L4M4 Exam Dumps - CIPS Level 4 Diploma in Procurement and Supply Questions and Answers

Explanation

"Meet current liabilities" is a posh way of saying "can you pay your bills". You're therefore looking for a liquidity ratio- a ratio that looks at assets vs liabilities (i.e. money in the bank vs money owed out). The Acid Test is a liquidity ratio. It's sometimes called the 'quick ratio'. Both terms come up on the exam. The other options are financial ratios but aren't for liquidity.

Under EU Public Procurement rules, the permissible procurement procedures include the Open Procedure and the Restricted Procedure. The Open Procedure allows any interested party to submit a tender, while the Restricted Procedure involves a two-stage process where only selected candidates are invited to submit tenders. These procedures are designed to ensure transparency, competition, and equal treatment in public procurement.

Exact Extract from Study Guide:

"The EU Public Procurement Directive outlines several procedures including Open Procedure and Restricted Procedure, which are designed to facilitate fair and transparent procurement processes."

Defining corrective actions and running supplier development programs are effective remedial actions following an audit. These approaches support continuous improvement, aligning with responsible sourcing by helping suppliers meet ethical and performance standards.

A current ratio below 1 suggests that the supplier may not have sufficient current assets to cover short-term liabilities, which could pose a risk to the buyer. Assessing financial stability aligns with responsible sourcing practices, as it ensures suppliers can fulfill contracts without disruption.

The decision to make a product internally rather than sourcing it externally is influenced by several factors. One of the primary considerations is the availability of in-house competencies and capacity. If an organisation possesses the necessary skills, technology, and resources to produce the required goods or services efficiently, it may opt for internal production to maintain control over quality, reduce costs, and protect proprietary information.

Exact Extract from Study Guide:

"Make or buy decisions take into account: product/service is core, the organisation's capacity to make, current market (cost saving with economy of scales and/or logistics), amount of competition."

Explanation

Exchange rates and tariffs are associated with international sourcing.

The other options are concerns for both local sourcing and international sourcing.

Explanation

Social value is about benefitting the local community / society. Therefore of those options listed, use of local labour is the most appropriate to consider.

The Pareto principle (80/20) shows that around 80% of spend is often concentrated with 20% of suppliers. It is relevant for identifying strategic suppliers (D) that require close management and opportunities to improve or change relationships (E) for greater value. Contract expiry dates (B) and payment frequency (A) are administrative details, not Pareto analysis outputs. Cost variation (C) relates to performance analysis, not spend concentration. Responsible sourcing uses Pareto analysis to allocate resources effectively, focusing attention on the most impactful supplier relationships.

The Pareto principle, or the 80/20 rule, is a tool used in procurement to identify that approximately 80% of an organisation's spend is typically with 20% of its suppliers. Applying this principle helps in:

Identifying Strategic Suppliers:Recognising which suppliers account for the majority of spend allows organisations to focus on managing and nurturing these key relationships.

Optimising Supplier Relationships:Understanding spend distribution can highlight opportunities to renegotiate terms, consolidate suppliers, or adjust sourcing strategies for better efficiency and cost savings.

Exact Extract from Study Guide:

"The Pareto Principle is used to identify that 80% of spend is typically with 20% of suppliers, enabling procurement to focus on strategic supplier management and optimise commercial relationships."

Explanation

"yes- ethics and sustainability form part of 'value for money' " is the correct answer.

There are several factors that represent value for money and these are listed on p.3. These include; price, delivery, quality, ethics, sustainability and availability.