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C.P.M. Exam Specifications - Module 2: Supply Environment



Institute for Supply Management™ (ISM) Certification Program

Certified Purchasing Manager (C.P.M.) Examination Specifications
Effective January 1, 2001
Final draft Published September, 1999

MODULE 2: SUPPLY ENVIRONMENT

  1. Negotiations
  2. Information Technology
  3. Quality Issues
  4. Internal Relationships
  5. External Relationships

Part A. Negotiations

TASK 201: Prepare for and develop strategies and tactics for negotiations.

Knowledge of:

1) Conditions favoring the use of negotiations

  1. Lack of competition
  2. Price, quality, and service needs
  3. Buying production/service capabilities
  4. High buyer/seller uncertainty
  5. Urgency
  6. Long supplier leadtimes
  7. Necessity for flexible contract type(s)
  8. Lack of firm specifications
  9. Single source strategies

2) Preparations for negotiations

  1. Negotiation objectives

  2. 1.0 Fair and reasonable price
    2.0 Timely performance
    3.0 Meeting the minimum essential needs of the organization
    4.0 Control over how the contract is performed
    5.0 Maximum contractor cooperation
    6.0 Sound relations with contractors
  3. Negotiation site
  4. Team selection
  5. Relevant information (e.g., proposals, learning curves, backgrounds of players)
  6. Analysis of seller's and purchaser's positions

  7. 1.0 Seller's desire for a contract
    2.0 Seller's certainty of getting a contract
    3.0 Amount of time for negotiation
    4.0 Adequacy of cost/price analysis
    5.0 Purchaser's availability of other options
    6.0 Seller's competitive position (sole source or otherwise)
    7.0 Skill and authority level of the negotiator/negotiation team
    8.0 Extent of planning for the negotiation
    9.0 Seller’s financial condition
    10.0 Buyer’s financial condition
  8. Market and product conditions
  9. Development of strategies and tactics
  10. Organization cultural factors
  11. Fall-back alternatives

3) Negotiation philosophies

  1. Win-win/cooperational
  2. Win-lose/adversarial/competitive
  3. Lose-lose/confrontational

TASK 202: Conduct negotiations with potential and/or current suppliers to obtain maximum value.

Knowledge of:

1) Negotiation tactics

2) Special considerations in conducting negotiations

  1. Fact-finding sessions
  2. Best and final offers
  3. Negotiating with sole offeror versus entire competitive range
  4. Negotiating with small and historically underutilized businesses (HUB)
  5. Documentation of negotiations
  6. Negotiations as a consortium or cooperative

Part B. Information Technology

TASK 203: Develop/utilize a computerized purchasing system (e.g., online buying, EDI, Web-based electronic commerce).

and

TASK 204: Develop/implement/maintain a database of specifications, suppliers, products, and/or services.

and

TASK 205: Develop/utilize a computerized inventory and/or capital equipment tracking system.

Knowledge of:

1) Information technology basics

  1. Common computer hardware/software terminology
  2. Standard computer network systems terminology

2) Hardware types and configurations

  1. Personal computers
  2. Minicomputers
  3. Mainframe computers
  4. Computer workstations
  5. Client-server configurations

3) Software types

  1. System software
  2. Application software
  3. Network software
  4. Enterprise software

4) Computer hardware/software uses

  1. Word processing
  2. Desktop publishing
  3. Spreadsheets
  4. Database management
  5. Forecasting/modeling
  6. Graphics/drawing
  7. Electronic mail
  8. Firewall/security
  9. 1.0 Digital signatures

5) Electronic applications in purchasing, materials and supply management

  1. Database management systems
  2. MRP/DRP/ERP
  3. Electronic Data Interchange/electronic commerce
  4. Electronic Funds Transfer
  5. Internet/intranet/extranet
  6. Decision support systems/negotiation support systems
  7. Electronic file transfer (ftp)
  8. Performance measurement (e.g., purchasing, supplier)
  9. Project management
  10. Analytical applications
  11. Transactional uses
  12. Cost data management
  13. Asset management
  14. Maintenance management

6) Software for purchasing and supply management

  1. Off-the-shelf
  2. In-house
  3. Outsourced

7) Hardware/software training

  1. In-house
  2. Outsourced

8) Impact of computer systems

  1. Within the department
  2. Within the organization
  3. External (e.g., suppliers)

Part C. Quality Issues

TASK 206: Resolve quality problems with suppliers and user departments.

