Exam (elaborations)
CIPS L4M1 - Question & Answer
CIPS L4M1 - Question & Answer
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CIPS L4M1
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CIPS L4M1
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CIPS L4M1 - Question & Answer
O1. |Outline |FIVE |differences |between |purchasing |goods |and |purchasing |services. |-
|correct |answers✔✔1. |Goods |are |tangible, |services |are |intangible:
2. |Services |cannot |be |separated |from |their |supplier:
3. |Heterogeneity: |goods |are |usually |uniform |in |nature |while |services |are |unique |at
|each |delivery
4. |Services |'perish' |immediately |on |delivery |whereas |goods |can |be |stored |until
|required
5. |Products |are |easier |to |specify, |being |tangible
O2. |Explain |THREE |circumstances |in |which |a |competitive |tendering |exercise |might
|not |be |the |best |approach |to |making |a |purchase. |- |correct |answers✔✔1. |Urgency
2. |Commercial |confidentiality |or |national |security |(e.g. |military |organisations):
3. |Value |of |the |purchase:
4. |Production |costs |cannot |be |measured |accurately:
5. |Price |is |not |the |only |criterion |for |supplier |selection |and |contract |award
6. |Intellectual |Property |Rights |and |monopoly
O2. |Describe |TWO |e-sourcing |tools |and |their |use |in |procurement |and |supply. |-
|correct |answers✔✔1. |E-Catalogues
2. |E-Tendering
3. |E. |Auction
4. |Reverse |Auctions
5. |Online |suppleir |evaluation |data
O3. |Explain |the |role |of |a |shared |services |unit |(SSU). |- |correct |answers✔✔SSUs
|reflect |a |desire |to |centralise |and |share |services |
The |shared |service |provider |becomes |a |dedicated |provider |of |services |such |as;
|finance, |HR, |IT |and |procurement |which |continue |to |be |provided |internally
,An |SSU |manages |costs |and |quality |SLAs |to |demonstrate |value |for |money.
An |SSU's |benefits |may |be |summarised |as:
• |cost |effective |internal |service;
• |liaison |with |its |customers;
• |anticipating |future |demand;
• |employing |resources |and |providing |higher |levels |of |service |more |cost |effectively
|than |if |they |were |provided |by |a |department |or |an |external |provider.
O3. |A |manufacturer |of |electrically |powered |tools |for |the |engineering |industry
|consists |of |four |separate |business |units, |each |of |which |undertakes |its |own
|purchasing |activities.
Discuss |THREE |benefits |of |centralising |all |purchasing |activities |with |those |of
|retaining |the |present |decentralised |structure. |(1 |of |2) |- |correct
|answers✔✔Centralisation' |and |'decentralisation' |refer |to |the |degree |to |which
|responsibility |and |authority |is |delegated. |Arguments |for |centralisation |can |only |be
|evaluated |in |the |context |of |specific |organisational |environment |and |might |include:
1. |Policies |& |procedures
2. |Consolidation |of |requirements
3. |Location
4. |Supply |market |structure
5. |Expertise |required:
6. |Customer |demands
O3. |A |manufacturer |of |electrically |powered |tools |for |the |engineering |industry
|consists |of |four |separate |business |units, |each |of |which |undertakes |its |own
|purchasing |activities.
Discuss |THREE |benefits |of |centralising |all |purchasing |activities |with |those |of
|retaining |the |present |decentralised |structure. |(2 |of |2) |- |correct |answers✔✔The
|benefits |of |retaining |the |present |de-centralised |structure |include:
, 1. |Local |responsibility
2. |Knowledge |of |the |local |environment, |culture |and |customer |needs
3. |Skills |development |of |buyers |in |each |unit |
4. |Better |communication |and |coordination |between |procurement |and |operating
|departments,
5. |Customer |focus: |buyers |are |'closer' |to |internal |and |external |customers |developing
|understanding |of |user |needs |and |problems.
6. |Quicker |response |to |operational |and |user |needs, |
7. |Smaller |purchase |quantities: |
8. |Accountability: |d
9. |Freeing |central |procurement |units |to |focus |on |higher-level, |value-adding |tasks.
O3. |Explain |the |following |IT |systems |used |by |the |procurement |or |supply |chain
|function:
(i) |'Enterprise |Resource |Planning'
(ii) |'Materials |Requirement |Planning'
(iii) |'Purchase |to |Pay |(P2P)'. |- |correct |answers✔✔ERP |is |a |single |data |base |to
|manage |a |wide |range |of |functions |and |resources |across |a |business. |It |offers |real
|time |solutions. |
MRP |is |a |set |of |records, |decision |rules |and |procedures |to |manage |demand. |
P2P |is |a |two |way |flow |of |transactions |taking |a |purchase |requisition |through |to
|payment |of |invoice.
O1. |FIVE |elements |of |the |total |cost |of |ownership |of |capital |equipment |- |correct
|answers✔✔1. |pre |acquisition |costs
2. |purchase |price
3. |operating |costs
4. |maintenance |and |repair |costs
5. |downtime |costs |and |end |of |life/decommissioning |costs