CIPS L6M3 Exam Dumps

A Shared Services Model refers to the centralisation and consolidation of common business functions --- such as procurement, finance, HR, or IT --- into a single, specialised service unit that serves multiple divisions or business locations within an organisation.

Instead of each hotel operating independently, shared services allow XYZ Ltd to standardise processes, reduce duplication, improve efficiency, and leverage economies of scale across all 32 hotels.

This approach transforms procurement and supply chain operations from fragmented, location-based management to a strategically coordinated and value-driven function that supports the entire organisation.

1. Meaning of a Shared Services Model

In a shared services environment:

Core operational functions are delivered from a central unit (''shared service centre'') that provides services to multiple business units.

The focus is on process efficiency, cost savings, standardisation, and service quality.

It operates with a customer-service mindset, where internal stakeholders (e.g., hotel managers) are treated as clients.

For XYZ Ltd, this could mean establishing a central procurement and supply chain management function that handles supplier sourcing, contract management, and logistics for all hotels across the UK.

2. Three Models of Shared Services

There are several ways a shared services approach can be structured. The three most relevant models for XYZ Ltd are:

(i) Centralised Shared Services Model

Description:

All procurement and supply chain activities are managed from a single central location, such as a head office or shared service centre.

Decision-making authority and operational control are consolidated.

Advantages:

Economies of scale through consolidated purchasing.

Standardised processes and policies across all hotels.

Strong governance and strategic alignment with corporate objectives.

Greater negotiation leverage with suppliers due to volume consolidation.

Disadvantages:

Reduced flexibility and responsiveness at local (hotel) level.

Risk of slower decision-making due to central approvals.

Potential disconnection from local supplier relationships and needs.

Example:

XYZ's central procurement team manages all contracts for food, cleaning supplies, maintenance, and IT services for every hotel.

(ii) Centre of Excellence (CoE) or Hybrid Model

Description:

A hybrid model combines centralised control with local flexibility.

Core strategic functions (such as supplier selection, contract negotiation, and category management) are centralised, while local hotel managers retain control over operational decisions (e.g., ordering and replenishment).

Advantages:

Balances efficiency with flexibility.

Local hotels benefit from strategic supplier arrangements but retain some autonomy.

Facilitates knowledge sharing and continuous improvement.

Encourages collaboration between central and local teams.

Disadvantages:

More complex governance structure.

Requires strong coordination and communication between central and local units.

Example:

The central team negotiates national contracts with key suppliers (e.g., food distributors, linen suppliers), while local hotels place orders within those contracts based on demand.

(iii) Outsourced Shared Services Model

Description:

Procurement and supply chain management functions are outsourced to an external service provider or specialist procurement organisation.

The external partner manages sourcing, contracting, and logistics on behalf of XYZ Ltd.

Advantages:

Access to specialist expertise, technology, and global supplier networks.

Reduced internal administrative burden.

Can lead to significant cost savings and process improvement.

Disadvantages:

Loss of control over internal processes and supplier relationships.

Risk of misalignment with company culture or service standards.

Dependency on third-party performance and contractual terms.

Example:

XYZ outsources procurement of non-core categories (e.g., office supplies, cleaning chemicals) to a procurement service company while retaining internal control of key strategic sourcing.

3. Evaluation of the Models

Model Advantages Disadvantages Suitability for XYZ Ltd

Centralised Strong cost savings, standardisation, and control May reduce local responsiveness Suitable for standard, high-volume items (e.g., toiletries, linens)

Hybrid (CoE) Combines strategic alignment with local flexibility Requires robust coordination Best overall fit for mixed hotel operations

Outsourced Access to expertise and scalability Loss of control, dependence on third party Suitable for non-core categories only

4. Recommended Strategy for XYZ Ltd

The Hybrid (Centre of Excellence) model would be the most suitable strategy for XYZ Ltd.

Justification:

It provides centralised control over key strategic procurement activities (e.g., supplier contracts, tendering, sustainability standards), ensuring consistency and cost savings.

At the same time, it allows local hotel managers to retain autonomy over day-to-day ordering, ensuring flexibility and responsiveness to customer needs.

