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1 CIPS Exam Report for Learner Community: Qualification: Unit: Exam series: Advanced diploma in procurement and supply AD2 - Managing risks in supply chains July, 2013 Exam Series INFORMATION FOR CANDIDATES The Principal Marker s report is written in order to provide the learner community with feedback relating to the examination. It is designed as a tool for candidates - both those who have sat the examination and those who wish to use as part of their revision for future examinations. Candidates are advised to refer to the Examination Techniques Guide on the CIPS website as well as this Principal Marker s report. The Principal Marker s report aims to provide the following information: An indication of how to approach the examination question An indication of the points the answer should include An indication of candidate performance for the examination question Each question has a syllabus reference which highlights the learning objectives of the syllabus unit content that the question is testing. The unit content guides are available to download at the following link: ADDITIONAL SOURCES OF INFORMATION The Supply Management magazine is a useful source of information and candidates are advised to include it in their reading during their study. Please see the following link to the Supply Management website: JULY2013 (AD2 Managing Risks in Supply Chains) 1/6

2 Question 1 - Learning Outcome 1 (LO 1.3) Analyse FIVE operational risks for the supermarkets as a consequence of horse meat entering their supply chains. (25 marks) This was a single mandatory question worth 25 Marks in total which sought to test candidate knowledge and understanding of the syllabus areas with regard to analysing five different operational risks within the context of the case study. Syllabus LO reference 1.3 refers. Candidates were expected to analyse the operational risks to the supermarkets showing breadth of reflection. There was a degree of flexibility afforded to candidates in terms of choice because operational risk is a very broad category. Typical operational risks for the supermarkets being : Contract failure risk, Financial risk, Legal risks / Fines, Quality failure risks, Security of Supply risks, Outsourcing / supply chain relationship risk, Reputational risk / Public Relations risk / Branding, Contractual risks across the supply chain etc. This is not exhaustive. It was permissible for candidates to provide examples of operational risks without necessarily categorising them (e.g. the risk of being sued (financial risk). Candidates were expected to build on their analysis by articulating information on the risks likely effect and impact. Exam Question summary Candidates generally answered this question well with most managing to achieve a pass grade. Stronger answers tended to include a short introduction and then building on that with 5 separate paragraphs for each of the operational risks - examples being those described above. There were some excellent answers which very effectively articulated information on the risks likely effect and impact. Notwithstanding that the content was generally good, it was noticed that a number of candidates copied out various sentences straight from the case study. There were also instances where candidates described and explained risks without either explicitly naming them or applying them to the case study. JULY2013 (AD2 Managing Risks in Supply Chains) 2/6

3 Question 2 - Learning Outcome 2 (LO 2.1) The horsemeat scandal now poses supermarket retailers with a significant task of reviewing their risk management systems. This will require effective project management. Discuss FIVE key principles or success factors that the supermarkets should consider for effective project management of this significant task. (25 marks) This was a single mandatory question worth 25 Marks in total which sought to test candidate knowledge and understanding of the syllabus areas with regard to discussing key principles or success factors that should be considered with regard to effective project management in the context of the case study. Syllabus LO reference 2.1 refers. Candidates were expected to discuss any five key principles / success factors - examples success factors being: Clearly defined goals, Clearly defined goals, Clearly defined goals, Competent project team members, Competent project team members, Competent project team members, Good communication channels, Good communication channels, Feedback capabilities, Trouble-shooting mechanisms, Project staff continuity. Example key principles being: Focus on dimensions of success, Planning, Management transmitting a sense of urgency, Using a project lifecycle, Detailed communication, Evolving deliverables, Sign off / Approvals from sponsors, Documented business need, Fight for the time to do things right, Match responsibility with authority, Involve sponsors and stakeholders, Sell and resell the project, Acquire the best people possible, Top management must actively set priorities. Candidate answers were also expected to articulate a link to the task of new risk management systems. Candidates are afforded a degree of flexibility in that that they can relate their answers to any of the components of the way animal meat products are produced from inception, through to the final stage of sale in the supermarkets. In effect the management a PROJECT across all stages of the supply chain and the different types of organisation across that chain. Stronger answers support principles or success factors they discuss with relevant linkage to the case study material. Exam Question summary Whilst most candidates managed to obtain a pass - many were marginal - either regurgitating key principles from the syllabus without reference to case study or just focussing on the case study without linking to key principles. More marks would have been achieved by many candidates had they managed to successfully link the two with adequate explanation and analysis. Question 3 - Learning Outcome 3 (LO 3.4) JULY2013 (AD2 Managing Risks in Supply Chains) 3/6

