigma improvement methodology
  • 2.2.7 Creating continuous improvement

2.3 Critically appraise processes that can be used for supply chain improvement

  • 2.3.1 Just-in-time (JIT) supply processes
  • 2.3.2 The application of JIT in the service sector
  • 2.3.3 The development of lean thinking and lean supply
  • 2.3.4 Lean thinking compared with agile
  • 2.3.5 The 5S methodology

2.4 Examine how business process re-engineering (BPR) and benchmarking can be used for supply chain improvement

  • 2.4.1 The development of business process re-engineering (BPR)
  • 2.4.2 BPR in contrast to total quality
  • 2.4.3 The development of lean thinking and lean supply
  • 2.4.4 The use of benchmarking in supply chains

3.0 Understand measures required to achieve competitive advantage in supply chains

3.1 Evaluate sources of competitive advantage

  • 3.1.1 Competitive advantage based on lowest cost of supply
  • 3.1.2 Competitive advantage achieved through sources of differential advantage such as innovation, range of products, brand image and customer care

3.2 Analyse pricing arrangements that can be used to achieve competitive advantage in the supply chain

  • 3.2.1 The use of fixed pricing, variable pricing, and cost plus arrangements
  • 3.2.2 The use of open book costing and cost transparency
  • 3.2.3 The use of incentivisation in pricing and gain share (risk/reward) mechanisms

3.3 Analyse cost reduction activities for a supply chain to achieve competitive advantage

  • 3.3.1 Supplier rationalisation and aggregation of requirements
  • 3.3.2 The risks and benefits associated with single sourcing arrangements
  • 3.3.3 Negotiating reductions in prices and costs
  • 3.3.4 Collaborative and competitive models of supply
  • 3.3.5 Value analysis and value engineering

3.4 Assess methods to promote greater collaboration in supply chains to support the achievement of competitive advantage

  • 3.4.1 Strategic versus operational suppliers
  • 3.4.2 Creating partnership sourcing arrangements
  • 3.4.3 Building trust with suppliers
  • 3.4.4 The relationship life cycle

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