It supports collaboration and knowledge sharing, enabling best practices to be transferred across locations.

The hybrid model aligns with the service-oriented nature of the hospitality industry, where local customer requirements and regional supplier availability can vary significantly.

Implementation Considerations:

Establish a central Shared Services Centre for procurement, supply chain analytics, and supplier management.

Introduce a standardised e-procurement system accessible to all hotel locations.

Define clear governance policies for which decisions are made centrally vs locally.

Develop KPIs (cost savings, service quality, supplier performance) to measure success.

Provide training for local managers to use shared systems effectively.

5. Strategic Benefits of Adopting a Shared Services Model

Cost Efficiency: Consolidation of purchases increases buying power and reduces duplication.

Process Standardisation: Consistent procurement practices improve compliance and control.

Data Visibility: Centralised data enables better analytics and supplier performance tracking.

Strategic Focus: Local managers can focus on customer service rather than administrative procurement.

Scalability: The model supports future growth, acquisitions, or expansion into new markets.

6. Summary

In summary, a Shared Services Model centralises common business functions to drive efficiency, consistency, and cost savings across multiple business units.

For XYZ Ltd, the most effective approach would be the Hybrid (Centre of Excellence) model, as it balances central strategic control with local operational flexibility --- essential in the hotel industry.

By implementing this model, the CEO can achieve greater cost efficiency, standardisation, supplier leverage, and data transparency, while maintaining the agility needed to meet customer expectations across all 32 hotels.

Change management refers to the structured approach used to transition individuals, teams, and organisations from a current state to a desired future state.

In supply chain management, change may involve new systems, processes, technologies, suppliers, or organisational structures.

Successful change depends heavily on effective communication, as it ensures that employees and stakeholders understand why the change is happening, how it affects them, and what their role is in achieving success.

A supply chain manager can use various communication tools to manage change effectively. Three key tools are:

Stakeholder Analysis and Communication Plans,

Workshops and Training Programmes, and

Internal Communication Platforms (e.g., meetings, newsletters, intranets, dashboards).

1. Tool 1: Stakeholder Analysis and Communication Plan

Description:

Stakeholder analysis identifies all individuals or groups affected by the change --- such as procurement staff, logistics teams, suppliers, and customers --- and assesses their level of influence, interest, and potential resistance.

Once identified, a tailored communication plan is developed to engage each stakeholder appropriately.

Purpose and Benefits:

Ensures that communication is targeted and relevant for each audience.

Helps anticipate and manage resistance to change.

Builds trust, alignment, and shared understanding of objectives.

Encourages stakeholder buy-in and support.

Examples:

Creating a stakeholder matrix to identify ''champions'' (supportive leaders) and ''blockers'' (resistors).

Scheduling briefings or one-to-one discussions with high-impact stakeholders.

Providing clear communication about the benefits, timelines, and impacts of the change.

How Success Is Measured:

Stakeholder engagement levels (participation in meetings, feedback surveys).

Reduced resistance or conflict during implementation.

Observable ownership of change initiatives by key influencers.

If key stakeholders understand and advocate the change, it indicates successful communication and progress.

2. Tool 2: Workshops and Training Programmes

Description:

Workshops and training sessions are practical tools for communicating operational and behavioural changes.

They provide employees with the skills, knowledge, and confidence to adapt to new systems or processes, reducing uncertainty and anxiety.

Purpose and Benefits:

Builds understanding of the reason for the change (''the why'') and the actions required (''the how'').

Creates an open environment for feedback and two-way communication.

Ensures employees have the technical and procedural competence to implement change effectively.

Encourages collaboration across departments (procurement, logistics, IT).

Examples:

Training sessions to introduce a new ERP system or e-procurement platform.

Simulation workshops on new supplier management procedures.

''Lunch and learn'' sessions to share progress updates.

How Success Is Measured:

Training evaluation surveys show increased confidence and understanding.

KPIs and performance metrics (e.g., adoption rates, error reduction, process compliance).

Behavioural observation --- employees actively applying new processes or technologies.

