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CIPS L4M2 EXAM/199 ANSWERED QUESTIONS/A+ GRADED
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CIPS L4M2 EXAM/199 ANSWERED QUESTIONS/A+ GRADED
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CIPS L4M2 EXAM/199 ANSWEREDQUESTIONS/A+ GRADED
Re-buy - -It is not necessary to specify a new specification or to source the
market. Call-off or framework agreement. A preferred supplier is in place
-Modified Buy - -Review of existing contract requirements and making any
necessary amendments such as to build additional benefits, streamline the
business or to establish new KPIs/SLAs. Where some of the specification or
requirements have changed.
-New Buy - -A new purchase outlines requirements that have not been
specified before. There is a higher risk involved in procuring a new purchase,
demand/supplier/market analysis should be conducted, and new specific KPIs
should be included in the specification.
-Business Needs - -The mission of the organisation determines its
requirements and therefore what procurement needs to source.
-R - regulatory (any legal requirements)
A - availability (supply of goods/services when required, risk, financial and
capacity)
Q - quality (consistency, repeatability, and fit for purpose)
S - service requirements (flexibility, support, availability)
C - cost (target costs, total cost of ownership, continuous improvement)
I - innovation (improving customer experience) - -A model that can be used
to identify business needs.
-Kraljic Matrix - -A matrix that allows procurement to prioritise spend in line
with business needs.
-Leverage - Kraljic Matrix - -Business needs met by using purchasing
department buying power to gain the best price and terms e.g. competitive
tendering.
-Example of Leverage item (Kraljic Matrix) - -Company cars or mobile
phones.
-Strategic - Kraljic Matrix - -Business needs met by developing long term
relationships such as partnerships to ensure security of supply.
-Example of Strategic item (Kraljic Matrix) - -Capital assets such as
premises
, -Routine - Kraljic Matrix - -Business needs met by trying to buy these more
efficiently through blanket ordering, e-procurement and vendor managed
inventory leadership in procurement and supply.
-Example of Routine item (Kraljic Matrix) - -Stationary
-Bottleneck - Kraljic Matrix - -Business needs met by developing appropriate
contracts (such as call off contracts, framework agreements) in which the
buyer can ensure that stock levels and maintained and speed of re-ordering.
-Example of Bottleneck item (Kraljic Matrix) - -Spare parts or oil for
machines
-Cost and risk - Kraljic Matric - -Low cost / high risk - Bottleneck
High cost / high risk - Strategic
High cost / low risk - Leverage
Low cost / low risk - Routine
-Total cost of ownership - -Is how much it costs to own the product over its
lifetime until disposal.
-Whole life costing - -Is a technique used to arrive at the total cost of
ownership
-Planning, preparation and implementation - -Three stages of WLC
-WLC - planning - -Determines the budget for the asset being purchased,
helps improve the specification to reduce cost, and simulation or decision
support models can be used to assist.
-WLC - preparation - -Testing the various models for calculating WLC and is
necessary to choose the best model.
-WLC - implementation - -Implements the model to get the results. A review
and intervals for regular recalculation.
-Acquisition, operation and disposal - -There is a vital difference between
purchase price and total cost of ownership. This includes 3 categories.
-Cost based pricing - -Allows the supplier to cover its costs and make a
profit.
-Limits to cost based pricing - -Ignores competition and other influences on
pricing and are quite inflexible. They also don't give a supplier an incentive
to reduce or manage costs.
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