CIPS L4M1 Scope and Influence of Procurement and Supply verified/passed 2024

CIPS L4M1 Scope and Influence of Procurement and SupplyWhat is Procurement? - correct answer Procurement is a STRATEGIC function of a business obtains something Tangible as goods or Intangible as services. Include Purchasing Inventory, Logistics, Supply, Waste Management Quality, Cost, Added Value What is Purchasing? - correct answer Is the ACT of physically ordering and buying something. What is Supply? - correct answer Is the INFRASTRUCTURE which ensures that products and services get from supplier to the customer. What is inventory? - correct answer the stock of goods, materials or products What is a stock? - correct answer Asset available in the warehouse What is asset? - correct answer Value of everything an organization owns Fixed cost - correct answer Costs do not change (Salaries, Insurance, Rent) Variable Cost - correct answer Costs do change as they are linked to the business (Raw Material, Extra hours) Directly Cost (Direct Procurement) - correct answer Cost associated with the Job or production (Raw material, Man Power) Indirectly Cost (Indirect Procurement) - correct answer Not associated with the Job (Clean Liquid, Stationary, Mobile phones contracts, MRO - Maintenance repairs and Operations. Primary Sector of the Economy - correct answer The part of the economy that draws raw materials from the natural environment (Cotton, Oil, Silver, Wheat) Secondary sector of the Economy - correct answer The part of the economy that transforms raw materials into manufactured goods (Light Bulbs, Nuts and Bolts, Metal housing, Plastic fittings) Finished goods - correct answer Units of products that have been completed but not yet sold to customers (Shoes, Beds, Clothes, Jewellery) Stock Procurement Includes - correct answer Can be stored and inventory Raw Material, Components and Finished Goods. Non-Stock Procurement Includes - correct answer Are not stored and not listed in the Organization inventory (Cleaning Services, Internet Contract, Insurances, Advertising Campaigns) Explain why the procurement department should be consulted before an organization spends money. - correct answer Procurement can influence the majority of the costs within an organization: 1.- Evaluating potential suppliers 2.- Involved in preparing specifications 3.- Review Quality standards 4.- Assess ethical requirements 5.- Compare buy or lease options 6.- Investigate transport 7.- Review packing options. 8.- Research total life cost 9.- Calculate currency differences 10.- Benchmark prices 11.- Ensure assets are fit for a propose Total life Cost (TLC) - correct answer The total amount a product will cost an organization. Mentioned some examples of NON-STOCK INTANGIBLE procurements. - correct answer Insurance, Marketing, Salaries/Pensions, Cleaning, IT and Catering Services, Staff Development, Electricity, Gas, Rent or Mortage. Mentioned some examples of STOCK TANGIBLE procurements. - correct answer Components, Stationary, Uniforms Mentioned some examples of CAPITAL NON-STOCK TANGIBLE procurements. - correct answer Machinery, Buildings, Lands, Vehicles CapEx (Capital Expenditure) - correct answer The cost associated to assets of an Organization (The value of a Capital Purchases reduce overtime, the amount of the asset depreciated) OPEX (Operating Expenditure) - correct answer Cost Associated with the running of an Organization, such as electricity, labour, transport, rent, the raw material (Day to day running of the business) What is a budget? - correct answer Financial plan for a set period on how much can spend money. Depreciation - correct answer The reduction overtime in the value of an asset held by the company. What should a procurement professional consider when sourcing a capital purchase? - correct answer The TCL - Total Cost of Life, Depreciation. Procurement Process - correct answer A cross-functional business process that originates when a company needs to acquire goods or services from external sources, and it concludes when the company receives and pays for them. What are the stages of the procurement cycle process? - correct answer 1.-Understand the need 2.- Market/commodity 3.- Develop a strategy 4.- Pre procure 5.- Develop Documentation