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CIPS L4M8 Chapter 1 Exam Study Guide
100% Verified 2025.
The 13 Stages of the Procurement Cycle - Answer✔Stage 1 - Identify need and develop spec.
Stage 2 - Market commodity/make or buy options.
Stage 3 - Develop Strategy/Plan
Stage 4 - Pre procurement market tests
Stage 5 - Prepare Documentation
Stage 6 - Supplier Selection
Stage 7 - Send ITT
Stage 8 - Receive & Evaluate Bids
Stage 9 - Award contract
Stage 10 - Warehouse/logistics prep
Stage 11 - Contract management
Stage 12 - Relationship management
Stage 13 - End of life/asset management
Procurement Cycle - Stage 1 - Understand need and develop a high-level specification -
Answer✔The person generating the need should communicate with the buyer to ensure there
is no misinterpretation. Once the need is clearly understood, the procurement professional
should develop a specification
Two types of specification - Answer✔Performance and conformance
1
, ©JASONMcCONNELL 2025 ALL RIGHTS RESERVED
Performance specifications - Answer✔Specifies what the product or service will do or achieve.
This covers the outputs required, tolerances and any functions the product/service may have to
perform
Conformance specifications (technical) - Answer✔Specifies which standards a requirement
must meet or exceed
Characteristics of Performance specifications - Answer✔- Allow supplier innovation
- Promote competition in the marketplace
- The supplier bears the risk
- Buyer may not know exactly what they will be getting
- Shorter document
- Quicker to prepare
- Takes advantage of supplier expertise
Characteristics of Conformance specifications (technical) - Answer✔- No supplier innovation
- Reduce competition
- The buyer bears the risk
- Buyer knows exactly what they are getting
- Longer, complex document
- More time consuming to prepare
- Disregards supplier expertise
Procurement Cycle - Stage 2 - Market commodity/make or buy options - Answer✔Once
specification has been developed, the procurement professional is aware of what is required,
why and when. The options to consider include the budget available to spend on the
procurement, the number of suppliers available and whether to make or buy
2
, ©JASONMcCONNELL 2025 ALL RIGHTS RESERVED
To fully understand the market pricing, procurement professionals should research the level of
competition. The .... .... ... model is an established way of assessing the competition -
Answer✔Porter's Five Forces
Porter's Five Forces Model - Answer✔- Threat of new entrants
- Threat of substitutes
- Bargaining power of buyers
- Bargaining power of suppliers
- Rivalry among existing Competitors
Core Competencies - Answer✔The processes that are critical to an organisation achieving
success and competitive advantage
Make or buy decisions are about - Answer✔whether a product or service should be made
within the organisation or bought-in from an external supplier
A procurement professional can use Carter's Outsource Matrix when - Answer✔deciding
whether to make or buy
The four quadrants of Carter's Outsource Matrix - Answer✔- Strategic Alliance
(High strategic importance/Low Contribution to operational performance)
- Retain
(High importance/Low contribution)
- Eliminate
(Low importance/Low contribution)
- Outsource
(Low importance/High contribution)
3
, ©JASONMcCONNELL 2025 ALL RIGHTS RESERVED
Benefits of Outsourcing - Answer✔- Saving money
- Reducing overheads
- Reducing headcount
- Using external knowledge
Focusing internally on core competencies
- Helping with shortfalls in labour/expertise
Disadvantages of Outsourcing - Answer✔- Losing some control within an organisation
- Relying on external organisations
- Reducing quality
- Losing some internal knowledge
Procurment Cycle - Stage 3 - Develop strategy/plan - Answer✔Once the decision to make or buy
has been made and the market has been evaluated, the next stage is to develop the strategy or
plan of how to achieve the procurement. Buyers should think about the external environment
when developing this plan and take several factors into account that could affect their decisions
(STEEPLE)
STEEPLE - Answer✔Social
Technological
Economic
Environmental
Political
Legal
Ethical
The STEEPLE analysis is an effective way to - Answer✔evaluate the external environment. This
helps buyers to assess which factors could affect their need and helps them to develop the plan
accordingly
4
CIPS L4M8 Chapter 1 Exam Study Guide
100% Verified 2025.
