In what ways does CIPS assess understanding of the Five Rights?

In what ways does CIPS assess understanding of the Five Rights?

The “Five Rights” have become one of the primary goals for procurement professionals, meaning that every purchase should meet five key requirements: the right price, the right quantity, the right quality, at the right time, and in the right place. In fact, the Five Rights are frequently tested in the CIPS exams, especially in the L4M1 module. A typical exam question might ask about the benefits of obtaining the Five Rights. To achieve a high mark on this type of question, you need to demonstrate four key points:

  • The objectives of each right
  • The benefits of achieving each right
  • Risks of not achieving each right
  • How to achieve five rights

Right quality

A purchase achieves the right quality when the items meet the needs and expectation of the buyers. There are several key dimensions of product quality, and the right quality is achieved when the purchased items meet requirements across these dimensions, including:

  • Performance: Does the product do what it is supposed to do?
  • Reliability: Does the product function consistently over time?
  • Durability: How long does the product last under normal usage?
  • Conformance: Does the product meet the requirements and standards in the specification?
  • Features: What characteristics does the product offer?
  • Aesthetics: How does the product look? Does its appreance meet buyer’s expectation?
  • Serviceability: How easy is it to maintain, repair or get support?

Achieving the right quality means delivering zero-defect products, ensuring output quality, facilitating smooth business operations, and avoiding wasted time on rework. To gain the right quality, buyers need to work closely with other stakeholders to:

  • Challenge the specification: Buyers should assess the requirements in the specification, then select those that contribue true values to the buying organization.
  • Collaborate with internal departments to identify the actual needs, define technical requirements, and prepare an appropriate budget for the purchase.
  • Conduct value analysis and value engineering: These analyses aim to improve the fuctionality of a product while maintaining or reducing the costs of delivering those functions. To carry out value analysis or value engineering, a cross-functional team should be formed to break down functions of the product, identify the cost of delivering each function, and look up ways to achieve the same or better functionality at a lower cost.
  • Conduct early supplier involvement: Companies can gain significant saving and optimize their needs by involving suppliers in the early stage of a purchasing project. Suppliers may contribute valuble insights to the development of specifications, and help optimize product features while maintaining buyer satisfaction.
  • Supplier performance management and supplier development: Some suppliers feel complacent after being awarded a contract, leading to decline in quality and failure to meet the contractual timelines. Therefore, buyers must actively manage suppliers’ performance post-contract. Both parties should agree on KPIs and SLA to ensure mutual accountability. Supplier development is a strategic initiative where a company works closely with its suppliers to improve their performance, capabilities and alignment with business goals.
  • Standardisation: Buyers may include standards into their specifications when communicating with suppliers, ensuring clear understanding of requirements and reducing the time needed for for specification development.

Right quantity

A purchase achieves the right quantity when suppliers deliver the exact amount requested. Accurate ordering facilitates smooth production, helps meet customer’s orders within a required timeframe, and saves time and effort by avoiding rework. Delivering more or less than the ordered quantity can lead to production disruptions or exccessive inventory. To gain the right quantity, buyers need to:

  • forecast the demand: The buying company can use historial data or some forecasting tools to predict future sales orders and prepare the necessary inputs accordingly.
  • use electronic management systems such as P2P, MRP or ERP to manage and integrate data across the company. These systems promote smooth communication between departments, enabling the procurement department to identify exact quantity required and prepare well for supplier negotiation.
  • use track and record inventory tools such as barcode or RFID: These tools help manage warehouse operation effectively by identifying the exact inventory quanity on hand and timely handling exccessive inventories to avoid obsolete or redundant stocks.
  • adopt management techniques such as fixed order quantity, periodic review, consignment stock or Just in Time to accurately determine order quantities.
  • manage contract effectively: In various contract, suppliers are required to deliver orders in multiple shipments. Buyers need to follow the contract and work closely with suppliers to endure accurate delivery each time.

For the right price, right time, and right place, you can continue analyzing according to the structure mentioned above. In our revision classes, we help students present their answers comprehensively and accurately. If you’re interested, feel free to contact us via WhatsApp at +84 387 301 575.

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One thought on “In what ways does CIPS assess understanding of the Five Rights?

  1. This is so insightful and relevant to the exam preparation. I am excited and look forward to engaging with you on Saturday.Thank you

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