CPP CERTIFICATION PREPARATION 

Certification Preparation Course

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Purpose of Course

This certification examination review course is designed to prepare purchasing and materials management professionals for the Certified Purchasing Professional (CPP) Examination sponsored by the American Purchasing Society (APS). Certification as a CPP is increasingly being specified in position descriptions and job announcements as desired and/or minimum qualifications to be met for such professionals.

Course Objectives

1. To develop an understanding of materials/logistics and its relationship to purchasing.

2. To develop an understanding of the purchasing profession and its various subspecialties.

3. To develop an in-depth understanding of the purchasing pre-award and post-award processes, the purchasing management and administration processes, the functions of supply and materials management, and current issues as they relate to purchasing and supply management.

4. To develop an understanding of what to study and how to study in preparation for the CPP.

5. To determine which CPP Study tasks require the greatest amount of study and concentration in order to pass the CPP examination.

What is APS?

The American Purchasing Society (APS) is a progressive association of buyers and purchasing managers with more than 5,000 individual and corporate members in the United States and abroad. APS’s purpose is to provide national and international leadership in purchasing and materials management, particularly in the areas of education, research, and standards of excellence. APS provides opportunities for expansion of professional skills and knowledge. APS offers a wide range of educational products and programs for both members and non-members.

What does it take to become a CPP? Applicants for CPP certification must pass the CPP examination. In addition, an applicant must have a minimum of three years business experience OR a degree from a recognized college plus two years of business experience. Additionally, applicants must meet the requirements outlined below. In special circumstances, certification may be awarded to an individual who has not met the minimum requirements of formal education, but who has contributed significantly to the profession and who meets all other requirements.

Applicants for certification are first evaluated on their ethical standards and maturity as demonstrated by their reputation, financial responsibility record, and their ability to communicate. Next, a review of their academic achievements, experience and contributions to the purchasing profession is made to award points in each of these categories. A minimum total of 100 points is required for the Certified Purchasing Professional classification. See the point guide on the APS webpage to estimate your standing.

The focus of this certification program is the PURCHASING BODY OF KNOWLEDGE (BOK), which is shown below.

 

Accounting

1.         Explain how the purchasing manager uses supplier financial accounting information, including balance sheets, income statements, and cash flow statements to make decisions concerning supplier financial capability and qualifications. 

2.         Using supplier financial statements, calculate the current ratio, acid test/quick ratio, and debt to equity ratio and explain how those computed ratios will influence your decision concerning that supplier.

3.         Explain how the purchasing manager uses internal and/or supplier management or cost accounting information to make decisions, including cost/volume/profit and breakeven analysis, make or buy analysis, learning curve analysis, and development of cost estimating relationships.

 

Economics

1.         Explain how the purchasing manager uses the concepts of supply and demand in evaluating markets and potential suppliers.

2.         List and describe the various types of markets, including free markets, oligopolies, monopolies, monopsonies, and oligopsonies and how they affect the ability of the purchaser to obtain competition and fair and reasonable prices.

3.         Explain the various economic theories relating to supplier pricing of good and services. 

4.         Explain the concept of price elasticity of demand.

 

Business Mathematics

1.         Demonstrate the computation of percentages and calculate simple formulas found in the purchasing process.

2.         Given mathematical problems typically encountered in purchasing, calculate fractions, decimals, and ratios.

3.         Calculate interest rates, payback period, net present value, and other calculations considering the time value of money.

 

Business Law

1.         Explain how and when to employ legal counsel in support of the purchasing process.

2.         Explain how the Uniform Commercial Code (UCC), particularly Article 2, Sales affects the purchasing process.

3.         Explain when and where UCC applies and when it does not.

4.         Explain when a contract needs to be in writing and why.

5.         Describe the basic elements of the anti-trust laws (including Sherman Anti-Trust) and how they affect the buyer as well as the seller.

6.         Explain reciprocity and the legal implications of reciprocity.

7.         Explain the different types of warranties, including the UC warranties of “merchantability” and “fitness for its intended purpose”.

8.         Describe the legal recourses available to the buyer if the seller fails to perform as agreed in the contract.

 

Negotiations

1.         Explain the principles of negotiation according to Lewinski, Karras, and Fisher/Ury.

2.         Explain when purchasing people should negotiate and when they probably should not negotiate.

3.         Explain how to plan, organize, and conduct a negotiation conference.

4.         Prepare for and develop strategies and tactics for negotiations.                                        

5.         Conduct negotiations with potential and/or current suppliers to obtain maximum value.

 

Purchasing Management

1.         Explain the principles of purchasing (applicable to both private and public sector organizations and to both for profit and non-profit organizations.)

2.         Explain the Pareto Principle and how it applies in purchasing.

3.         Describe the forms typically used in purchasing and explain how those forms can be modified for use in E-Procurement.

4.         Explain the advantages and disadvantages of single and multi-sourcing.

5.         Explain the advantages and disadvantages of centralized and decentralized purchasing.

6.         Establish procurement plans and make decisions necessary to purchase products or services in congruence with organizational objectives and sourcing strategies.