4 Propose a business continuity plan that might be used to manage ONE of the operational risks identified in your answer to Question 1. (25 marks) This was a single mandatory question worth 25 Marks in total which sought to test candidate ability to propose a business continuity plan which will help supermarkets manage operational risks in a complex ever growing environment of tier 2 and 3 meat suppliers. Syllabus LO reference 3.4 refers. Candidates were expected to propose a business continuity plan which details the component parts which will help supermarkets manage operational risks in a complex ever growing environment of tier 2 and 3 meat suppliers. Candidate answers should be anchored to one of the operational risks identified in their answer to Question 1 with clarity on how plan elements will help successfully overcome those risks - all within the context of the case study. Ideally candidates were expected to propose a plan showing a stepped process covering: Business risk assessment & business impact planning, Plan development, Document, Test, Maintain etc. For example, to deal with disruption to supply causes by suspension or termination of the contracts of those companies illegally supplying horse meat the plan might include: back up sourcing of alternative meat suppliers or manufacturers, Agile and resilient supply chain management, robust risk management processes, Back up storage of all key data, Public relations response, Contingency communications across the supply chain, Ensure key resource lines remain intact, Managing all internal and external relationship / interfaces, Health and safety issues. Better answers will be structured appropriately and applied to the case study situation. Exam Question Summary It was noted that some candidates did not crucially to tie their answers back to a risk from Q1 and instead opted for generic risks such as a fire etc. Additionally, there were instances where some candidates either went down the path of too much theory and too little case study application or vice-versa. Poorer answers tended to consist of a list of short bullet points re-producing content from both Q1 and Q2. In the main however this question was answered well by candidates. Indeed, they were afforded a significant degree of flexibility in that they could relate their answers to any of the components of the way animal meat products are produced from inception through to the final stage of sale in the supermarkets. This is in effect the management of a project across all stages of the supply chain with different types of organisation across that chain. Stronger answers tended to develop a plan or stepped process or model covering steps such as: business risk assessment, impact planning, and plan development, documenting, testing and maintaining. JULY2013 (AD2 Managing Risks in Supply Chains) 4/6

5 Question 4 - Learning Outcome 4 (LO 4.2 both parts) The case study indicates that there is a massive failure of supermarket retailers to monitor and mitigate risks with their meat suppliers. One mechanism that might help is the use of a risk register. Q4a) Explain the main sections that would be included in a risk register. Q4b) Discuss how the supermarkets might engage a range of key stakeholders in undertaking risk assessments. (9 marks) (16 marks) This was a two part question worth 9 marks and 16 marks respectively which sought to test candidate knowledge and understanding or risk registers and mechanisms or techniques for engaging stakeholders - all within the confines of the case study. Syllabus LO reference 4.2 refers. For part a) Candidates were expected to articulate the likely content of a risk register template. For example: Unique reference for the risk, Description and nature of the risk, The date on which the risk first identified, The Risk owner, Probability of event occurring, Impact of the risk event, Identified possible responses, Risk mitigation actions preferred or chosen, Updates data on the current status of the risk. Other aspects to the design of the risk register may also be discussed, there is no single prescriptive format, the items detailed above are the main generic components. Candidates were also expected to give some explanation and not merely list the elements of the risk register template For part b) Candidates were expected to identify and discuss a range of key stakeholders that would be involved in risk assessment. Examples might include but not be limited to: Meat suppliers, Meat processors, Farmers, Customers, Audit and inspection agencies, Central government, Internal staff, Supply chain specialists at various points in the supply chain, Directors and Managers etc. Candidates were also expected to build on this by discussing suitable approaches and techniques for the engagement of the above stakeholders. This will include a range of communication and engagement methods including: Formal meetings, Briefings, Legislation, KPIs, SLAs, Research activities such as focus groups, Audit and inspection visits and engagement, Formal and informal consultation, Formal notices of compliance etc. Stronger answers will link the approaches to the appropriate stakeholder. Exam Question Summary For part a) Overall most candidates managed to obtain a pass for this question, albeit that answers were very mixed, as JULY2013 (AD2 Managing Risks in Supply Chains) 5/6

6 many candidates on part a) merely offered bullet points and did not adequately explain them for full credit. Some poorer candidates merely wrote one small paragraph containing 3 or 4 elements of a risk register suggesting they thought this was sufficient for full marks. Stronger answers for part a) therefore provided explanation over and above a list of the main elements of a risk register. Overall most candidates managed to obtain a pass for this question. For Part b) Again, answers to this question were varied in quality. Stronger answers tended to build on an initial identification of a range of internal and external stakeholder by linking the approaches to engagement to specific stakeholder types with commentary on possible effectiveness of the approach. Some candidate talking about internal and external stakeholders and then theory dumped Mendelow onto their paper without any identification of actual stakeholders from the case study or explaining the various engagement techniques and tools that should be used for each. Some merely explained with a diagram all the dynamics of the matrix and poorer candidates simply described and defined risk assessments and starting rewriting material from the other questions. JULY2013 (AD2 Managing Risks in Supply Chains) 6/6

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