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| Section | Objectives |
|---|---|
| Topic 1: Specification development | - Types of specifications (input, output, conformance) - Stakeholder engagement in requirements definition - Key performance indicators and measurable requirements |
| Topic 2: Understanding and defining business needs | - Alignment of procurement with organisational objectives - Role of procurement in identifying and defining needs |
| Topic 3: Demand management and value for money | - Balancing cost, quality, and risk - Demand analysis and forecasting - Whole life costing and total cost of ownership |
| Topic 4: Risk, sustainability, and compliance considerations | - Sustainability and ethical sourcing requirements - Managing procurement and supply risks - Legal and regulatory constraints affecting specifications |
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159. Frage
British Steel needs to source a set of instruments that will improve quality of steel. Without these instruments British Steel will loss control of the temperature. The bucket may freeze up, or if it is too hot it leaks out of the casting process, damaging the machine. There is limited supply on the market and quality varies greatly.
Which of the following will be the most appropriate managing approach to procure these items?
Antwort: D
Begründung:
The instrument plays a crucial role in steel manufacturing because it presents in the majority of products, in which case lacking this instrument would have significant impact on the organisation's output (production lines stop or damaging other machine). Otherwise, the risk of supply is high because there is limitation in supply. Therefore, it is considered as a strategic item in term of Kraljic's portfolio matrix. Procurement manager should form partnership with suppliers to maximise the value.
The following graph illustrates Kraljic's portfolio matrix:
160. Frage
Which of the following statements describes a correct example of an indirect cost?
Antwort: C
Begründung:
An indirect cost is not directly linked to the production of a specific product, but supports the process (e.g.
administration, management, facility costs).
According to the CIPS L4M2 Study Guide, Chapter 3: Cost Management, it defines:
"Indirect costs are not directly linked to a specific output. Examples include managerial salaries, administrative overheads, and factory utilities." Analysis:
* A. Electrician wages - Direct labour cost related to production.
* B. Alloy rims - Direct material cost.
* C. Manager's salary - Correct. Not tied to one vehicle but supports production overall.
* D. Paint cost - Direct material cost.
Correct answer: C
CIPS Study Guide Reference:
* Module: L4M2 - Defining Business Needs
* Chapter 3: Whole-life costing and cost types
* Section: Indirect Costs
161. Frage
A buyer may consider switching from one product or service to another, or from one supplier to another.
Which of the following options are a type of switching cost?
* Inflation cost
* Historical cost
* Retraining cost
* Modification cost
Antwort: B
Begründung:
When developing a business case, procurement professionals must consider the costs associated with changing suppliers, known as switching costs.
The CIPS L4M2 Study Guide, Chapter 4 (Developing the business case), explains:
"Switching costs arise when an organisation changes from one supplier, product or service to another. These costs may include retraining staff, modifying systems or processes, and integration costs." Assessment of each item:
* Inflation cost relates to general economic price increases and is not caused by switching suppliers.
* Historical cost refers to past expenditure and does not affect the decision to switch.
* Retraining cost is incurred when staff must learn new systems, processes or products due to a change in supplier.
* Modification cost arises when equipment, processes or systems need to be altered to accommodate a new supplier or product.
The correct combination of switching costs is 3 and 4, making Option C correct.
CIPS Reference:
CIPS L4M2 Defining Business Needs
Chapter 4: Developing the business case and evaluating sourcing options
162. Frage
GSC Ltd is a manufacturer of car parts. To accommodate growing demands of electric cars, the company is developing a new component which requires different type of steel. The project team estimates that the component will be ready for production in 1.5 years. Until then, they need to keep the production busy.
After checking the inventory records, the production team sees that the company has 3 months of stock. The lead time for each batch is two months. Which of the following should be a priority ac-tion of the company?
Antwort: A
Begründung:
The scenario is very long with many distracting data. Students need to read carefully and use their experience to solve this problem.
The company is developing a new component which requires different type of material. But this component will not be available for mass production in 1.5 years. This means the company still needs to produce the current components with current materials until the development is finished. They must continue purchase the materials from current supplier through call-off orders. This situation is an example of straight re-buy.
Reference:
LO 1, AC 1.1
163. Frage
Which of the following are most likely to increase the buyer's bargaining power?
1. Buyers are price sensitive
2. High set-up cost for new entrants
3. Threat of forward integration is high
4. Threat of backward integration is significant
Antwort: C
Begründung:
Price sensitivity is the degree to which the price of a product affects consumers' purchasing behaviours. Buyer power will be stronger if buying organisation are price sensitive and vice versa.
Backward integration is a form of vertical integration in which a buying organisation expands its role to fulfil tasks formerly completed by businesses up the supply chain. Buyer power is strong if threat of backward integration is high.
Set-up cost is a determinant of threat of new entry. Some industries require very expensive assets in order to make products. The financial risk of entering the industry and not succeeding can deter many potential new entrants. The fewer new entrants, the fewer available substitutes, then the bar-gaining power of buyer can be negatively affected.
Forward integration is a business strategy that involves a form of vertical integration whereby business activities are expanded to include control of the direct distribution or supply of a compa-ny's products. Threat of forward integration is a determinant of supplier's bargaining power.
Reference: CIPS study guide page 88-91
LO 2, AC 2.2
164. Frage
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