CIPS Level 6 Professional Diploma cheat sheet

Supply chain surplus = customer value delivered minus total supply chain cost; a strategy is only viable where it grows this surplus relative to competitors.

Postponement (delayed differentiation) pushes product differentiation downstream until demand is known; it reduces forecast error cost but adds holding and process cost upstream.

Bullwhip effect: order variance amplifies upstream; primary causes are demand signal distortion, order batching, price fluctuation, rationing and shortage gaming.

Inventory turns = cost of goods sold / average inventory value; days of supply = 365 / inventory turns.

Little's Law: average inventory = throughput rate × average flow time (I = R × T); applies to pipelines, work-in-process and stock.

Cash-to-cash cycle = days inventory outstanding + days sales outstanding − days payables outstanding; shortening it releases working capital.

Push-pull boundary: demand-driven (pull) stages are triggered by actual orders; forecast-driven (push) stages are triggered by planning data and carry forecast risk.

Safety stock rises with the square root of lead time and with the service-level z-factor: SS = z × σ_dLT; doubling service level from 95% to 99% raises z from 1.65 to 2.33.

Total cost of ownership includes acquisition, logistics, quality, inventory carrying, downtime and end-of-life costs; it is the correct comparator between supply options, not purchase price.

Kraljic portfolio matrix axes: profit impact (spend, value added) and supply risk (availability, substitutability, entry barriers); quadrants are leverage, strategic, bottleneck and non-critical.

Contract formation requires offer, acceptance, consideration and intention to create legal relations; invitation to tender is normally an invitation to treat, not an offer.

Battle of the forms: under common law the last counter-offer accepted before performance forms the contract; CISG and many civil codes resolve it differently.

Liquidated damages are enforceable only if a genuine pre-estimate of loss (or, post-Cavendish, not a penalty); unenforceable penalties leave the innocent party to prove actual loss.

Frustration discharges a contract on an unforeseen event making performance impossible or radically different; it does not apply where the risk was expressly allocated.

Force majeure is a contractual clause, not a legal doctrine; relief depends on the clause's wording, notice requirements and mitigation duties.

Remedies hierarchy: cure/rework, price reduction, replacement, damages, then termination; termination for breach requires a repudiatory breach or an express termination right.

Indemnity clauses shift specified loss to one party regardless of fault; liability caps and exclusions must satisfy reasonableness tests where the Unfair Contract Terms regime applies.

Key contract management metrics: milestone compliance, payment against acceptance, variation count and value, claims and disputes, and supplier performance against KPIs.

Category management cycle: profile (spend, demand, market), analyse (supply market, internal needs), develop strategy, implement, then manage performance and review.

Spend analysis tools: Pareto (80/20) identifies the small supplier base carrying most spend; tail spend is typically 20% of value but 80% of transactions.

Supplier preferencing matrix axes are attractiveness of the account (value, growth) and spend with the supplier; quadrants are development, core, exploit and nuisance.

Sourcing options spectrum: make in-house, buy direct, buy through distributor, outsourced managed service; each trades control against cost and risk.

e-Sourcing tools: e-RFx for requirements gathering, reverse auction for price competition among qualified suppliers, e-tendering for sealed competitive bids.

Award criteria must be stated in the tender documents; lowest price and most economically advantageous tender (MEAT) are the two standard bases.

Should-cost modelling builds cost from materials, labour, overhead and margin rather than accepting quoted price; it supports negotiation and cost breakdown analysis.

Supplier segmentation for development uses capability and strategic importance, not only current spend; low-spend critical suppliers can be bottleneck items.

Situational leadership (Hersey-Blanchard) matches style to follower maturity: telling, selling, participating, delegating as competence and commitment rise.

Tuckman team stages: forming, storming, norming, performing, adjourning; conflict is expected at storming and is not a sign of failure.

Transformational leadership uses idealised influence, inspirational motivation, intellectual stimulation and individualised consideration; transactional leadership uses contingent reward and management by exception.

Lewin's change model: unfreeze, change, refreeze; Kotter's eight steps extend it with urgency, coalition, vision, short-term wins and anchoring.

Conflict modes (Thomas-Kilmann): competing, collaborating, compromising, avoiding, accommodating; collaborating suits high-stakes cross-functional category decisions.

Stakeholder analysis maps power against interest; high power/high interest stakeholders need close management, high power/low interest need keeping satisfied.

Negotiation: BATNA is the best alternative to a negotiated agreement; the ZOPA is the zone between each party's reservation point, and the bargaining zone shrinks as BATNAs improve.

Motivation theories: Maslow's hierarchy, Herzberg's hygiene factors versus motivators, and Vroom's expectancy theory (motivation = expectancy × instrumentality × valence).

CIPS Global Standard competencies group into three areas: tactical (procurement operations), managerial and professional (category, contract, supplier management), and strategic (strategy, policy, governance).

Ethical procurement pillars include avoiding conflicts of interest, confidentiality of tender information, fair treatment of bidders, and accurate representation of capability.

Conflict of interest: declare, record and withdraw; a declared conflict does not automatically disqualify a person, but an undeclared one invalidates the process.

Tender integrity controls: sealed bids, common closing date and time, single receipt point, equal information to all bidders, and documented evaluation against published criteria.

Continuous professional development records should state what was learned and how it was applied, not only hours attended.

Knowledge management distinguishes tacit knowledge (experience, judgement) from explicit knowledge (documents, procedures); tacit knowledge transfers through mentoring and communities of practice.

Procurement documentation trail: requisition, business case, sourcing plan, evaluation record, award recommendation, contract, and performance review; each must be retrievable for audit.

Governance principles: accountability, transparency, probity, stewardship and segregation of duties; the same person should not raise, approve and pay an order.

Three lines model: operational management owns risk, risk/compliance functions monitor, internal audit provides independent assurance to the governing body.

Fraud triangle: pressure (incentive), opportunity and rationalisation; controls target opportunity primarily through segregation and approval limits.

Bribery risk controls: gifts and hospitality registers with value thresholds, due diligence on intermediaries, no facilitation payments, and confidential whistleblowing channels.

Modern slavery due diligence follows a risk-based approach: map the supply chain, assess risk by country and sector, audit high-risk tiers, and report publicly.

Sustainability frameworks: environmental (carbon, circularity), social (labour rights, health and safety) and economic (local value, payment practices); ESG reporting is increasingly mandatory.

Codes of ethics are effective only when backed by tone at the top, training, sanctions and a speak-up culture; a published code alone is not a control.

Data protection in procurement: personal data in supplier records must have a lawful basis, be minimised, retained only as long as needed and protected in tender portals.