L4M8 Procurement & Supply in Practice Exam Questions And Answers (Verified And Updated)

L4M8 Procurement & Supply in Practice Exam Questions And Answers (Verified And Updated) How many stages are there within the CIPS Procurement Cycle? - answerThe CIPS procurement cycle has 13 stages: 1. Understand need and develop a high-level specification. 2. Market/commodity options including make-versus-but assessment. 3. Develop strategy/plan. 4. Pre-procurement market tests and market engagement. 5. Development of required documentation, e.g. request for quotation (RFQ). 6. Supplier selection to participate in an invitation to tender (ITT). 7. Issue invitation to tender/request for quotation. 8. Bid/tender/quotation evaluation and validation. 9. Contract award and implementation. 10. Warehouse logistics and receipt. 11. Contract performance review and continuous improvement. 12. Supplier relationship/contract management. 13. Asset management/end of life. What is stage 1 of the CIPS Procurement Cycle? - answerUnderstand need and develop a high-level specification. What is stage 2 of the CIPS Procurement Cycle? - answerMarket/commodity options including make-versus-but assessment. What is stage 3 of the CIPS Procurement Cycle? - answerDevelop strategy/plan. What is stage 4 of the CIPS Procurement Cycle? - answerPre-procurement market tests and market engagement. What is stage 5 of the CIPS Procurement Cycle? - answerDevelopment of required documentation, e.g. request for quotation (RFQ). What is stage 6 of the CIPS Procurement Cycle? - answerSupplier selection to participate in an invitation to tender (ITT). What is stage 7 of the CIPS Procurement Cycle? - answerIssue invitation to tender/request for quotation. What is stage 8 of the CIPS Procurement Cycle? - answerBid/tender/quotation evaluation and validation. What is stage 9 of the CIPS Procurement Cycle? - answerContract award and implementation. What is stage 10 of the CIPS Procurement Cycle? - answerWarehouse logistics and receipt. What is stage 11 of the CIPS Procurement Cycle? - answerContract performance review and continuous improvement. What is stage 12 of the CIPS Procurement Cycle? - answerSupplier relationship/contract management. What is stage 13 of the CIPS Procurement Cycle? - answerAsset management/end of life. When developing a specification, on what two models can it be focused? - answer• Performance specification • Technical (conformance) specification How should a specification be developed? - answerThe specification should be developed together with stakeholders and colleagues to ensure that the final design is fit for purpose and that it meets the generated need. What are the main points of Performance specifications? - answer• Allow supplier innovation • Promote competition in the marketplace • The supplier bears the risk • Buyer may not know exactly what they are getting • Shorter document • Quicker to prepare • Takes advantage of supplier expertise What are the main points of Conformance specifications? - answer• No supplier innovation • Reduced competition • The buyer bears the risk • Buyer knows exactly what they are getting • Longer, complex document • More time consuming to prepare • Disregards supplier expertise Why is it important to understand the budget before sending out any information to suppliers? - answerUnderstanding the budget is essential for keeping within budget. The amount of budget that is available will affect the quality of the product or service that can be obtained. What is "Variance" against budget? - answerVariance is the difference between the budgeted amount and the spend. What is a commodity? - answerA raw material that can be brought or sold e.g. oil, gas, or coffee. What model can be used to establish & assess market competition? - answerPorters Five Forces What are the key areas of Porters Five Forces? - answerCentralising around Rivalry among existing competitors, the four further forces of the model are: Threat of new entrants Bargaining power of suppliers Threat of substitutes Bargaining power of buyers When would the 'make or buy decision' be made during the procurement cycle? - answerDuring Stage 2: Market commodity options. What should be established during the 'make or buy' decision? - answerTo establish which method offers best value, the businesses should think about whether the item in question is core to the company. A core competency within an organisation is a product or service that is strategic to the success or failure of the business - it is the main focus of the business. What are 'core competencies' defined as? - answerThe processes that are critical to an organisation achieving success and competitive advantage What matrix can be used when a procurement professional is deciding whether to 'make or buy' during Stage 2 of The Procurement Cycle? - answerCarter's Outsource Matrix Using this matrix professionals can decide whether the product or service has a high or low contribution, assess its strategic importance and act accordingly. Products or services best suited to the 'buy' decision or ones that have a high contribution to operational performance but low strategic importance. What are the four quadrants & two axis's of the Carter's Outsource Matrix? - answer1. Strategic alliance 2. Retain 3. Eliminate 4. Outsource Right axis, Low - High: Strategic importance Bottom axis, Low - High: Contribution to operational performance What is 'outsourcing' defined as? - answerOutsourcing is contracting and external company to supply goods or services that once produced internally. What are the main benefits to outsourcing Products or Services? - answer• Saving money • Reducing overheads • Reducing headcount • Using external knowledge • Focusing internally on core competencies • Helping with shortfalls in labour/expertise What are the recognised disadvantages of outsourcing Products or Services? - answer• Losing some control within an organisation • Relying on external organisations • Reducing quality