Ethical and Responsible Sourcing (L4M4)

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

• 1.1.1Definitions of sourcing and outsourcing
• 1.1.2Make or buy decisions and the role of intracompany trading
• 1.1.3Strategic and tactical sourcing
• 1.1.4Costs and benefits of outsourcing
• 1.1.5Options and impacts of outsourcing non-core and core work or services

1.2 Differentiate between approaches to the sourcing of requirements from suppliers

• 1.2.1Single, dual and multiple sourcing arrangements
• 1.2.2Types and use of tendering
• 1.2.3Direct negotiations with suppliers

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

• 1.3.1Typical criteria used to select external suppliers
• 1.3.2Impacts of different selection criteria on supplier selection
• 1.3.3Use and interpretation of indicators of profitability, liquidity, gearing and cash from financial statements to assess and make conclusions on the viability of suppliers

1.4 Define the award criteria that can be commonly applied when sourcing requirements from external suppliers

• 1.4.1Award criteria: price, whole-life asset management costs, technical merit, added-value solutions, environmental, social, governance and ethical

2.1 Analyse commonly used sources of information on market data that can impact on the sourcing of requirements from external suppliers

• 2.1.1Compiling spend data relating to suppliers
• 2.1.2Indices that measure economic activity and commodity pricing
• 2.1.3Secondary data relating to markets and suppliers
• 2.1.4Limitations of using financial statements that assess profits, assets & liabilities, and cash as selection criteria
• 2.1.5The role of credit rating agencies

2.2 Identify the key processes used for obtaining quotations and tenders

• 2.2.1Advertising requirements
• 2.2.2Requests for information or quotations
• 2.2.3The operation of tendering
• 2.2.4Formalised arrangements for tendering

2.3 Identify the processes that can be typically used to assess quotations or tenders

• 2.3.1Assessment of suppliers’ proposals
• 2.3.2The use of weighted points systems for assessment
• 2.3.3Assessment of environmental, social, governance and ethical elements of suppliers’ proposals
• 2.3.4Assessing added value
• 2.3.5Making recommendations
• 2.3.6Procedures for contract award

3.1 Compare the key legislative, regulatory and organisational requirements when sourcing in the not for-profit, private and public sectors

• 3.1.1Impact of international, national and local regulatory frameworks on the sourcing process
• 3.1.2The importance and impact of environmental, social and governance considerations of bribery, corruption, fraud, human rights and modern slavery in sourcing activities
• 3.1.3Role of regulation and accountability for procurement in public, private and third sector organisations

3.2 Compare the key legislative, regulatory and organisational requirements when undertaking international sourcing in the not for-profit, private and public sectors

• 3.2.1The regulatory challenges of importing including documentation, duties and tariffs, customs control requirements and exchange rate fluctuations
• 3.2.2 Implications of international sourcing: documentation, duties and tariffs and Incoterms ®
• 3.2.3Payment mechanisms, credit account, bills of exchange and letters of credit
• 3.2.4Customs control and clearance
• 3.2.5Applicable law and jurisdiction

3.3 Identify and apply environmental, social and governance practices that support responsible sourcing

• 3.3.1Application of the CIPS Code of Conduct
• 3.3.2Application of codes of practice supporting environmental, social and governance goals
• 3.3.3Contractual provisions, supplier monitoring and KPIs

3.4 Compare the use of audits and other feedback mechanisms to evaluate environmental, social and governance standards

• 3.4.1The use of audits to evaluate ethical standards
• 3.4.2Encourage dialogue with suppliers to secure improvements

3.5 Contrast processes and practices that the organisation could adopt to meet environmental, social and governance goals

• 3.5.1The triple bottom line – profit, people and planet
• 3.5.2Standards applicable to environmental, social and governance goals
• 3.5.3Reporting frameworks to include environmental, social and governance performance
• 3.5.4Define organisational value for money to include environmental and social outcomes