Pass the CIPS CIPS Level 4 Diploma in Procurement and Supply L4M6 Questions and answers with CertsForce

Profitability is impacted when product costs rise without corresponding price adjustments. Understanding cost-price relationships is key to managing profitability in procurement.

Explanation

In a 'perfect competition' there are no barriers to entry or exit, and competition is at its highest possible level. For more information on different types of market see p.40

Explanation

This QUESTION NO: refers to Porter's Value Chain (p.35). There's a couple of questions on this in the exam so try to learn it. Primary activities are; inbound logistics, operations, outbound logistics, marketing and sales, after sales- service

Explanation

Note the word ‘NOT’ in the question. In order for a competitive tender to be successful, there should be a clear specification in place (i.e. you need to know what you want, in order for suppliers to bid for it). Competitive tendering should also only be used for high value purchases; it’s time consuming to do, so you wouldn’t do it for low value items such as pens for the office. Therefore the correct answer to this question is 'items are of low value' and 'there isn’t a clear specification'. There’s a useful table on p.73 of when you would and wouldn’t use a competitive tender.

Comprehensive and Detailed Explanation:

The buying organisation's decision to terminate the partnership with supplier FGH is influenced by:

Changes in the composition of the supply market: The entry of new suppliers into the market provides the buying organisation with more options, reducing dependency on FGH and enabling the pursuit of better partnerships.

Poor communication by the supplier: FGH's lack of proactive communication regarding delivery delays has led to frustration, indicating a breakdown in the partnership's effectiveness.

These factors align with the principles of supplier relationship management, where effective communication and adaptability to market changes are crucial.

Comprehensive and Detailed Explanation:

Succession issues pertain to the challenges associated with ensuring the uninterrupted supply of goods or services when transitioning from one supplier to another. Continuity of supplies is a primary concern, as any disruption can impact operations, customer satisfaction, and revenue. Effective succession planning involves:

Identifying Alternative Suppliers:Ensuring that backup suppliers are in place and capable of meeting requirements.

Knowledge Transfer:Facilitating the transfer of critical information and processes to new suppliers.

Inventory Management:Maintaining adequate stock levels during the transition period.

Other options listed, such as processing penalties, deletion of old specifications, and payment of old invoices, are administrative tasks that, while important, do not directly relate to succession planning.

In the Supplier Preferencing Model:

Core: A buyer with high spend and high attractiveness is viewed as critical by the supplier, encouraging strategic collaboration.

Exploitable: Where buyer spend is high but power is lower, suppliers may exploit the situation by raising prices or setting unfavorable terms.

These are the two scenarios associated with high spend buyers.

Regular reviews focusing on lessons learned and continuous improvement ensure the partnership remains effective and aligned with objectives. This supports ongoing collaboration and operational excellence.

Explanation

The correct answer is ‘The Matrix doesn’t consider whether the stakeholder is for or against the activity’. For a list of other limitations of using Mendelow’s Stakeholder Matrix see p.82

Routine items are low risk and low value. They are non-critical and often easily sourced. CIPS categorizes such items in the ‘Routine’ quadrant of the Kraljic Matrix, where minimal procurement effort is justified and supply assurance is easily managed.