CIPS L4M1 ACTUAL QUESTIONS AND
CORRECT ANSWERS UPDATED EXAM SCRIPT
◉ What should always be considered when making a purchase.
Answer: The 5 rights of procurement and suppluy:
Right Price - not the cheapest but the most value for money
Right Time - Available to sample and available to purchase at right
time
Right Place - Relatively close to view/sample/order or deliver in time
Right Quality - To arrive and functions as expected (Iso 9001)
Right Quantity - Enough to be available to and satisfy the customer (
Just in time & Kanban
◉ What is added value. Answer: Addition to a feature or capability
for which the buyer is willing to pay extra
◉ What are the three types of stock procurements. Answer: Raw
materials, components, and finished goods
◉ What are raw materials. Answer: A type of stock procurement, Raw
materials: are extracted from their natural source by the primary
sector. i.e. iron ore
,◉ What are components. Answer: A type of stock procurement,
Components: Are manufactured in the secondary sector from raw
materials and are used to create finished goods. i.e. nuts and bolts
◉ What are finished goods?. Answer: A type of stock
procurement.Finished goods: Stocked by retail store to sell to
consumers , i.e. washing machine
◉ How should stock procurements be managed?. Answer: Stock
Procuments needs to managed well to keep inventory cost effective, if
not can lead to problems. Effective stock control can save money as
JCB found when they implemented new software to manager their
inventory
◉ What are Non-stock procurements. Answer: Commercial services
that help run an organisation and are not listed as inventory. i.e. wifi,
telephone service and insurance.
Just as important to get good value
◉ What are some examples of Non stock procurements. Answer:
Tangible, often capital purchases
Intangible, Cleaning services, a telephone system, an internet
contract, insurance, or an advertising campaign
, ◉ Define Direct procurements. Answer: Sourcing and supply of a
product or service that is directly related to a specific job, such as the
raw materials used to produce a product.
◉ How important are direct procurements ?. Answer: Direct
procurements are therefore integral to an organisation; without them,
there can be no finished product for the consumer.
◉ How should relationships with direct procurements suppliers be
managed?. Answer: Must manage relationships with suppliers well
due to the importance of these procurements. Professionals can use
the Kraljic matric to to manage these relationships effectively.
◉ How are supplier relationships assessed?. Answer: The Kraljic
matrix:
1. High Supply risk+ High spend= Critical
2. High supply risk + low spend = bottleneck
3. Low supply risk+ High spend = leverage
4. Low supply risk + high spend = routine
◉ Define Indirect procurements. Answer: Goods and services that are
needed for an organisation to continue functioning, but don't
contribute to the bottom line. i.e. marketing or office equipment
◉ How important are indirect procurements and your relationship
with these suppliers
CORRECT ANSWERS UPDATED EXAM SCRIPT
◉ What should always be considered when making a purchase.
Answer: The 5 rights of procurement and suppluy:
Right Price - not the cheapest but the most value for money
Right Time - Available to sample and available to purchase at right
time
Right Place - Relatively close to view/sample/order or deliver in time
Right Quality - To arrive and functions as expected (Iso 9001)
Right Quantity - Enough to be available to and satisfy the customer (
Just in time & Kanban
◉ What is added value. Answer: Addition to a feature or capability
for which the buyer is willing to pay extra
◉ What are the three types of stock procurements. Answer: Raw
materials, components, and finished goods
◉ What are raw materials. Answer: A type of stock procurement, Raw
materials: are extracted from their natural source by the primary
sector. i.e. iron ore
,◉ What are components. Answer: A type of stock procurement,
Components: Are manufactured in the secondary sector from raw
materials and are used to create finished goods. i.e. nuts and bolts
◉ What are finished goods?. Answer: A type of stock
procurement.Finished goods: Stocked by retail store to sell to
consumers , i.e. washing machine
◉ How should stock procurements be managed?. Answer: Stock
Procuments needs to managed well to keep inventory cost effective, if
not can lead to problems. Effective stock control can save money as
JCB found when they implemented new software to manager their
inventory
◉ What are Non-stock procurements. Answer: Commercial services
that help run an organisation and are not listed as inventory. i.e. wifi,
telephone service and insurance.
Just as important to get good value
◉ What are some examples of Non stock procurements. Answer:
Tangible, often capital purchases
Intangible, Cleaning services, a telephone system, an internet
contract, insurance, or an advertising campaign
, ◉ Define Direct procurements. Answer: Sourcing and supply of a
product or service that is directly related to a specific job, such as the
raw materials used to produce a product.
◉ How important are direct procurements ?. Answer: Direct
procurements are therefore integral to an organisation; without them,
there can be no finished product for the consumer.
◉ How should relationships with direct procurements suppliers be
managed?. Answer: Must manage relationships with suppliers well
due to the importance of these procurements. Professionals can use
the Kraljic matric to to manage these relationships effectively.
◉ How are supplier relationships assessed?. Answer: The Kraljic
matrix:
1. High Supply risk+ High spend= Critical
2. High supply risk + low spend = bottleneck
3. Low supply risk+ High spend = leverage
4. Low supply risk + high spend = routine
◉ Define Indirect procurements. Answer: Goods and services that are
needed for an organisation to continue functioning, but don't
contribute to the bottom line. i.e. marketing or office equipment
◉ How important are indirect procurements and your relationship
with these suppliers
