CIPS - Perfect L4M2 - Reliable Defining Business Needs Test Braindumps

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CIPS L4M2 Exam Syllabus Topics:

SectionWeightObjectives
Topic 1: Devise a business case for requirements sourced externally20-25%- Estimate costs and prices for procurement activities
  • 1. Cost estimation and budgeting methods
  • 2. Direct and indirect costs
  • 3. Total cost of ownership / whole life costing
  • 4. Market data sources for cost/price information
- Influence of business needs on procurement decisions
  • 1. Types of purchase: new, modified rebuy, straight re-buy
  • 2. Procurement's role in developing business cases
  • 3. Impact of business needs on purchase types
- Criteria for creating business cases
  • 1. Benchmarking requirements
  • 2. Costs, benefits, options, alignment, timescales
- Interpret financial budgets for purchase control
  • 1. Purpose and structure of budgets
  • 2. Cash flow and cost entries
  • 3. Budget performance and variance management
Topic 2: Market management in procurement and supply20-25%- Analyse market structures and competition
  • 1. Impact of market structure on procurement strategies
  • 2. Perfect competition, monopoly, oligopoly, monopolistic competition
- Assess market forces and trends
  • 1. Technological, legal, economic, social factors
  • 2. Supply and demand dynamics
  • 3. Global vs local market conditions
- Evaluate market information sources
  • 1. Supplier intelligence and market research
  • 2. Industry reports, government data, trade journals
Topic 3: Stakeholder management in defining needs15-20%- Align needs with organisational objectives
  • 1. Strategic alignment and value contribution
- Identify and classify stakeholders
  • 1. Internal vs external stakeholders
  • 2. Power/interest matrix and engagement strategies
- Communicate and consult with stakeholders
  • 1. Resolving conflicting requirements
  • 2. Methods for gathering requirements
Topic 4: Legal and regulatory considerations10-15%- Sustainability and ethical requirements
  • 1. Environmental, social, ethical criteria
- Legislation affecting requirements definition
  • 1. Procurement regulations, competition law, standards
Topic 5: Use specifications in procurement and supply20-25%- Types of specifications
  • 1. Conformance vs performance specifications
  • 2. Drawings, samples, brands, technical standards
  • 3. Output/outcome-based specifications
- Advantages and limitations of specification types
  • 1. Risk, cost, flexibility, supplier innovation impact
- Sources for developing specifications
  • 1. Internal stakeholders, technical experts, standards bodies
  • 2. Suppliers, industry benchmarks, regulatory requirements

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CIPS Defining Business Needs Sample Questions (Q146-Q151):

NEW QUESTION # 146
Which of the following is an useful tool for value engineering?

Answer: B

Explanation:
Value Engineering (VE) is concerned with new products. It is applied during product development. The focus is on reducing costs, improving function or both, by way of teamwork-based product evaluation and analysis.
This takes place before any capital is invested in tooling, plant or equipment.
This is very significant, because according to many reports, up to 80% of a product's costs (throughout the rest of its life-cycle), are locked in at the design development stage. This is under-standable when you consider the design of any product determines many factors, such as tooling, plant and equipment, labour and skills, training costs, materials, shipping, installation, maintenance, as well as decommissioning and recycle costs.
The Kano model is a theory for product development and customer satisfaction developed in the 1980s by Professor Noriaki Kano, which classifies customer preferences into five categories. Both Kano model and Value Engineering aims at optimising new product, so they can be combined to-gether. CIPS L4M2 study guide consider Kano model is a tool of Value Engineering

Example of Kano model (source: Wikipedia)


NEW QUESTION # 147
A procurement team is categorising their purchased items into four quadrants of Kraljic's supply chain portfolio matrix. They realise that there are some low-value items which come from very few suppliers in the market. The organisation is critically dependent on these suppliers. The team plans to reduce the dependence by finding alternative sources. Is this a right course of action?

Answer: D

Explanation:
According to Kraljic portfolio matrix, the low-value items with high supply risk are bottleneck items.

The purchasing strategy that is commonly recommended for these products is primarily based on acceptance of the dependence and reduction of the negative effects of the unfavourable position. An alternative strategy suggested by purchasing practitioners is to find other suppliers and move towards the non-critical quadrant.
- Accept dependence, reduce negative consequences: The main focus of this strategy is to assure supply, if necessary even at additional cost. Examples of this strategy are keeping extra stocks of the materials concerned or developing consigned stock agreements with suppliers. By performing a risk analysis firms can identify the most important bottleneck products and consider the implications. A possible action for dealing with unexpected bad dependence positions for certain products is to employ contingency planning.
- Reduce dependence and risk, find other solutions: This strategy is geared towards reducing the dependence on the supplier. The most common way to achieve this is to broaden the specifications of the product or to search for new suppliers.
The procurement team in the scenario has selected reducing dependency by finding alternatives. This is a right strategy for bottleneck item.


NEW QUESTION # 148
A buying organisation may not have technical capability to produce a highly complex specification. Which of the following are sources of information that can be used to create the specification? Select TWO that apply

Answer: B,E

Explanation:
If an organisation doesn't have capability to produce a technical specification, they can draft one based on standards or consulting the suppliers.
Reference: CIPS study guide page 125-130
LO 3, AC 3.1


NEW QUESTION # 149
Buyers are more powerful than the supplier when they are purchasing from monopoly market. Is this statement true?

Answer: C

Explanation:
A monopoly is a market with a single seller (called the monopolist) but with many buyers. In this market, the bargaining power of supplier is higher than of buyer since the supplier is the only seller.


NEW QUESTION # 150
When making a business case, the proposal has to consider financial costs, non-financial costs and opportunity costs. What is an opportunity cost?

Answer: D


NEW QUESTION # 151
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