CIPS L4M1 FINAL EXAM | WITH COMPLETE QUESTIONS AND
ANSWERS | 2025/206 LATEST UPDATED | 100 % RATED AND VERIFIED
SOLUTIONS | GET AN A+
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
? - (ANSWER)Can be sourced from several different suppliers so relationships can be different
from that of direct procurement suppliers.
Importance and risk should be assessed by using the Kraljic matrix to identify the relationship
required with the supplier
Define capital expenditures - (ANSWER)1. Asset of the organisation. i.e. machinery, buildings,
or land.
2. They are procured to help a business develop, make money and keep up with market trends
What do Procurement professionals need to assess when it comes to CAPEX -
(ANSWER)Depreciation is the amount by which the asset reduces and procurement professional
should assess how quick this may happen by working with the finance department
Define operating expense - (ANSWER)Ongoing expenses that ensure efficient day-to-day
running of the business.
What type of expenses are usually paid monthly and have a low to medium value -
(ANSWER)Operating expenses
What kind of expensess are raw materials, rent, salaries and transport - (ANSWER)Operating
expenses
, Give 3 examples of OPEX - (ANSWER)Rent, raw materials, salaries, transport
Give 3 examples of CAPEX - (ANSWER)machinery, buildings, or land.
What expenditures make money and help the business keep up with market trends -
(ANSWER)CAPEX
What does TCA stand for - (ANSWER)Total cost of acquisition
Define TCA - (ANSWER)TCA is the total amount of money an organisation has to pay to
acquire a product, from sourcing through to receiving and installing it.
How do you calculate TCA - (ANSWER)Things to consider when calculation TCA, price,
quality, cost of carriage and insurance, and, lead time.
What is one way of analysing which purchasing option is best value for money -
(ANSWER)Calculating TCA and TCO can help show which options is best value for money.
What does TCO stand for - (ANSWER)Total Cost of Ownership (TCO)
Define TCO - (ANSWER)1. TCO is used to analyse the total costs that will be incurred over
the lifetime of goods or services. Often used when procuring assets rather than regularly sourced
items.
How do you calculate TCO - (ANSWER)3. To calculate TCO, you must consider TCA, tooling,
insurance, operating, maintenance, training, storage, and disposal.
Define external suppliers - (ANSWER)Individuals or organisations that are separate from the
buying organisation.
ANSWERS | 2025/206 LATEST UPDATED | 100 % RATED AND VERIFIED
SOLUTIONS | GET AN A+
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
? - (ANSWER)Can be sourced from several different suppliers so relationships can be different
from that of direct procurement suppliers.
Importance and risk should be assessed by using the Kraljic matrix to identify the relationship
required with the supplier
Define capital expenditures - (ANSWER)1. Asset of the organisation. i.e. machinery, buildings,
or land.
2. They are procured to help a business develop, make money and keep up with market trends
What do Procurement professionals need to assess when it comes to CAPEX -
(ANSWER)Depreciation is the amount by which the asset reduces and procurement professional
should assess how quick this may happen by working with the finance department
Define operating expense - (ANSWER)Ongoing expenses that ensure efficient day-to-day
running of the business.
What type of expenses are usually paid monthly and have a low to medium value -
(ANSWER)Operating expenses
What kind of expensess are raw materials, rent, salaries and transport - (ANSWER)Operating
expenses
, Give 3 examples of OPEX - (ANSWER)Rent, raw materials, salaries, transport
Give 3 examples of CAPEX - (ANSWER)machinery, buildings, or land.
What expenditures make money and help the business keep up with market trends -
(ANSWER)CAPEX
What does TCA stand for - (ANSWER)Total cost of acquisition
Define TCA - (ANSWER)TCA is the total amount of money an organisation has to pay to
acquire a product, from sourcing through to receiving and installing it.
How do you calculate TCA - (ANSWER)Things to consider when calculation TCA, price,
quality, cost of carriage and insurance, and, lead time.
What is one way of analysing which purchasing option is best value for money -
(ANSWER)Calculating TCA and TCO can help show which options is best value for money.
What does TCO stand for - (ANSWER)Total Cost of Ownership (TCO)
Define TCO - (ANSWER)1. TCO is used to analyse the total costs that will be incurred over
the lifetime of goods or services. Often used when procuring assets rather than regularly sourced
items.
How do you calculate TCO - (ANSWER)3. To calculate TCO, you must consider TCA, tooling,
insurance, operating, maintenance, training, storage, and disposal.
Define external suppliers - (ANSWER)Individuals or organisations that are separate from the
buying organisation.
