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CIPS L4M2 Exam Syllabus Topics:

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

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CIPS Defining Business Needs L4M2 Prüfungsfragen mit Lösungen (Q23-Q28):

23. Frage
When should procurement professional tolerate a risk?

Antwort: A

Begründung:
Risk control is the process by which an organization reduces the likelihood of a risk event occurring or mitigates the effects that risk should it occur. Our preferred way to determine your risk control strategy is to use the four T's Process:
Transferring Risk can be achieved through the use of various forms of insurance, or the payment to third parties who are prepared to take the risk on behalf of the organization Tolerating Risk is where no action is taken to mitigate or reduce a risk. This may be because the cost of instituting risk reduction or mitigation activity is not cost-effective or the risks of impact are at so low that they are deemed acceptable to the business (such as some trivial annoyance). Even when these risks are tolerated they should be monitored because future changes may make it no longer tolerable.
Treating Risk is a method of controlling risk through actions that reduce the likelihood of the risk occurring or minimize its impact prior to its occurrence. Also, there are contingent measures that can be developed to reduce the impact of an event once it has occurred.
Terminating Risk is the simplest and most often ignored method of dealing with risk. It is the ap-proach that should be most favored where possible and simply involves risk elimination. This can be done by altering an inherently risky process or practice to remove the risk. The same can be used when reviewing practices and processes in all areas of the business.
If an item presents a risk and can be changed or removed without it materially affecting the busi-ness, then removing the risk should be the first option considered; rather than attempting the treat, tolerate or transfer it.


24. Frage
Bob is a new procurement specialist at XYZ Ltd. He is assigned to categorise the company's sup-plies. After analysing, Bob realises that a group of low value products is sourced from a tiny geo-graphical area which is prone to flooding. What would be the best strategy to manage this category of products?

Antwort: D

Begründung:
In the scenario, the products have low value and high risk of supply. This group is known as bottleneck or critical in Kraljic's portfolio matrix. The objective for such items would be securing the supply. The company can achieve this goal by 'making' the products themselves, or finding an alternative option.
Diagram Description automatically generated

Reference: CIPS study guide page 82-84
LO 2, AC 2.1


25. Frage
Which of the following are fixed costs? Select TWO that apply.

Antwort: C,D

Begründung:
Comprehensive and Detailed Explanation (paraphrased from CIPS L4M2 content) CIPS L4M2 defines fixed costs as those that do not change in total with small changes in the level of activity within a relevant range (for example, rent, insurance, basic utilities standing charges).
* Premises costs (C) - such as rent and building insurance, are typically fixed: they are paid regardless of production volume (within normal operating levels).
* Utilities costs (D) - often treated as fixed or semi-fixed in exam-style questions: the organisation pays standing charges and must maintain services regardless of output.
In contrast:
* Staff overtime (A) - varies with workload; this is a variable cost.
* Sales commission (B) - depends on sales volume, so it is variable.
* Materials costs (E) - directly linked to output (more units = more materials), so variable.
Understanding fixed versus variable costs is vital when preparing a business case (e.g. break-even, sensitivity analysis, and assessing the impact of demand changes).
Relevant CIPS L4M2 areas:
* Cost behaviour: fixed, variable, semi-variable
* The role of cost analysis in business cases and sourcing decisions
* Overhead allocation and cost structures


26. Frage
A procurement organisation is keen to encourage innovation available within the supply market in the execution of an upcoming significant contract opportunity. A team member suggests that the specification should define the performance indicators so that supplier's solution can be checked against them. Which of the following will enable the organisation to achieve this goal?

Antwort: D

Begründung:
The buying organisation is keen to encourage innovation so they should use the outcome or output based specification. In an outcome-based specification, umbrella statements like 'good quality', 'ambient temperature', 'convenient way' are often used. This may confuse the suppliers, and it's hard to check the solution that supplier offers. On the other hand, ouput-based specifications often include measurable requirements. For example, a specification for air conditioning system states that the system should maintain the room temperature at 19-24 degrees Celsius. Therefore, output specification is more appropriate in this case.
Reference:
LO 3, AC 3.1


27. Frage
Procurement should work closely with colleagues in accounts when creating an annual budget. This is because the budget will help the company ...

Antwort: A


28. Frage
......

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