If employees perform their new roles effectively and embrace the new system, it signals that the change has been successfully communicated and embedded.

3. Tool 3: Internal Communication Platforms and Feedback Channels

Description:

Regular, multi-channel communication ensures that everyone stays informed and engaged throughout the change process.

Effective tools may include team meetings, intranet updates, newsletters, dashboards, and digital collaboration tools (e.g., Microsoft Teams, Slack, Yammer).

These platforms provide transparency, reinforce key messages, and enable continuous feedback loops.

Purpose and Benefits:

Keeps all employees up to date with progress, successes, and next steps.

Reinforces consistent messaging across different locations or departments.

Encourages dialogue and feedback, helping managers identify problems early.

Builds a sense of inclusion and ownership among staff.

Examples:

Weekly internal newsletters on change milestones.

Dashboards showing key performance indicators for new processes.

Q&A sessions or ''town hall'' meetings to address concerns.

How Success Is Measured:

Employee feedback and sentiment analysis (via surveys or discussion forums).

High participation rates in communication sessions.

Improved morale and engagement scores.

Faster adoption of new processes, as employees remain well-informed and aligned.

If communication channels remain active and feedback shows confidence and engagement, it indicates successful internal communication.

4. Indicators of Successful Change Implementation

To determine whether the change has been successfully implemented, the supply chain manager should monitor quantitative and qualitative indicators, such as:

Success Indicator Description

Performance Metrics Improved KPIs such as delivery times, cost reduction, error rates, or supplier performance.

Employee Engagement Staff demonstrate understanding and support for the new systems and processes.

Adoption Rates High usage and compliance with new procedures, technologies, or policies.

Customer Feedback Positive feedback on service levels, reliability, or responsiveness.

Cultural Alignment Evidence of new behaviours becoming the organisational norm.

Ultimately, success is achieved when the change is embedded --- meaning it becomes part of the organisation's standard operating culture rather than a temporary initiative.

5. Summary

In summary, effective communication is central to successful change management in supply chain operations.

Three key tools a supply chain manager can use are:

Stakeholder analysis and communication planning -- to target and engage stakeholders effectively.

Workshops and training programmes -- to equip employees with the knowledge and skills to adopt change.

Internal communication platforms -- to provide continuous updates, transparency, and feedback.

Change is considered successfully implemented when employees demonstrate understanding, commitment, and behavioural adoption, and when measurable performance improvements align with the intended outcomes of the change initiative.

A distribution network design determines how an organisation's goods move from suppliers and warehouses to customers in the most efficient, cost-effective, and responsive manner.

For a growing toy retailer like XYZ, designing an optimal distribution network is a strategic decision that directly impacts cost, delivery speed, customer satisfaction, and long-term scalability.

As the company expands from a regional to a national presence, it must carefully evaluate multiple factors that influence the structure, location, and capacity of its distribution facilities.

1. Factors Impacting the Design of XYZ's Distribution Network

(i) Customer Location and Service Level Requirements

The geographic spread of XYZ's customers and the expected delivery times will significantly influence the distribution network design.

Rationale: The company's existing single distribution centre in Southampton is located far from customers in the Midlands, North of England, and Scotland. This increases delivery lead times and transport costs to those regions.

Strategic Impact: To maintain competitive service levels (e.g., next-day delivery) and reduce transport distance, XYZ may need to establish additional regional centres closer to customer clusters.

Implication: Customer density mapping and transport time modelling should guide the placement of the new DC to balance cost and service efficiency.

(ii) Transportation and Logistics Costs

Transport is often the largest cost component in distribution network design. The balance between warehousing costs and transportation efficiency is critical.

Rationale: Locating a new DC centrally --- for example, in the Midlands --- could reduce outbound transport costs to northern regions, even if it increases inbound freight slightly.

Strategic Impact: The optimal number and location of DCs must minimise the total landed cost (transport, handling, and inventory combined), not just one component.

Implication: XYZ should conduct a network optimisation study to identify a location that reduces mileage and improves vehicle utilisation while maintaining customer service targets.

