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CIPS L4M1 - Question & Answer Past exam
questions latest 2023/2024
O1. Outline FIVE differences between purchasing goods
and purchasing services. - .....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. - .....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
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O2. Describe TWO e-sourcing tools and their use in
procurement and supply. - .....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). -
.....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;
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• 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) - .....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
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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) - .....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.
CIPS L4M1 - Question & Answer Past exam
questions latest 2023/2024
O1. Outline FIVE differences between purchasing goods
and purchasing services. - .....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. - .....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
,2|Page
O2. Describe TWO e-sourcing tools and their use in
procurement and supply. - .....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). -
.....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;
,3|Page
• 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) - .....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
, 4|Page
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) - .....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.