The 13 Stages of the Procurement Cycle - Answer✔Stage 1 - Identify need and develop spec.
Stage 2 - Market commodity/make or buy options.
Stage 3 - Develop Strategy/Plan
Stage 4 - Pre procurement market tests
Stage 5 - Prepare Documentation
Stage 6 - Supplier Selection
Stage 7 - Send ITT
Stage 8 - Receive & Evaluate Bids
Stage 9 - Award contract
Stage 10 - Warehouse/logistics prep
Stage 11 - Contract management
Stage 12 - Relationship management
Stage 13 - End of life/asset management
Procurement Cycle - Stage 1 - Understand need and develop a high-level specification -
Answer✔The person generating the need should communicate with the buyer to ensure there
is no misinterpretation. Once the need is clearly understood, the procurement professional
should develop a specification
Two types of specification - Answer✔Performance and conformance
1
, ©JASONMcCONNELL 2025 ALL RIGHTS RESERVED
Performance specifications - Answer✔Specifies what the product or service will do or achieve.
This covers the outputs required, tolerances and any functions the product/service may have to
perform
Conformance specifications (technical) - Answer✔Specifies which standards a requirement
must meet or exceed
Characteristics of Performance specifications - Answer✔- Allow supplier innovation
- Promote competition in the marketplace
- The supplier bears the risk
- Buyer may not know exactly what they will be getting
- Shorter document
- Quicker to prepare
- Takes advantage of supplier expertise
Characteristics of Conformance specifications (technical) - Answer✔- No supplier innovation
- Reduce competition
- The buyer bears the risk
- Buyer knows exactly what they are getting
- Longer, complex document
- More time consuming to prepare
- Disregards supplier expertise
Procurement Cycle - Stage 2 - Market commodity/make or buy options - Answer✔Once
specification has been developed, the procurement professional is aware of what is required,
why and when. The options to consider include the budget available to spend on the
procurement, the number of suppliers available and whether to make or buy
2
, ©JASONMcCONNELL 2025 ALL RIGHTS RESERVED
To fully understand the market pricing, procurement professionals should research the level of
competition. The .... .... ... model is an established way of assessing the competition -
Answer✔Porter's Five Forces
Porter's Five Forces Model - Answer✔- Threat of new entrants
- Threat of substitutes
- Bargaining power of buyers
- Bargaining power of suppliers
- Rivalry among existing Competitors
Core Competencies - Answer✔The processes that are critical to an organisation achieving
success and competitive advantage
Make or buy decisions are about - Answer✔whether a product or service should be made
within the organisation or bought-in from an external supplier
A procurement professional can use Carter's Outsource Matrix when - Answer✔deciding
whether to make or buy
The four quadrants of Carter's Outsource Matrix - Answer✔- Strategic Alliance
(High strategic importance/Low Contribution to operational performance)
- Retain
(High importance/Low contribution)
- Eliminate
(Low importance/Low contribution)
- Outsource
(Low importance/High contribution)
3
, ©JASONMcCONNELL 2025 ALL RIGHTS RESERVED
Benefits of Outsourcing - Answer✔- Saving money
- Reducing overheads
- Reducing headcount
- Using external knowledge
Focusing internally on core competencies
- Helping with shortfalls in labour/expertise
Disadvantages of Outsourcing - Answer✔- Losing some control within an organisation
- Relying on external organisations
- Reducing quality
- Losing some internal knowledge
Procurment Cycle - Stage 3 - Develop strategy/plan - Answer✔Once the decision to make or buy
has been made and the market has been evaluated, the next stage is to develop the strategy or
plan of how to achieve the procurement. Buyers should think about the external environment
when developing this plan and take several factors into account that could affect their decisions
(STEEPLE)
STEEPLE - Answer✔Social
Technological
Economic
Environmental
Political
Legal
Ethical
The STEEPLE analysis is an effective way to - Answer✔evaluate the external environment. This
helps buyers to assess which factors could affect their need and helps them to develop the plan
accordingly
4