7.         Review purchase requisitions in accordance with organizational requirements and/or budgetary constraints.

8.         Determine appropriate methods of procurement, including the different methods of E-Procurement.

9.         Perform cost/benefit analyses on planned purchases.

10.     Review supplier samples and/or demonstrations with the buying organization management and/or user departments.

11.     Develop/review specifications, statements of work, performance terms, and/or acceptance criteria.

12.     Locate (through internet market surveys and other means) and select potential sources of materials or services.    

13.     Explain how to use supplier catalogs, including online catalogs.                                         

14.     Prepare bid and proposal solicitations with pertinent specifications, terms, and conditions including digitalized solicitations for posting to an internet, extranet, or intranet “bid room” and solicitations appropriate for “online auctioning” and “reverse auctioning”.

15.     Explain the use of third parties in the solicitation and bidding process.

16.     Describe the various E-Procurement tools available to the buyer, including internet, intranet, extranet, application service provider (ASP), server-based, ERP, stand-alone, exchanges, and B2B hubs.

17.     Describe how Electronic Data Interchange (EDI) and Value Added Networks (VANS) can be used to facilitate the purchasing process.

18.     Manage and develop automated lists of recommended sources.     

19.     Use price, cost, and financial analytical techniques to evaluate offers and proposals to determine the overall best offer for a product/service.                                       

20.     Conduct supplier visits/evaluations and conduct “due diligence” to determine qualification and responsibility of potential suppliers either on a “prequalification” basis or immediately prior to award.

21.     Measure supplier performance using rating systems and/or predetermined standards.        

22.     Prepare and/or issue contracts/purchase orders, including hardcopy and/or electronic.

23.     Obtain legal review and approval of a contract or purchase order when required.

24.     Administer contracts/purchase orders from award to completion, including use of automated contract management systems.

25.     Maintain effective and efficient relationships with other internal departments involved in procurement and contract administration.

26.     Participate in cross-functional and/or multifunctional teams (e.g., project management, process improvement).

27.     Develop/manage effective relationships with suppliers, utilizing such techniques as supplier partnerships, strategic alliances, supply chain management, and supplier training programs.

28.     Review product availability and/or pricing information with suppliers.

29.     Conduct interviews with current and prospective supplier sales personnel.

30.     Coordinate/review/respond to supplier inquiries, protests, and appeals.

31.     Expedite deliveries and conduct follow-up procedures when necessary.                     

32.     Resolve contract/purchase order differences with suppliers.   

33.     Support and assist accounts payable in providing effective and efficient payments to suppliers.

34.     Describe the different methods of electronic payments and explain the advantages and disadvantages of those various methods.

35.     Resolve payment problems with suppliers and user departments.                                      

36.     Manage automated and hardcopy files of contracts, purchase orders, agreements, equipment records, and/or specifications.

 

International Purchasing

1.         Explain how to develop global procurement plans stemming from organizational goals.

2.         Describe the process of developing the total landed cost of acquisition

3.         Explain the different methods of procurement available in global sourcing.

4.         Describe the different methods of acquisition (direct, off-shore buying office, etc.) for global sourcing.

5.         Explain how global negotiations differ from domestic purchasing.

6.         Explain how different business customs and courtesies of key nationalities affect the offshore purchasing process.

7.         Explain the different laws governing contracts from offshore suppliers (CISG and UCC) and how they impact on risk of buyer contract performance.

8.         Explain the various customs laws, regulations, and tariffs and how they affect the supply management process.

9.         Describe several global trade barriers and how they affect the global sourcing process.

10.     Describe provisions/clauses appropriate for inclusion in the international contract for purchase.

11.     Based on economic, political, and trade-related factors, determine whether to denominate a contract in dollars or in the (foreign) currency of the offshore supplier.

12.     Describe how currency devaluations and revaluations of foreign currencies affect the prices paid by domestic buyers and foreign suppliers.

13.     Explain the documentation required in international trade.

14.     Explain the several different methods of payment available for offshore purchases and which of those are most advantageous to the buyer.

 

Computers

 

1.         Describe the various hardware and software options available for automation of the purchasing process.

2.         Develop/utilize a computerized purchasing system (e.g., online buying, EDI, Web-based electronic commerce) with an ultimate goal of “paperless purchasing”.

3.         Develop/implement/maintain a database of specifications, suppliers, products, and/or services.

4.         Develop/utilize a computerized inventory and/or capital equipment tracking system.

 

Psychology

1.         Explain the various theories of motivation in order to understand what motivates people and describe the method(s) which work best for you.

2.         Explain the impact of motivation on productivity and job satisfaction.

 

Quality Assurance

1.         Describe when quality begins and what the buyer should do to obtain a quality product.

2.         Define quality from a purchasing point of view (the product meets the agreed specification).

3.         Resolve quality problems with suppliers and user departments.

4.         Develop measurements of quality improvement and target setting (e.g., “best in class” benchmarks).

 

Statistics

1.         Compute various types of averages (mode, mean, and median).

2.         Explain standard deviation and how to calculate and use it in purchasing.

3.         Employ the several methods of forecasting used in the purchasing process.

 

Engineering

1.         Read blueprints and engineering drawings and explain the various symbols and notations on those drawings.

2.         Explain how engineering supports the purchasing process and the methods of cooperation between purchasing and engineering.