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Summary CIPS L2M3 Stakeholder Relationships
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Summary of CIPS Level 2 Module 3 course.
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ContentsL2M3 Stakeholder Relationships ............................................................................................................... 3
1 The stakeholder in procurement and supply ........................................................................................ 3
1.1 Define external stakeholders in procurement and supply ........................................................... 3
Defining stakeholders ........................................................................................................................... 3
Profiling stakeholders ........................................................................................................................... 3
Typical external stakeholders ............................................................................................................... 4
1.2 Identify internal stakeholders involved in purchases from suppliers ........................................... 4
The role of procurement and supply in dealing with other business functions ................................... 5
1.3 Describe how internal & external stakeholders influence procurement & supply activity .......... 7
Internal stakeholders ............................................................................................................................ 8
External stakeholders............................................................................................................................ 9
The importance of the procurement and supply department ............................................................. 9
2 The key market factors that impact on procurement and supply functions ...................................... 10
2.1 Identify the key economic sectors that impact on procurement and supply functions ............. 10
Public, private, and not-for-profit or third sector ............................................................................... 10
Primary, secondary and tertiary sectors ............................................................................................. 11
2.2 Indicate the impact of demand and supply on markets ............................................................. 11
Demand and supply curves ................................................................................................................. 11
How demand and supply factors can change ..................................................................................... 13
How demand and supply factors can impact pricing and availability ................................................ 13
2.3 Describe how markets factors impact on procurement & supply activities of an organization 14
The level of competition ..................................................................................................................... 14
The impact of demand on sales .......................................................................................................... 15
Market growth and decline................................................................................................................. 16
Competitive forces on organizations .................................................................................................. 17
2.4 Identify the contribution that marketing makes to develop customer & supplier relationships
18
The principles and definition of marketing ......................................................................................... 18
Techniques associated with marketing............................................................................................... 19
Sources of competitive advantage sought through marketing .......................................................... 19
The relevance of marketing principles to purchasers ......................................................................... 20
3 The techniques associated with successful and effective communication in procurement & supply21
, 3.1 Describe and explain approaches to build rapport with internal and external stakeholders .... 22
Techniques to develop, maintain and improve relationships with internal stakeholders to promote
effective procurement and supply ...................................................................................................... 22
3.2 Explain methods of negotiating with suppliers and customers .................................................. 24
Negotiation techniques....................................................................................................................... 24
3.3 Recognize all elements of the communication cycle .................................................................. 27
The communication cycle ................................................................................................................... 28
The importance of appropriate, prompt and timely communications with stakeholders and
suppliers .............................................................................................................................................. 28
How to create appropriate written correspondence ......................................................................... 29
Completing electronic files and documents used in support of the procurement and supply process
............................................................................................................................................................ 30
3.4 Describe the key characteristics of successful and effective team working............................... 31
How to recognize group cohesiveness and performance................................................................... 31
The stages of team development ....................................................................................................... 32
4 Approaches for conflict resolution with stakeholders in a procurement and supply ........................ 32
4.1 Identify the types of information that can be exchanged between purchasers and suppliers .. 32
Scheduling difficulties ......................................................................................................................... 32
Demand forecasts ............................................................................................................................... 33
Costs and availability........................................................................................................................... 33
4.2 Indicate how conflict can arise in the work of procurement and supply ................................... 33
The source of conflict in organizations and between their personnel ............................................... 33
The sources of conflict between organizations and their personnel ................................................. 33
4.3 Identify approaches to conflict resolution with stakeholders in procurement and supply ....... 34
Approaches to conflict resolution ....................................................................................................... 34
Achieving buy-in from stakeholders ................................................................................................... 36
,L2M3 Stakeholder Relationships
1 The stakeholder in procurement and supply
Market factors: elements that influences the demand or price of a good/service.
Shareholder: an owner of shares in a company.
Internal stakeholder: people with an inside interest in an org. (shareholders, employees)
External stakeholders: people who don’t belong to the org., but have an impact on it.
1.1 Define external stakeholders in procurement and supply
Supply chain: a network of individuals, orgs., technology, activities and resources working
together to make sure goods/services reach the end user.
