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Foundation Stage Syllabus
Business Analysis in Purchasing & Supply
AIM
To provide an introduction to
financial analysis and statistical and accounting techniques for use by the
purchasing professional.
RATIONALE
The importance of financial
evaluation and statistical analysis is increasingly important in organisations,
especially in the service and e-commerce environments. The purchasing
professional is expected to acquire the financial expertise to evaluate the
performance of the whole organisation as well as the statistical expertise to
measure and evaluate the effectiveness of the purchasing function.
1. Sources of Finance for the
Private sector.
Public sector.
In the assessment the candidate may
be required to:
compare the available sources of finance (e.g. shares, loans, factoring,
private-public partnerships)
outline the advantages and disadvantages of the different sources of finance.
2. Analysing suppliers' data as part
of the pre-purchase order/contract award stage
Trading Profit and Loss account.
Balance Sheet.
Budget and Cash Flows.
Application of ratio analysis to supplier financial data.
Auditing of supplier performance.
In the assessment the candidate may
be required to:
identify, analyse and compare financial data for purchasing decisions (e.g. data
obtained by purchasing research, supplier's published accounts, MIS, and
production data)
evaluate company accounts obtained from suppliers and/or purchase research
sources
prepare a budget/cash flow for planning use by the purchaser, from obtained
supplier data, to verify that the supplier's financial credibility and proposed
supply performance, is viable
identify the role of ICT in financial analysis (e.g. the use of spreadsheets,
financial software for data analysis and the internet for company research and
performance data).
3. Prices and Costs - the application
of internal and external costs analysis for purchasing projects and orders and
contracts.
Elements of costs.
Fixed and variable costs.
Direct, indirect and standard costs.
Process costs.
Costs and margins.
Break-even analysis.
In the assessment the candidate may
be required to:
differentiate between elements of prices and costs
explain the purpose of differentiating between elements of prices and costs
identify the main issues in controlling process costs
discuss the purpose and practice of break-even analysis
identify the ways in which ICT can assist in financial analysis. (weighting 20%)
4. Capital Buying
Capital buys analysis - determination of requirements for a capital purchase,
including roles of all departments/functions in the decision process, and the
links to purchasing.
Total life cycle costs analysis.
General investment appraisal techniques.
In the assessment the candidate may
be required to:
describe the capital buying process and project appraisal
analyse and make recommendations for a specific capital buy case
evaluate different forms of investment appraisal
identify the role of ICT in the capital buying and investment process using
modelling and simulation techniques including the use of IT packages and
available software.
5. Statistical Methods for Purchasing
Analysis
(a)
Descriptive statistics.
Diagrams
Averages
Measures of dispersion
Index numbers.
(b)
Inferential statistics.
probability; conditional probability, sum rule and product rule
expected value
Normal, Poisson and Binomial distribution
(c)
Forecasting methods.
time series: moving averages, trends, seasonal variation
introduction to regression including the Learning curve
Statistical methods for quality control.
In the assessment the candidate may
be required to:
explain the role of statistics in the work of the purchasing professional
interpret basic statistical data
apply statistical analysis to purchasing and supply issues
describe the ways in which ICT can be used in statistical forecasting, diagram
production and inference
to plot a quality control curve and recognise how warning limits are derived.
CIPS - MCG Centre Number - 005031578