(iii) Infrastructure and Accessibility

Efficient movement of goods depends on the availability of reliable transport infrastructure, including road, rail, ports, and courier service hubs.

Rationale: The new DC should be located near major motorway intersections (e.g., M1, M6, M40) or near national carrier hubs for ease of access to all parts of the UK.

Strategic Impact: Accessibility ensures timely deliveries, cost-effective distribution, and flexibility during peak periods such as Christmas.

Implication: Locations in the Midlands (such as Northamptonshire or Leicestershire) are common for national distribution because of their proximity to transport links and population centres.

2. Additional Influencing Factors (Supporting Considerations)

While the question specifies three factors, XYZ should also consider the following during its distribution network design:

Demand Patterns and Seasonality: Toys experience high seasonal demand peaks. Network capacity and location must accommodate increased Christmas and holiday volumes.

Labour Availability and Costs: The DC should be located where skilled warehouse labour is accessible and affordable.

Technology and Automation: Future plans for automation (e.g., robotic picking or warehouse management systems) may influence site size, layout, and investment levels.

Sustainability Goals: Locating DCs to reduce carbon emissions and optimise transport routes supports ESG objectives.

Risk and Resilience: Diversifying distribution centres reduces the risk of total supply chain disruption due to fire, weather, or transport breakdowns.

3. Selecting a Location for the New Distribution Centre

Selecting the right location for a new distribution centre is a multi-criteria decision-making process involving quantitative and qualitative evaluation. XYZ should follow these key steps:

(i) Define Strategic Objectives

Clarify the company's goals for the new DC --- e.g., improving delivery speed, reducing cost, supporting national growth, or enhancing customer experience.

These objectives will drive trade-offs between cost efficiency and service responsiveness.

(ii) Conduct Network Modelling and Analysis

Use network optimisation modelling tools to analyse various scenarios and identify the most cost-effective configuration.

This should include:

Mapping current customer demand by region.

Evaluating transportation costs under different network layouts.

Assessing total logistics cost vs. service level trade-offs.

Scenario analysis (e.g., two DCs vs. three DCs) can help determine the optimal solution.

(iii) Apply Location Selection Criteria

Evaluate potential sites against quantitative and qualitative criteria, such as:

Quantitative Factors Qualitative Factors

Transportation and distribution cost Labour availability and skills

Proximity to suppliers/customers Infrastructure and accessibility

Facility and land cost Community support and local incentives

Taxation and business rates Environmental and sustainability impact

Inventory and service levels Expansion potential and risk exposure

Weighted scoring models can be used to objectively rank location options based on these factors.

(iv) Risk and Sustainability Assessment

Assess each potential location for environmental, geopolitical, and operational risks.

Consider environmental regulations, carbon footprint implications, and compliance with sustainability objectives such as energy efficiency and waste management.

(v) Final Decision and Implementation Planning

After selecting the optimal location, develop a phased implementation plan covering facility construction or leasing, systems integration, workforce recruitment, and supplier coordination to ensure seamless transition.

4. Strategic Impact on Corporate and Supply Chain Strategy

Redesigning the distribution network will have direct implications for XYZ's overall corporate strategy by:

Enabling national market penetration and growth.

Improving customer service and satisfaction through faster delivery.

Reducing total logistics costs and carbon emissions.

Increasing supply chain resilience through decentralisation.

This change supports the company's strategic transition from a regional retailer to a national omnichannel brand capable of serving all UK customers efficiently.

5. Summary

In summary, the design of XYZ's new distribution network will be influenced by key factors such as customer location and service levels, transportation costs, and infrastructure accessibility.

When selecting a new distribution centre location, the company should apply a data-driven, multi-criteria approach combining network optimisation modelling with qualitative evaluation to ensure the decision aligns with cost, service, and sustainability objectives.

By carefully planning its network design, XYZ Ltd can achieve greater operational efficiency, improved customer responsiveness, and long-term competitiveness in the UK toy retail market.

In accordance with the requirements at Level 6 for the Chartered Institute of Procurement & Supply (CIPS) Professional Diploma, a clear distinction must be drawn between a goal and a strategy.