- Why identifying stakeholders is useful?
o Provide an overall picture of who is involved with the supply chain & procurement.
o Identify the interests of stakeholders in relation to the company’s aims & objectives.
o Identify the influence & power of stakeholders on the business.
o Highlight any potential conflict of interest.
o Identify the needs of target stakeholders.
o Help you in identifying the best ways to reach stakeholders (communications).
Defining stakeholders
- Questions to ask to help you define stakeholder:
o Who uses the products/services of the org.?
o What external agencies are involved in the org.?
o What suppliers does the org. use?
o What roles are within the org.?
o Who owns the org.?
Profiling stakeholders
- Helps you choose the way you engage and communicate with them.
- Helps you identify gaps in your knowledge of your stakeholders.
,- Keep satisfied: High power, low interest. (Investors, shareholders interested in ROI)
- Manage closely: High interest, high power. (Government, involved in decision making)
- Minimum effort: Low interest, low power. (Small customers & suppliers, require little effort
- Keep informed: High interest, low power. (NGOs)
Typical external stakeholders
- Suppliers: manufacturers, wholesalers.
o Lean: a business methodology that aims to create more value with fewer resources.
- Customers: the person that pays for goods/services.
o B2C: business to customer, an individual shopper.
o B2B: business to business, companies in supply chain.
- Consumers: an individual or org. who pays an amount to consume goods/services.
- Communities: expectation from the community of the business’ environmental
responsibility and involvement in local events.
- Government: businesses pay taxes to govs., comply with regulations.
- Other groups: professional bodies like CIPS. Media orgs., creditors.
1.2 Identify internal stakeholders involved in purchases from suppliers
,The role of procurement and supply in dealing with other business functions
- Marketing: the marketing function promotes the business and its goods and services.
Responsible for company’s annual report documents.
o
Product: includes promoting the details/specifications of goods/services
and how it relates to the end user needs and wants. (packaging, design,
branding)
Price: how the product is priced considering manufacturing & distribution
cost and what the customers are willing to pay.
Place (distribution): how the business gets its products to customers,
including the geographic location, and online sales.
Promotion (communication): advertising, social media, sponsorship,
public relations (PR)
, Purchase Supply
Advertising agencies, printers Brochures, flyers, promotional gifts
Web designers, outsourced social media Social media content, display stand
PR agencies, graphic designers Annual report, sales information
The goods & services that marketing team may purchase and supply
- Sales: sales function creates orders for goods & services produced by the business.
o Might be combined with Marketing in smaller businesses.
o Respond to RFI about the business products & services.
o Provides estimates and quotations along with information on deliveries.
o Process orders from customers, receive payments and passes them to finance.
o Collaborate with other departments to fulfill customer orders.
o Purchase: company cars, Customer Relationship Management system (CRM)
o Supply: sales literature, samples, quotations.
- Production: manufactures or assembles a product to ensure that goods are of right
quality, quantity and cost.
o Production need to know, how much should be produced and by when.
o Components and raw material needed.
o Where and when they need to get raw material.
o How will the goods be produced.
o How many staff is needed, how final product will be packaged.
o Other elements of Production include:
Scheduling: ensuring the correct resources are available at the right time.
Monitoring: ensuring all processes proceed according to plan.
Stock control: ensuring components are available at the right time.
Cost control: producing goods at the agreed cost.
Quality control: ensuring quality of goods is maintained at every stage of
the process.
o Purchase: raw materials, components, tools, machinery, packaging.
o Supply: finished goods, schedules, budgets, quality control reports, stock reports.
- Operations: responsible for the effective & efficient running of the business, its
manufacturing, operational processes, and health & safety compliance.
o Strategic planning of business processes, staffing levels, quality management.
o Facilities management, servicing & maintenance of machinery.
o Purchase: tools, equipment, machinery, outsourced staff & contractors.
o Supply: resource planning, strategic plans, maintenance & servicing plans.
- Human resources (HR): responsible for organization’s personnel and recruitment of
staff, policies, retention, and departure of staff.
o Training & development of employees and ensure correct number of staff
o Purchase: agency staff, training providers, uniform suppliers, meeting room hire.
o Supply: recruitment, reward strategy, redundancy policy, succession planning.
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