CIPS L4M1 Questions With All Correct Answers
O1. Outline FIVE differences between purchasing goods and purchasing
services. correct answer -1. Goods are tangible, services are intangible:
2. Services cannot be separated from their supplier:
3. Heterogeneity: goods are usually uniform in nature while services are
unique at each delivery
4. Services 'perish' immediately on delivery whereas goods can be stored until
required
5. Products are easier to specify, being tangible
O2. Explain THREE circumstances in which a competitive tendering exercise
might not be the best approach to making a purchase. correct answer -1.
Urgency
2. Commercial confidentiality or national security (e.g. military organisations):
3. Value of the purchase:
4. Production costs cannot be measured accurately:
5. Price is not the only criterion for supplier selection and contract award
6. Intellectual Property Rights and monopoly
O2. Describe TWO e-sourcing tools and their use in procurement and supply.
correct answer -1. E-Catalogues
2. E-Tendering
3. E. Auction
4. Reverse Auctions
5. Online suppleir evaluation data
O3. Explain the role of a shared services unit (SSU). correct answer -SSUs
reflect a desire to centralise and share services
The shared service provider becomes a dedicated provider of services such as;
finance, HR, IT and procurement which continue to be provided internally
An SSU manages costs and quality SLAs to demonstrate value for money.
An SSU's benefits may be summarised as:
• cost effective internal service;
• liaison with its customers;
• anticipating future demand;
,• employing resources and providing higher levels of service more cost
effectively than if they were provided by a department or an external
provider.
O3. A manufacturer of electrically powered tools for the engineering industry
consists of four separate business units, each of which undertakes its own
purchasing activities.
Discuss THREE benefits of centralising all purchasing activities with those of
retaining the present decentralised structure. (1 of 2) correct answer -
Centralisation' and 'decentralisation' refer to the degree to which
responsibility and authority is delegated. Arguments for centralisation can
only be evaluated in the context of specific organisational environment and
might include:
1. Policies & procedures
2. Consolidation of requirements
3. Location
4. Supply market structure
5. Expertise required:
6. Customer demands
O3. A manufacturer of electrically powered tools for the engineering industry
consists of four separate business units, each of which undertakes its own
purchasing activities.
Discuss THREE benefits of centralising all purchasing activities with those of
retaining the present decentralised structure. (2 of 2) correct answer -The
benefits of retaining the present de-centralised structure include:
1. Local responsibility
2. Knowledge of the local environment, culture and customer needs
3. Skills development of buyers in each unit
4. Better communication and coordination between procurement and
operating departments,
5. Customer focus: buyers are 'closer' to internal and external customers
developing understanding of user needs and problems.
6. Quicker response to operational and user needs,
7. Smaller purchase quantities:
8. Accountability: d
, 9. Freeing central procurement units to focus on higher-level, value-adding
tasks.
O3. Explain the following IT systems used by the procurement or supply chain
function:
(i) 'Enterprise Resource Planning'
(ii) 'Materials Requirement Planning'
(iii) 'Purchase to Pay (P2P)'. correct answer -ERP is a single data base to
manage a wide range of functions and resources across a business. It offers
real time solutions.
MRP is a set of records, decision rules and procedures to manage demand.
P2P is a two way flow of transactions taking a purchase requisition through to
payment of invoice.
O1. FIVE elements of the total cost of ownership of capital equipment
correct answer -1. pre acquisition costs
2. purchase price
3. operating costs
4. maintenance and repair costs
5. downtime costs and end of life/decommissioning costs
O1. It is widely believed that it is important to attempt to reduce costs and add
value throughout the supply chain. Explain THREE innovative strategies that
might achieve such goals correct answer -1. value engineering
2. lean supply
3. agile supply
4. TQM
5. JIT and
6. value added negotiations/relationships
O2. Explain THREE ways in which electronic systems can be used in the
sourcing process. correct answer -1. internet
2. e-tendering (RFI/RFP/RFQ/RFX)
3. e- catalogues
4. e-auctions and reverse auctions
5. intranet.
explain how each can be used in sourcing process
O1. Outline FIVE differences between purchasing goods and purchasing
services. correct answer -1. Goods are tangible, services are intangible:
2. Services cannot be separated from their supplier:
3. Heterogeneity: goods are usually uniform in nature while services are
unique at each delivery
4. Services 'perish' immediately on delivery whereas goods can be stored until
required
5. Products are easier to specify, being tangible
O2. Explain THREE circumstances in which a competitive tendering exercise
might not be the best approach to making a purchase. correct answer -1.