Definition -- Goal

A goal is a desired outcome or target that an organisation aims to achieve. It describes what the organisation intends to accomplish, often aligning with its mission or vision. It may be long-term and provides direction, but is not in itself the action plan. In strategic terms, it gives the endpoint. For instance: ''Become the market leader in X by 2028.''

Definition -- Strategy

A strategy is the broad approach or plan the organisation adopts to achieve its goal. It defines how the organisation will reach the goal, taking into account the internal and external environment, and allocating resources accordingly. It is less granular than tactical plans, but more concrete than simply the goal. For example: ''Expand through acquisition of smaller competitors in underserved regions, coupled with digital-platform investment to accelerate time-to-market.''

Example of each

-- Goal: A private-sector manufacturing firm sets a goal: ''Increase global market share of our flagship product from 15 % to 25 % within the next five years.''

-- Strategy: To achieve that goal the firm might adopt a strategy: ''Focus on cost-leadership in lower-cost countries, develop strategic alliances with global distributors, and invest in product differentiation to enter higher-value segments.''

Three possible strategies for an organisation competing in the private sector

Cost-leadership strategy: The organisation aims to become the lowest-cost provider in its industry (or a key segment thereof). This might involve scaling up production, sourcing raw materials from low-cost regions, streamlining supply chain processes, leveraging automation, and negotiating favourable supplier contracts. By lowering cost base, the firm can offer competitive pricing or maintain margins.

Example: A consumer goods company shifts manufacturing to regions with lower labour and overhead costs, standardises its component platforms, uses lean-manufacturing methods and begins global sourcing to reduce unit cost, thereby enabling it to compete on price.

Differentiation strategy: The organisation seeks to offer unique products or services valued by customers that justify a premium price. This might involve innovation, branding, superior quality, service excellence, or exclusive features. The strategy is to build perceived value and make price less of the primary competition dimension.

Example: A luxury car manufacturer invests heavily in advanced driver assistance, bespoke customization options and premium materials. It emphasises brand heritage and customer experience to differentiate from mainstream competitors and charge higher margins.

Focus or niche strategy: The organisation concentrates on a specific segment of the market (geographic, customer group, product line) and tailors its offering to the unique needs of that segment better than competitors who serve broader markets. This allows the organisation to specialise and build competitive advantage in that niche.

Example: A software firm focuses exclusively on small financial institutions in emerging markets, offering a modular compliance and risk-management platform tailored to their regulatory environment. By specialising, the firm can outperform generalist software vendors in that niche.

In summary, the goal sets the destination, and the strategy charts the path. The three strategies above illustrate substantive ways in which a private-sector organisation might choose to compete: through cost efficiency, through differentiation, or by focusing on a defined niche.

Network Optimisation Modelling (NOM) is a strategic analytical approach used to design, evaluate, and improve the structure and performance of a supply chain network. It uses mathematical, statistical, and simulation models to identify the most efficient configuration of supply chain facilities --- such as factories, warehouses, suppliers, and distribution centres --- and to determine how materials and products should flow through the network to minimise total cost while meeting service-level objectives.

In essence, network optimisation modelling seeks to answer key strategic questions such as:

Where should production and distribution facilities be located?

How much capacity should each site have?

Which suppliers and transport routes are most cost-effective?

What is the optimal balance between cost, service, and risk?

For a global manufacturer or retailer, this approach provides the foundation for achieving cost efficiency, responsiveness, and resilience in supply chain design.

1. Key Features of Network Optimisation Modelling

Data-Driven Decision-Making:

NOM relies on quantitative data such as demand forecasts, transportation costs, inventory levels, service times, and capacity constraints.

Scenario and Sensitivity Analysis:

It allows managers to model ''what-if'' scenarios --- for example, the impact of new suppliers, trade tariffs, or changes in customer demand --- and evaluate how different network configurations affect cost and service.

Holistic View of the Supply Chain:

NOM considers the end-to-end network, including suppliers, production sites, warehouses, and customer locations.

Multi-Objective Optimisation:

It balances competing objectives such as cost reduction, service-level improvement, carbon minimisation, and risk reduction.

