CIPS L4M8 questions and answer
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
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
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)
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
The SWOT analysis is another useful tool for evaluating the environment before
finalising a strategy or plan to meet the generated need - ANSWER>>Strengths
Weaknesses
Opportunitites
Threats
The next stage of developing a strategy/plan is to - ANSWER>>decide whether
to use a request for quotation (RFQ) or an invitation to tender (ITT)
Invitation To Tender - ANSWER>>A structured process requesting a supplier to
provide a bid against a specified set of terms, usually to carry out a service, by a
stated deadline
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
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
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)
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
The SWOT analysis is another useful tool for evaluating the environment before
finalising a strategy or plan to meet the generated need - ANSWER>>Strengths
Weaknesses
Opportunitites
Threats
The next stage of developing a strategy/plan is to - ANSWER>>decide whether
to use a request for quotation (RFQ) or an invitation to tender (ITT)
Invitation To Tender - ANSWER>>A structured process requesting a supplier to
provide a bid against a specified set of terms, usually to carry out a service, by a
stated deadline
