3.1 - Explain aspects of corporate governance impacting the procurement or supply chain function

Question 1

Corporate governance

Answer 1

The mechanisms, procedures and processes that are used to control and direct an organisation

Question 2

name 5 elements of corporate governance and how they link

Answer 2

1. Vision (policies and procedures)
2. Mission (management, stakeholder & board accountability)
3. Strategy (performance management)
4. Objectives (stakeholder protection)
5. Goals (Values & ethics)

Question 3

Conflict of interest

Answer 3

A situation where someone within an organisation has opposing loyalties

Question 4

Name 6 examples of conflict of interest

Answer 4

1. A buyer having a close friend or family member as a procurement manager
2. A buyer having a relationship with a subordinate or supplier
3. A buyer awarding a contract to a family member
4. Creating a rival organisation to the one in which a person is employed
5. Accepting payment from suppliers in exchange for information
6. Accepting corporate hospitality or gifts in return for awarding a contract

Question 5

Name the 2 ways in which conflicts of interest present themselves

Answer 5

1. An actual conflict of interest occurs when a procurement professional has to make a decision that may affect them personally
2. A perceived conflict of interest occurs when a procurement professional has private interests that could affect a decision-making process

Question 6

Whats the 4D conflict of interest model

Answer 6

1. Disclose
2. Distance
3. Delegate
4. Disassociate

Question 7

Name 4 things policies may be based on

Answer 7

1. Organisational objectives
2. Legislation
3. Regulation
4. Standards

Question 8

Name 10 policies and procedures

Answer 8

1. Ensure conformance
2. Ensure compliance
3. Protect from coercion, bribery or fraud
4. Organisational protection
5. Continuity of supply
6. Promote efficiency
7. Promote ethical behaviour
8. Provide references
9. Assist audit processes
10. Aid with legal cases

Question 9

organisational accountability

Answer 9

All members of the business working together to achieve the objectives

Question 10

Name 5 levels of competence

Answer 10

1. Tactical
2. Operational
3. Managerial
4. Professional
5. Advanced professional

Question 11

Name 4 ways accountability can be enhanced

Answer 11

1. Defining clear roles and promoting team leadership
2. Promoting a sense of ownership for team results
3. Providing freedom, control, support and ownership
4. Not focusing on the negatives and embracing the positives

Question 12

Name 7 things procurement relates to within procurement

Answer 12

1. Conforming to the CIPS Code of conduct
2. Compliance with any ethical policies
3. Conducting supplier appraisals fairly and transparently
4. Awarding contracts to the most suitable and cost-effective supplier
5. Managing spend to keep within budget constrainst
6. Ensuring specifications are representative of the need
7. Addressing or reporting on potential areas of concerns

Question 13

Whats the formula for variance

Answer 13

Variance = actual spend - budget

Question 14

Name 5 things buyers may need to do from the reporting of variances in the budget

Answer 14

1. Request a budget increase
2. Reduce costs
3. Reduce order volumes
4. Change suppliers
5. Cancel orders

Question 15

Name 8 elements which give an organisation a view on how the department is performaning

Answer 15

1. Supplier delivery information
2. Product quality information
3. Percentages of defects/reworks
4. New suppliers
5. Contracts up for review
6. Cost reductions
7. Price increases
8. Changes in legislation or regulations

Question 16

Name 6 ethics within procurement

Answer 16

1. Ethical practises
2. Rules applying to ethical behaviour and conduct
3. Ethics in rules and regulations
4. Moral principles
5. Ethics within conduct of research
6. Ethical values

Question 17

Name the 5 main elements of a code of ethics

Answer 17

1. Values
2. Principles
3. Personal responsibility
4. Compliance
5. Reporting

Question 18

Whistle blowing

Answer 18

When an individual reports activity or information which they believe to be illegal, unethical or not in accordance with the organisations policies and procedures

Question 19

Name 6 benefits of having a code of ethics within a procurement function

Answer 19

1. Framework
2. reputation
3. Protection
4. Focus
5. Involvement
6. Diversity

Question 20

Name 4 procurement challenges that a code of ethics will guide practitioners through

Answer 20

1. Human rights issues
2. Bribery and coercion
3. Movements such as fair trade
4. Environmental issues

Question 21

Name the 4 key principles of the CIPS Code of ethics

Answer 21

1. Understanding and commitment
2. Ethical practise
3. Professionalism
4. Accountability

Question 22

Name the 3 parties involved in the tripartite structure of the ILO

Answer 22

1. Employees
2. Employers
3. Governments

Question 23

Whats the aim of the ILO

Answer 23

Take all opinions into account and reach a solution that provides fair and acceptable conditions for all parties involved

Question 24

Name the 8 core conventions of the ILO

Answer 24

1. Freedom of association and protection of the right to organise
2. Right to organise and collective bargaining
3. Forced labour
4. Abolition of forced labour
5. Minimum age
6. Worst forms of child labour
7. Equal remuneration
8. Discrimination (Employment and occupation)

Question 25

Remuneration

Answer 25

The amount of payment and benefits a person gets in return for work

Question 26

Whats the purpose of the CIPS Code of conduct

Answer 26

To outline the actions and behaviours which must be followed by CIPS members

Question 27

Name the 5 sections of the CIPS code of conduct

Answer 27

1. Enhance and protect the standing of the profession 2. Maintain the highest standard of integrity in all business relationships 3. Promote the eradication of unethical business practises 4. Enhance the proficiency and stature of the profession 5. Ensure full compliance with laws and regulations by