Knowledge of:

1) Documentation of corrective action process

2) Root cause analysis

3) Alternative solutions

  1. Return to supplier
  2. Rework documentation
  3. Rework parts and materials
  4. Renegotiation
  5. Disposal
  6. Retraining

4) Corrective action options

TASK 207: Develop measurements for quality improvement and target setting (e.g., "best in class" benchmarks).

Knowledge of:

1) Quality assurance

  1. Definition of quality
  2. Acceptance testing
  3. Certification requirements
  4. Levels of inspection
  5. Quality documentation
  6. Quality system modules

  7. 1.0 ISO 9000 1.1 Quality registration aspects
    1.2 Focus
    1.3 Levels of approval (9001, 9002, 9003)
    2.0 Other systems

2) Total quality management

  1. Definition
  2. Meeting customer needs
  3. Quality tools

  4. 1.0 Team training
    2.0 Benchmarking
    3.0 Kaizen
  5. Statistical tools
  6. 1.0 Pareto Charts
    2.0 CpK
    3.0 Cause-effect diagrams
    4.0 Stack-up tolerances/upper and lower control limits
    5.0 Six Sigma
    6.0 SPC

3) Quality function deployment

  1. Definition

Part D. Internal Relationships

TASK 208: Develop/manage/evaluate relationships with other internal departments.

Knowledge of:

1) Basic functions performed by other key departments in an organization and their relation to purchasing

  1. Top management
  2. Engineering/design
  3. Quality control/quality assurance
  4. Manufacturing/production
  5. Accounting/finance
  6. Marketing/sales
  7. Facilities
  8. Logistics/supply chain
  9. Product/business managers
  10. Management information systems
  11. Legal
  12. Public relations/affairs
  13. Merchandising
  14. Production/service planning
  15. Research and development
  16. Product development
  17. Field service
  18. Maintenance
  19. Other departments

2) Interdepartmental communication

  1. Mechanisms
  2. Role/perception of purchasing within the organization
  3. Establishment of trust and credibility
  4. Early Purchasing Involvement (E.P.I.)
  5. Internal customer surveys

TASK 209: Participate in cross-functional and/or multifunctional teams (e.g., project management, process improvement).

Knowledge of:

1) Purpose of cross-functional teams

2) Types of teams related to purchasing

  1. Cost reduction
  2. Value analysis
  3. Capital equipment
  4. Sourcing
  5. Product development
  6. Budgeting
  7. Supplier development
  8. Information systems
  9. Finance
  10. Cycle-time reduction
  11. Quality improvement
  12. Inventory control
  13. Other

3) Role of purchasing in teams

  1. Support/service/information
  2. Project management
  3. Leadership
  4. Facilitation

4) Advantages/disadvantages of teams

  1. Consensus building
  2. Time considerations
  3. Ownership issues
  4. Managing or introducing change
  5. Groupthink
  6. Synergy

5) Phases of team building

6) Problem solving models

7) Personality profiles

8) Effectiveness measures

   1.0 Individual
   2.0 Team

9) Process improvement models

10) Project management

TASK 210: Recommend/implement changes to the organization's purchasing, supply management, and material usage policies as needed.

Knowledge of:

1) The scope of the procurement process

  1. Purchasing/procurement
  2. Contracting
  3. Materials management
  4. Supply management
  5. Service management
  6. Logistics/supply chain
  7. Licensing
  8. Merchandising/inventory planning
  9. Quality systems
  10. Document control
  11. Risk management
  12. Investment recovery

2) The role of purchasing in organizational strategies

  1. Public sector
  2. Private sector
  3. Not-for-profit
  4. Non-profit

3) Management of the change process ("change management")

4) Legal ramifications

TASK 211: Disseminate information and provide training related to purchasing and supply management policies and procedures.

