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| Section | Objectives |
|---|---|
| Understanding and defining business needs | - Role of procurement in identifying and defining needs - Alignment of procurement with organisational objectives |
| Risk, sustainability, and compliance considerations | - Managing procurement and supply risks - Sustainability and ethical sourcing requirements - Legal and regulatory constraints affecting specifications |
| Specification development | - Types of specifications (input, output, conformance) - Key performance indicators and measurable requirements - Stakeholder engagement in requirements definition |
| Demand management and value for money | - Whole life costing and total cost of ownership - Demand analysis and forecasting - Balancing cost, quality, and risk |
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NEW QUESTION # 164
A consulting firm in London had previously had static budgets. They were set once and locked in for the year.
This resulted in departments meeting their budgets early and doing virtually nothing the rest of the accounting period. To address this imbalance, the company tossed out the static budget and developed a new one for each department of the next 18 months. And each month, real sales figures are analyzed against the plan and the budget is adjusted accordingly. Then the company adds another month into the budgeting plan. What type of budget this company is using?
Answer: A
Explanation:
A rolling budget is continually updated to add a new budget period as the most recent budget period is completed. Thus, the rolling budget involves the incremental extension of the existing budget model. By doing so, a business always has a budget that extends one year into the future.
Think of continuous (rolling) budgets as waves rolling ashore on the beach. A new wave comes in each time, replacing the one that was there before. From a financial perspective, the wave is your budget, and the time between waves is longer! These reporting time frames can be monthly, quar-terly, yearly, etc.
An incremental budget is a budget prepared using a previous period's budget or actual performance as a basis with incremental amounts added for the new budget period.
Zero-based budgeting (ZBB) is a method of budgeting in which all expenses must be justified for each new period. The process of zero-based budgeting starts from a "zero base," and every function within an organization is analyzed for its needs and costs. Budgets are then built around what is needed for the upcoming period, regardless of whether each budget is higher or lower than the previous one.
Activity-based budgeting (ABB) is a system that records, researches, and analyzes activities that lead to costs for a company. Every activity in an organization that incurs a cost is scrutinized for potential ways to create efficiencies. Budgets are then developed based on these results.
Reference: CIPS study guide page 52-59
LO 1, AC 1.4
NEW QUESTION # 165
Which of the following activities are considered as primary activities of an organization according to Porter's value chain? Select TWO that apply:
Answer: C,D
Explanation:
Primary activities consist of inbound logistics, operations, outbound logistics, sales & marketing, service.
Second activities consist of firm infrastructure, human resource management, technology development and procurement The following graph illustrate the value chain (Source: Smartsheet) Graphical user interface, diagram Description automatically generated
Picking and delivery components is inbound logistics.
Maintenance is an example of operations activity.
Sourcing transportation services is an activity of procurement
Assembly design is an activity in research and development (Technology) Recruiting is an activity of human resource management Reference: CIPS study guide page 71 LO 2, AC 2.1
NEW QUESTION # 166
Over the life of a product, which of the following would be considered non-value-adding costs?
* Rework costs
* Production costs
* Maintenance costs
* Waste disposal costs
Answer: D
NEW QUESTION # 167
Facing fiercer competition at home and abroad, IKEA, the leading furniture retailer, needs to im-prove its competitiveness. In order to do this, IKEA must decrease operating costs and improve quality of current and new retail stores. The company establishes a project team. The job of the team is to collect data on performance from multiple stores in several countries, then select the best performing one. The team will work closely with best performing store and study its processes. After the research, the team will recommend best practices to other retail stores. IKEA management can also apply these practices to new stores in the future. Which of the following correctly describe the process undertaken by IKEA project team?
Answer: D
Explanation:
Basically, IKEA project team is undertaking the following process:
This is a typical benchmarking process. Benchmarking is defined as the process of measuring products, services, and processes against those of organizations known to be leaders in one or more aspects of their operations. Benchmarking provides necessary insights to help you understand how your organization compares with similar organizations, even if they are in a different business or have a different group of customers.
In the scenario, benchmarking process is undertaken within subsidiaries of IKEA, thus it is internal.
Reference:
- CIPS study guide page 49-51
- What is Benchmarking? Technical & Competitive Benchmarking Process | ASQ
- Internal Benchmarking at IKEA
LO 1, AC 1.3
NEW QUESTION # 168
The buyer's database is regarded as a primary data source. Which of the following is also a source of primary data?
Answer: C
Explanation:
Comprehensive and Detailed Explanation (from CIPS L4M2: Market Management) Primary data = data collected first-hand by the buyer for a specific purpose.
Secondary data = data collected by others and reused (e.g. reports, indices).
* A. Price lists collected directly from suppliers at trade fairs represent first-hand market data.
* B, C, D are all secondary - they originate from external publications and existing datasets.
Hence, A is correct.
Relevant CIPS L4M2 Sections:
* Sources of data for supply market analysis
* Differences between primary and secondary data
NEW QUESTION # 169
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