Urgency
2. Commercial confidentiality or national security (e.g. military organisations):
3. Value of the purchase:
4. Production costs cannot be measured accurately:
5. Price is not the only criterion for supplier selection and contract award
6. Intellectual Property Rights and monopoly
O2. Describe TWO e-sourcing tools and their use in procurement and supply.
correct answer -1. E-Catalogues
2. E-Tendering
3. E. Auction
4. Reverse Auctions
5. Online suppleir evaluation data
O3. Explain the role of a shared services unit (SSU). correct answer -SSUs
reflect a desire to centralise and share services
The shared service provider becomes a dedicated provider of services such as;
finance, HR, IT and procurement which continue to be provided internally
An SSU manages costs and quality SLAs to demonstrate value for money.
An SSU's benefits may be summarised as:
• cost effective internal service;
• liaison with its customers;
• anticipating future demand;
,• employing resources and providing higher levels of service more cost
effectively than if they were provided by a department or an external
provider.
O3. A manufacturer of electrically powered tools for the engineering industry
consists of four separate business units, each of which undertakes its own
purchasing activities.
Discuss THREE benefits of centralising all purchasing activities with those of
retaining the present decentralised structure. (1 of 2) correct answer -
Centralisation' and 'decentralisation' refer to the degree to which
responsibility and authority is delegated. Arguments for centralisation can
only be evaluated in the context of specific organisational environment and
might include:
1. Policies & procedures
2. Consolidation of requirements
3. Location
4. Supply market structure
5. Expertise required:
6. Customer demands
O3. A manufacturer of electrically powered tools for the engineering industry
consists of four separate business units, each of which undertakes its own
purchasing activities.
Discuss THREE benefits of centralising all purchasing activities with those of
retaining the present decentralised structure. (2 of 2) correct answer -The
benefits of retaining the present de-centralised structure include:
1. Local responsibility
2. Knowledge of the local environment, culture and customer needs
3. Skills development of buyers in each unit
4. Better communication and coordination between procurement and
operating departments,
5. Customer focus: buyers are 'closer' to internal and external customers
developing understanding of user needs and problems.
6. Quicker response to operational and user needs,
7. Smaller purchase quantities:
8. Accountability: d
, 9. Freeing central procurement units to focus on higher-level, value-adding
tasks.
O3. Explain the following IT systems used by the procurement or supply chain
function:
(i) 'Enterprise Resource Planning'
(ii) 'Materials Requirement Planning'
(iii) 'Purchase to Pay (P2P)'. correct answer -ERP is a single data base to
manage a wide range of functions and resources across a business. It offers
real time solutions.
MRP is a set of records, decision rules and procedures to manage demand.
P2P is a two way flow of transactions taking a purchase requisition through to
payment of invoice.
O1. FIVE elements of the total cost of ownership of capital equipment
correct answer -1. pre acquisition costs
2. purchase price
3. operating costs
4. maintenance and repair costs
5. downtime costs and end of life/decommissioning costs
O1. It is widely believed that it is important to attempt to reduce costs and add
value throughout the supply chain. Explain THREE innovative strategies that
might achieve such goals correct answer -1. value engineering
2. lean supply
3. agile supply
4. TQM
5. JIT and
6. value added negotiations/relationships
O2. Explain THREE ways in which electronic systems can be used in the
sourcing process. correct answer -1. internet
2. e-tendering (RFI/RFP/RFQ/RFX)
3. e- catalogues
4. e-auctions and reverse auctions
5. intranet.
explain how each can be used in sourcing process
