L4M2 Exam Dumps - CIPS Level 4 Diploma in Procurement and Supply Questions and Answers

Detailed Explanation:

Zero-based budgeting emphasizes starting from scratch and justifying all expenses.

3 (Budget flexibility): Ensures resources are allocated dynamically based on needs.

4 (Focus on operational issues): Encourages alignment with operational priorities rather than historical trends.Using prior figures (1) is contrary to zero-based budgeting principles. Reference: CIPS Level 4, Financial Planning and Budgeting.

Explanation

Despite of its importance, cost analysis is often a daunting task for procurement professionals. In order to analyse supplier's costs effectively, procurement may need the input from other depart-ments. Normally, technical (or engineering) department may help them to identify the direct costs of the product/service (how much material is required to make the product, or how many people are needed to perform the job, etc), while finance (or accounting) department may have ideas on the overheads of the supplier.

In this scenario, engineering department may provide insights on the components needed and the tasks to perform. Similarly, finance may know how much supplier pays for the overheads.

On the other hand, while commercial agency and suppliers are external stakeholders, Sales and marketing is unlikely to provide valuable information in this case.

Comprehensive and Detailed Explanation (paraphrased from CIPS L4M2 content)

CIPS L4M2 warns against over-specification – defining requirements in more detail, higher quality, or tighter tolerances than are actually needed. Key consequences include:

Increased costs – suppliers incur higher production and quality costs, which are passed on to the buyer.

Fewer potential suppliers – only a small number can meet the demanding specification.

More complex supplier relationships – closer collaboration and management may be needed to meet the demanding spec.

Assessing each statement:

Ineffective SLA – if the specification is unnecessarily detailed or unrealistic, SLAs can become difficult to meet, overly complex, or focused on the wrong priorities. Likely outcome.

Higher supplier costs – very clearly a result of over-specification (tight tolerances, special materials, complex processes).

Increased SRM – when the requirement is demanding and fewer suppliers can comply, buyers often need more intensive SRM to manage performance and risk.

Reduced inventory costs – this is not a typical outcome of over-specification; if anything, higher unit costs and longer lead times can increase inventory risks and carrying costs.

Thus 1, 2 and 3 are in line with CIPS treatment of over-specification; 4 is not, so:

Correct option: C (1, 2 and 3 only)

Relevant CIPS L4M2 areas:

Dangers of over-specification (cost, risk, supplier base)

Service Level Agreements and realistic performance measures

The role of SRM in managing complex or high-dependency suppliers

Explanation

The purpose of this QUESTION NO: is to test the student's ability to identify the problems and translate those problems to actionable requirements before communicating with the suppliers. The scenario suggests that Synergy Ltd's customer services team is using Excel spreadsheets, they lack a centralised customer database. This leads to problems in communications with customers.

A CRM system can solve the communication problem. But a QUESTION NO: arises: If a CRM system is employed, how will the previous data be imported? If the CRM system can support bulk import from Excel tables, it will save a lot of time.

Explanation

There are three basic groups of WLC (whole life-cycle costing) models:

- Decision support models

- Simulation models: Life cycle cost is an essential approach to decide on alternative rehabilitation strategies for infrastructure systems. Monte Carlo simulation approach is used to develop a stochastic life cycle cost (SLCC) model and methodology in order to compare different rehabilitation scenarios/alternatives for infrastructures, such as water mains. This method assumes that some inputs are randomly variable in a range of values.

- Optimisation models

Explanation

As you can see from the scenario, ABC Group is developing the new product. It might be using value engineering. The latter sentences confirm this: the cross-functional team in ABC is mapping the functions and surveying the customers. Their method is known as Kano model.

Explanation

This question mentions about specification in construction. In this sector, specifications are written documents that describe the materials and workmanship required for a development. They do not include cost, quantity or drawn information and need to be read alongside other contract documentation such as quantities, schedules and drawings.

Specifications vary considerably depending on the stage to which the design has been developed, ranging from performance (open) specifications that require further development by a contractor or supplier, to prescriptive (closed) specifications for which the design is already complete when the project is tendered.

Prescriptive specifications typically contain detailed descriptions of the following components:

- General requirements relating to regulations and standards.

- The type of products and materials required.

- The execution and installation methods required.

Prescriptive specifications give the client much more certainty about the end product when making investment decisions (such as when they appoint the contractor), and place a greater burden on the designer to ensure proper installation rather than the contractor.

Explanation

Those items make up small portion of spend and the supply risk is low. So it is tactical item according to Kraljic portfolio matrix. Procurement should bundle these items into larger contracts, simplify procurement process.

LO 2, AC 2.1