CIPS Exam Report for Learner Community:

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Professional diploma in procurement and supply

PD3 - Strategic supply chain management
May15

Question 1 Learning Outcome 1.3

Analyse the STEEPLE factors which might impact on the proppant supply chains.

(25 marks)
STEEPLE factors are macro-environmental threats or opportunities that impact an organisation or its supply
chain. Candidates were expected to demonstrate an understanding and application of the STEEPLE factors to
the proppant supply chain. Some examples are given below.
Socio-cultural: increase in employment opportunities; lack of available skills; consumer demand; community
resistance; national cultural differences. Technological: proppant design and production; fracking methods;
exploration technology; supply chain integration technology. Economic: supply and demand factors; general
economic conditions; rates of inflation, interest and taxation; international sourcing issues. Environmental:
public awareness; environmental standards; degradation caused by the fracking operation and the associated
transportation operations. Political: government policy; support and encouragement; incentives and
embargoes. Legal: health and safety; employment rights; environmental legislation. Ethical: sustainable
practices; global supply chain issues; reputational risk.
This question was generally well-answered. Most candidates were able to identify STEEPLE factors relating to
the case, but did not always demonstrate their impact on the supply chain. Covering all seven STEEPLE
categories within the time available was a challenge. Some candidates did not help themselves in this respect
by including long introductions to fracking and the fracking supply chain which did not attract any marks. Time
management was another problem. A number of candidates spent too long on this question, which affected
their marks in relation to other questions. Others identified many factors under the initial categories but
skimped on the later ones, whereas a balanced approach was required. This demonstrates the importance of
focusing on the question requirements and undertaking strict time management.
Strong answers focused on the question requirements, discussed a balanced range of factors across all the
STEEPLE categories, and clearly demonstrated the impact of the factors. Weaker answers were poorly
focused, unbalanced, and failed to demonstrate the impact of the STEEPLE factors on the proppant supply
chain.

MAY2015_PD3_EXAM_REPORT_LEARNER_COMMUNITY_FV

1/4

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Question 2 Learning Outcome 2.3

Assess FIVE challenges for transportation and physical logistics management in the
proppant supply chains.

(25 marks)

There are a number of key issues that need to be considered within the proppant supply chain. The materials
to be transported are likely to have a low cost/weight ratio and the operations are in undeveloped areas with
harsh environmental conditions and remote locations. Transport and logistics therefore accounts for 60% of
total supply chain costs.
Operational factors that may be considered are: the departure and destination points for materials; the
length of journey involved; the nature of the goods; the timescales and urgency of customer expectations; the
environmental impact of the transport operation; availability of standardised container options; loading and
unloading facilities; availability of transport networks to the destinations required; intermodal transport
options; and special-purpose versus standard vehicles.
Strategic challenges include: long term demand planning; coordination of inbound and outbound logistics;
network planning; fleet ownership; size and location of storage facilities; the optimal mix of transport modes
(road/rail/sea); in-house versus third-party logistics provision; and international challenges such as variations
in transport law, currency differences, and customs requirements.
In addition to the transport challenges, there are also issues related to storage and availability of goods and
materials. These include: the location of stockyards; the security of the goods within them; the management
of the goods in terms of procurement and distribution; and the special environmental storage requirements
for some materials.
A significant number of candidates covered four challenges rather than five, thus losing out on a potential five
marks. Other answers contained one long discussion with no discernible division into specific challenges. This
demonstrates the importance of explicitly addressing the question requirements. When five challenges were
covered, there was often little differentiation between them and a lot of overlap. This emphasises the
importance of answer-planning. Discussion was not always focused on transport and logistics issues and there
seemed to be a lack of preparation in relation to this area of the syllabus. A number of candidates discussed
the transportation and logistics of water as well as proppant. Since the two supply chains are inextricably
linked, due credit was given for this.
Strong answers explicitly covered five challenges, focusing clearly on transportation and logistics issues.
Weaker answers contained poorly differentiated challenges, suffered from repetition, and did not address the
question specifics.

MAY2015_PD3_EXAM_REPORT_LEARNER_COMMUNITY_FV

2/4

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Question 3 Learning Outcome 3.3

Explain a range of methods which might be used to measure performance in the proppant
supply chains in order to improve their efficiency and effectiveness.
Use examples from the case study to support your answer.

