Advanced Contract and Financial Management (L5M4)


Module purpose
On completion of this module, learners will be able to develop measures to ensure and improve contract performance as they assess the concept and use of strategic sourcing and also consider financial aspects that may impact procurement and supply activity.

Module aim(s)
In any organisation, a significant element of the procurement and supply function is based around the contracting process. Those involved in the formulation and management of contracts with external suppliers must therefore have a clear understanding of the strategic nature of contractual performance measures in procurement and supply. Financial management refers to the efficient and effective management of money (funds) to accomplish organisational objectives. This module is designed for those working in the procurement and supply field, with responsibility for contracting elements of the procurement and supply function who must also have a strategic awareness of the impact of financial aspects of their discipline.

Next steps
Joining a CIPS qualification programme means you will join the largest Institute in the world for those working in procurement and supply. You can join as a member online today. Once you've become a CIPS member you can book your examinations online.

    Learning outcomes

    1.0  Understand and apply tools and techniques that can be used to measure and develop contract performance in procurement and supply

    1.1 Assess the use of Key Performance Indicators (KPIs)

    • Cost
    • Quality
    • Delivery
    • Safety

    1.2 Evaluate methods of measuring and improving supply chain performance

    • Collate and analyse data
    • Measure supplier innovation against agreed matrix
    • Measure time to market against agreed timescales
    • Create e-systems integration across the organisation and its supplier network
    • Cost and benefits of investments measurement
    • Ensure a balance between qualitative and quantitative measures of performance
    • Measure return on investment

    1.3 Examine approaches available for supplier development

    • Knowledge and technology transfer
    • Collaborative product/service development
    • Continuous improvement reviews and strategies
    • Supplier capability assessment 
    • Identify opportunities to use technology

    1.4 Assess innovative measures to improve the supply chain

    • Cross-functional working
    • Simultaneous engineering
    • Early supplier involvement
    • Supplier forums and associations

    2.0  Understand and apply the concept of strategic sourcing

    2.1  Assess the market factors that influence strategic sourcing

    • Industry dynamics
    • Pricing behaviour
    • Financial data on suppliers
    • Market demand and supply factors
    • Business motivations, cost margins and working practices of key suppliers
    • Internal stakeholder involvement

    2.2 Examine the assessment of sourcing options for strategic supplies of products and/or services

    • Contract type and duration
    • Competitive vs. non-competitive sourcing
    • Number of suppliers and vetting strategies
    • The use of e-sourcing
    • Competition
    • Direct negotiation
    • Joint proposition improvement

    2.3 Analyse a strategic assessment plan for a key supplier using modelling and analytical techniques

    • Capacity and capability
    • Planning
    • Quality control systems
    • Security
    • Technical expertise
    • Reputation and time established
    • Investment plans
    • Trading with competitors
    • Financial reports
    • Analysing potential sales
    • Future expansion opportunities – partnership potential

    3.0  Understand and apply financial techniques that affect supply chains

    3.1  Analyse how costs and finance can impact on supply chains

    • The financial objectives of different organisations (e.g. value for money, maximising shareholder wealth and providing a surplus)
    • The costs of materials, labour and overheads
    • Funding working capital and credit insurance
    • Project funding
    • Medium and long term financing options
    • Corporate financing decisions in investment, finance and dividends

    3.2 Critically assess methods for managing the volatility of currencies in supply chains

    • Fixed and floating exchange rates
    • Demand and supply factors in foreign exchange and the reasons for exchange rate volatility
    • Spot, forward and derivative instruments in foreign exchange
    • Services provided by the banking sector in foreign exchange

    3.3 Analyse methods for managing the volatility of commodities in supply chains

    • Demand and supply factors in commodities
    • The differentiation of commodities
    • Soft and hard commodity markets
    • Speculation in commodity markets
    • The use of spot, forward, futures and hedging in the buying and selling of commodities
    • The use of a Contract for Difference (CFD) in the buying and selling of commodities

    4.0  Analyse and apply financial and performance measures that can affect the supply chain

    4.1  Assess financial measures that can be applied to measuring the performance of the supply chain

    • The measurement of costs, timescales, processing, quality and satisfaction
    • Financial measures such as profitability, return on investment, sales growth, cash flow
    • The use of balanced scorecard methodologies

    4.2 Examine the impact of stakeholder feedback on the supply chain strategy

    • Articulating the supply chain strategy
    • Determining measurable outcomes of success
    • Devising metrics of performance including feedback from 3rd parties and suppliers, and other stakeholders
    • Reporting structures and processes

    4.3 Analyse approaches to benchmarking that can be applied to measuring the performance of the supply chain

    • The use of benchmarking in supply chains
    • Comparisons of business unit, competitors or other industry players
    • Gap analysis and performance improvement

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    Choose three ELECTIVE module to make up the final 18 required credits.

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