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CIPS L4M2 Exam is designed to be challenging and comprehensive. It covers a wide range of topics related to business needs analysis, including business strategies, stakeholder analysis, requirements gathering, gap analysis, and solution evaluation. Candidates must demonstrate a thorough understanding of each of these topics and their practical application in real-world business scenarios.
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Preparing for the CIPS L4M2 exam requires a substantial amount of study and preparation. Candidates are advised to read widely, attend relevant training courses or webinars, and review past exam papers to familiarize themselves with the types of questions that may be asked. By achieving a successful result in L4M2 exam, candidates will demonstrate their ability to effectively define business needs, which is a critical component of successful procurement and supply chain management.
CIPS L4M2 Certification Exam is an essential qualification for professionals in the field of business analysis. It provides a comprehensive understanding of the principles and practices of defining business needs, which is essential for success in this field. Candidates who pass the exam will demonstrate their expertise and commitment to their profession, which can lead to new opportunities and career advancement.
NEW QUESTION # 32
A procurement manager decided to use a conformance specification in a request for quotation (RFQ) for the manufacturing of a specialist item designed by their company. The company does not have the capability to manufacture the item in-house, but requires the item to be made to their detailed specification. Was this the correct thing to do?
Answer: C
Explanation:
Comprehensive and Detailed Explanation (paraphrased from CIPS L4M2 content) CIPS L4M2 clearly distinguishes between conformance and performance specifications.
* A conformance specification describes exactly what the item must be like - dimensions, materials, design drawings, tolerances, etc.
* It is appropriate when the buyer already has a detailed design and simply wants the supplier to manufacture to that design.
In this scenario:
* The buyer's organisation has designed the specialist item and has a detailed specification.
* They cannot manufacture it in-house, but they need the item exactly as designed.
This is precisely when CIPS says a conformance specification is appropriate: the purpose is to ensure the supplier delivers exactly what has been specified and that the item meets all the buyer's technical and functional requirements.
* Option D matches this principle exactly.
* Option A mentions cost-effectiveness, which might happen, but it is not the main reason for using conformance specifications.
* Options B and C describe issues that are either irrelevant or are more associated with over-specification or missed innovation opportunities, not with the basic correctness of using conformance specifications in this situation.
Relevant CIPS L4M2 areas:
* Types of specification: conformance vs performance vs outcome
* When to use buyer-designed (conformance) specifications
* Risks and benefits of restricting supplier design freedom
NEW QUESTION # 33
Which of the following are the causes of material cost variance?
1. The buyer updates purchase-to-pay system to track payment and delivery
2. An unprocessed goods received note is missing
3. The employees must work overtime to catch up with the customers' orders
4. The purchase is made in emergency
Answer: B
Explanation:
The difference between the standard cost of direct materials specified for production and the actual cost of direct materials used in production is known as Direct Material Cost Variance. Material Cost Variance gives an idea of how much more or less cost has been incurred when compared with the standard cost. Thus, Variance Analysis is an important tool to keep a tab on the deviations from the standard set by a company.
Material Cost Variance can be due to less purchase price being paid than the standard or because of change in the quantity of material used. Thus, Material Cost Variance is made up of two components namely; Material Price Variance and Material Usage Variance.
Among the 4 options:
- 'The buyer updates purchase-to-pay system to track payment and delivery': The use of e-procurement system can increase the productivity and create labour cost variance, not material cost variance.
- 'An unprocessed goods received note is missing': If a goods received note is missing, the buyer won't pay for that batch, which create quantity variance.
- 'The employees must work overtime to catch up with the customers' orders': Overtime salary can cause labour variance, not material cost variance.
- 'The purchase is made in emergency': Normally, the price in emergency situation is higher than usual. This can cause price variance.
Reference:
- CIPS study guide page 57-59
- Material Variance | Cost, Price, Usage Variance Formula, Example - eFM (efinancemanage-ment.com) LO 1, AC 1.4
NEW QUESTION # 34
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: B
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.
Reference:
- CIPS study guide page 82-84
- Purchasing strategies in the Kraljic matrix-A power and dependence perspective, Marjolein C.J. Caniels, Cees J. Gelderman LO 2, AC 2.1
NEW QUESTION # 35
Which of the following might be consequences of over-specification? Select TWO that apply:
Answer: C,D
Explanation:
Over-specification can cause problems to buying organisation, include the following:
- Higher expense due to unnecessary features embedded into the product
- Stifle competition because higher requirements will lead to fewer suppliers in the market are able to supply
- Harder to evaluate the trade-offs between different features and attributes in the specification
NEW QUESTION # 36
Warwickshire Ambulance Service (WAS) is an NHS Trust. It operates throughout Warwickshire and the neighbouring areas. It has three core areas of activity, namely the provision of Emergency Ambulance Services, routine Patient Transport Services, and Logistic Medical Services. The agency is working towards higher service level through benchmarking. Which of the following is the benefit of benchmarking to WAS?
Answer: B
Explanation:
Benchmarking is ' the pursuit by organisations of enhanced performance by learning from the suc-cessful practices of others. Benchmarking is a continuous activity; key internal processes are adjusted, performance is monitored, new comparisons are made with the current best performers and further changes are explored.
Where information about these key processes is obtained through a co-operative partnership with specific organisations (rather than via a third party such as an independently-maintained database), there is an expectation of mutual benefit over a period of time.
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Graphical user interface, text, application, email Description automatically generated Reference:
- The Department of Navy Benchmarking Handbook: A system view
- CIPS study guide page 49-51
LO 1, AC 1.3
NEW QUESTION # 37
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