(25 marks)

There are a number of methods which might be used to measure performance in the proppant supply chain.
The most popular methods discussed by candidates were: the SCOR model; joint performance appraisal;
benchmarking; key performance indicators; the performance pyramid; the balanced score card approach;
360-degree feedback models; and performance dashboards. Other valid models and tools were also
acceptable.
Some candidates misunderstood this question and answered in relation to performance measures rather than
performance methods. Some credit was given to these answers in relation to KPI methodology, but they did
not constitute a complete answer. A lot of preparation was evident in terms of long lists of KPIs relating to the
case, presumably in response to the November 2014 paper which included a question specifically on this
subject. However, the May 2015 question required a broader discussion of performance management. This
demonstrates the importance of answering the set question rather than one that was anticipated.
Apart from the example KPIs, there was limited application in relation to the other performance methods.
Candidates could have given examples of where the different types of benchmarking could be used in the
proppant supply chain (benchmarking), examples of appropriate strategic, tactical and operational measures
(performance pyramid), examples of how buyer and supplier performance is inextricably linked (joint
performance appraisal), and what range of measures would be appropriate for the case situation (balanced
scorecard).
The SCOR model is a general method for analysing supply chains. Candidates often just described this model
without linking it to performance management. There was also confusion about Kaplan & Nortons balanced
scorecard and supplier scorecards. They are not the same thing. The former is a strategic management tool
which advocates a balance of financial performance, customer knowledge, internal business processes, and
learning and growth in relation to an organisations corporate objectives in order to succeed. The latter aims
to measure the contract-specific, operational performance of suppliers. Supplier scorecards need to be
balanced inasmuch as they should incorporate a range of operational performance factors, but they are not
the same as Kaplan & Nortons model. Many candidates made a valiant attempt to apply Kaplan & Norton to
operational performance, but few succeeded.
Strong answers contained a discussion of a range of (at least three) performance management methods with
robust application to the case situation. Weaker answers contained an insufficient number of methods, lacked
application, and failed to address the question specifics.

MAY2015_PD3_EXAM_REPORT_LEARNER_COMMUNITY_FV

3/4

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Question 4 Learning Outcomes 1.1, 1.2, 4.1

Evaluate the contribution that effective supply chain management may make in achieving
competitive advantage in the production of natural gas from shale.

(25 marks)

There are a number of ways in which supply chain management may help organisations achieve competitive
advantage: reducing non value-adding activities: reducing total costs; reducing cycle times; improving
responsiveness to demand requirements; enhancing quality and service; improving supply chain
communications; optimising the balance of service level and cost; and achieving greater transparency for both
cost and risk management.
The case study provides a plethora of potential examples of the contribution of supply chain management to
achieving competitive advantage in the production of natural gas from shale. These include: the end-to-end
process of the management of inputs such as frac-sand, drilling equipment, water and capital equipment; coordinated deliveries of frac-sand to drilling sites; optimisation of the transport infrastructure in the delivery of
goods and services to and from the fracking sites; agile responses to demand requirements; lean provision of
continuous supply; balancing the trade-offs between the costs of holding stock and the costs of a stock-out;
and the minimisation of transport and distribution cost of the finished product. There are many other relevant
examples which were given due credit.
This is a fairly open question and the answer therefore requires definition and structure. Candidates should
start with definitions of supply chain management and competitive advantage. Some sort of structural
framework for the answer is also advisable. Many candidates used Porters generic strategies as such a
framework, but others are equally acceptable. One option is to utilise the component parts of the definitions.
This enables examples from the case to be discussed in a structured rather than random way. A lot of
candidates provided definitions and an academic model, but then proceeded to ignore them when discussing
examples. There should be a link between theory and practice.
Most candidates were able to identify a range of examples that answered the question sufficiently. However,
some responses were descriptive and just quoted examples from the case study text without demonstrating
how the initiatives actually achieve competitive advantage. This is where the discussion framework and
linkage to theory would be useful. Time management was also a problem. Most candidates attempted this
question last and did not always allow sufficient time to answer it fully.
Strong answers were well-structured, defined the relevant concepts, discussed a range of examples from the
case, and clearly linked them to the achievement of competitive advantage. Weaker answers were poorly
structured, were descriptive, and did not link the examples to the concept of competitive advantage.

MAY2015_PD3_EXAM_REPORT_LEARNER_COMMUNITY_FV

4/4

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