Knowledge of:

1) The development of training manuals

  1. Responsibility
  2. Relationship to general training manuals
  3. Use as an ongoing reference

2) Training cost, effectiveness, and outcomes measurement

3) "The Learning Organization" concept

4) Training delivery methods

5) Selection of training personnel

Part E. External Relationships

TASK 212: Develop/manage effective relationships with suppliers, utilizing such techniques as supplier partnerships, strategic alliances, supply chain management, and supplier training programs.

Knowledge of:

1) Benefits of good supplier relations

2) Ways of promoting good relations

  1. Top management meetings
  2. Relations between suppliers and customer functions
  3. Timely payment of invoices
  4. Equitable treatment of suppliers
  5. Periodic supplier surveys
  6. Enhanced two-way communication
  7. Supplier training
  8. Encouraging confidentiality

3) Issues in supplier product education and involvement

  1. Advantages
  2. Possible problems
  3. Site visits

4) Issues in reciprocity

  1. Legality
  2. Impact on suppliers and buyers
  3. Domestic versus international

5) Concepts of continuous improvement

  1. Quality
  2. Cost
  3. Design
  4. Service
  5. Cycle time reduction

6) Supplier partnerships/strategic alliances

  1. Rationale
  2. Methods for identifying potential alliances
  3. Forms of alliances
  4. Developing alliances
  5. Maintaining/sustaining alliances
  6. Concluding alliances
  7. Supplier certification issues

7) Reverse marketing

8) Supplier mentorship

9) Early supplier involvement

  1. New product development
  2. Supply chain involvement
  3. Development cycle reduction time
  4. Collocated engineering

10) Supply chain management

  1. Definition
  2. Potential benefits
  3. Procurement cycle reduction (process mapping)
  4. Risk management
  5. Supplier process layout
  6. Role of purchasing
  7. Second-tier purchasing agreements

11) Development of trust

TASK 213: Review product availability and/or pricing information with suppliers.

Knowledge of:

1) Factors which may affect availability and pricing

  1. Market drivers
  2. Economic conditions
  3. Industry capacity
  4. Supplier capacity
  5. Buyer’s share of supplier business
  6. Quotas
  7. Labor status

2) Price model analysis

TASK 214: Conduct interviews with current and prospective supplier sales personnel.

Knowledge of:

1) Typical sales methods

2) Approaches to handling sales methods

3) Typical organization policies for meeting with sales personnel

4) Professional courtesies

TASK 215: Coordinate/review/respond to supplier inquiries, protests, and appeals.

Knowledge of:

1) Procedures for dealing with inquiries and protests

2) Legal requirements

  1. Freedom of Information Act

TASK 216: Develop/implement a small business/disadvantaged supplier development program.

Knowledge of:

1) Sources of information on socially or economically disadvantaged suppliers/historically underutilized businesses

  1. Small Business Administration 1.0 PASS
  2. Minority Business Directories
  3. Minority Business Development Councils
  4. Local minority chambers of commerce
  5. Business fairs

2) Small Business/Small Disadvantaged Business (SB/SDB) requirements

3) Issues in developing programs

  1. Organizational policies
  2. Impediments
  3. Benefits
  4. Assessing program goals
  5. Disparity studies
  6. Customer-driven requirements

TASK 217: Represent the buying organization in meetings with corporations, government agencies, professional associations, media, and other organizations.

Knowledge of:

1) Meeting dynamics

2) Associations

  1. Trade
  2. Professional

3) Issues in the external role and perception of purchasing

4) Other organizations

  1. Group Purchasing Organizations (GPO)

5) Antitrust restrictions

6) Professional decorum

  1. SEC restrictions on information disclosure

7) Feedback to management

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