Use of Advanced Tools and Techniques:

Network optimisation models are typically supported by tools such as linear programming, mixed-integer optimisation, geospatial mapping, and simulation software (e.g., Llamasoft, AnyLogistix, or SAP IBP).

2. Advantages of Network Optimisation Modelling

(i) Cost Reduction and Efficiency

By identifying the optimal number, location, and role of facilities, NOM minimises transportation, warehousing, and production costs.

For example, consolidating underutilised warehouses can reduce fixed costs while maintaining service levels.

(ii) Improved Service Levels

Optimisation models ensure that customer demand is met from the most efficient locations, reducing lead times and enhancing delivery reliability.

(iii) Enhanced Strategic Decision-Making

NOM provides fact-based insights to support major strategic decisions --- such as site relocation, outsourcing, or capacity expansion --- reducing reliance on intuition.

(iv) Risk Management and Resilience

Through scenario modelling, companies can anticipate the impact of disruptions (e.g., port closures, supplier failures, or geopolitical shifts) and design contingency plans to maintain supply continuity.

(v) Support for Sustainability and Carbon Reduction

Modern network models incorporate sustainability objectives, helping firms reduce transport miles, optimise loads, and lower carbon emissions, aligning with ESG goals.

(vi) Alignment of Global and Local Operations

For multinational organisations, NOM ensures consistency between global strategy and regional operations by identifying the best trade-offs between global efficiency and local responsiveness.

3. Disadvantages and Limitations of Network Optimisation Modelling

(i) Data Intensity and Complexity

Accurate modelling requires large volumes of detailed and reliable data --- on costs, lead times, demand, and capacities. Poor-quality or outdated data can lead to flawed conclusions.

(ii) High Implementation Costs

Developing, validating, and maintaining network optimisation models requires specialised software and skilled analysts, which can be costly for smaller organisations.

(iii) Static Assumptions

Models are often based on assumptions that represent a single point in time. In dynamic markets, these assumptions can quickly become obsolete, reducing model accuracy.

(iv) Oversimplification of Real-World Variables

While mathematical models capture many factors, they may struggle to account for unpredictable elements such as political instability, natural disasters, or human behaviour in the supply chain.

(v) Change Management Challenges

Network redesigns can require major operational and cultural adjustments --- such as facility closures or changes in supplier relationships --- which can face internal resistance.

(vi) Potential for Short-Term Focus

If used solely for cost optimisation, NOM may neglect long-term strategic objectives such as innovation, customer experience, or ethical sourcing.

4. Strategic Implications of Network Optimisation Modelling

For an organisation like XYZ Ltd (a car manufacturer) or a large retailer, implementing NOM has significant strategic value:

It aligns supply chain design with corporate objectives such as cost leadership or customer proximity.

It supports strategic sourcing decisions by identifying optimal supplier locations and logistics routes.

It enhances global competitiveness by enabling fast adaptation to changes in demand, regulation, or cost structures.

It contributes to sustainability goals through reduced emissions and resource optimisation.

NOM therefore becomes a decision-support tool that enables leadership to test alternative strategic configurations before committing resources.

5. Example Application

In an automotive company such as XYZ Ltd:

The model could assess the trade-offs between manufacturing in the UK versus Eastern Europe or Asia.

It could simulate the effects of Brexit-related tariffs or shipping disruptions.

It could optimise inventory levels across plants and dealerships to balance working capital and customer responsiveness.

Such insights allow the CEO and supply chain leaders to make data-driven strategic decisions that improve efficiency, resilience, and sustainability.

6. Summary

In summary, Network Optimisation Modelling is a powerful analytical approach that supports strategic supply chain design by identifying the most efficient, resilient, and sustainable configuration of the network.

Its advantages include cost reduction, improved service, strategic agility, and sustainability alignment. However, it also presents challenges such as data dependency, complexity, and high implementation cost.

When implemented effectively, NOM enables organisations to transform their supply chain into a strategic asset --- one that delivers value, resilience, and competitive advantage in an increasingly uncertain global environment.