CIPS L4M1 Practice Questions and Correct Answers

Define procurement Procurement is the process of obtaining goods or services through following a process that includes identifying the need through to goods or services being delivered. Define purchasing Purchasing is the act of physically ordering and buying something. Define supply Supply is the infrastructure which ensures goods/services can be delivered Define value Value is the worth of something, the difference between what we pay and what a potential customer is willing to pay What is a good A good is a tangible physical item such as raw materials, components What is a service A service is an intangible item such as cleaning, training What are constructional works Constructional works include both goods and services, such as concrete, architecture What are stock items Stock items are ones we can hold inventory of such as raw materials, components What are non-stock items Non-items are ones which cannot be held, such as capital procurements, services Outline what is meant by direct and indirect procurements Direct material - traceable to units of production such as wood into furniture Indirect material - not traceable to specific units such as sanding paper into sanding machinery Direct labour - directly involved in the making of units Indirect labour - Indirectly involved in the making of units such as maintenance engineers Direct expense - variable costs which are rare such as paying royalties on each unit produced Indirect expense - fixed or step-fixed, such as factory rent What are primary activities in Porter's value chain Inbound logistics Operations