UPDATED [Feb 22, 2024] Pass Procurement and Supply in Practice Exam with Latest Questions
L4M8 Exam Practice Questions prepared by CIPS Professionals
Candidates who successfully complete the CIPS L4M8 Exam will be awarded the CIPS Diploma in Procurement and Supply, which is a globally recognized qualification that demonstrates a commitment to professional development and continuous learning. Whether you are just starting out in your career or looking to take it to the next level, the CIPS L4M8 Exam can help you develop the skills and knowledge you need to succeed in procurement and supply chain management.
CIPS L4M8 Certification Exam focuses on a broad range of topics related to procurement and supply chain management, including procurement strategy, supplier management, contract management, ethical and sustainable procurement, and risk management. L4M8 exam is designed to test the candidate's ability to apply these concepts to real-world scenarios and to demonstrate their understanding of the procurement process.
NEW QUESTION # 55
Using the case study about Toyata, which type of benchmarking Tada has used when comparing the Toyata with Porsche?
Answer:
Explanation:
Benchmarking is the process of comparing a function, process or performance with another which is best-in-class. Benchmarking is either internal or external. External benchmarking has three types; 1) Competition benchmarking, 2) Functional 3) Generic Company Toyota with the Porsche a competition in the same industry and by suggesting that drives will find the cars performances comparable with that of Porsche Cayman sports car, suggest think it is an external competitive benchmark.
NEW QUESTION # 56
Describe five types of contract terms that a procurement professional should create with a supplier when forming an agreement.
Answer:
Explanation:
Terms are the right and duties agreed which are then documented in a contract. Five types of con-tract terms that a procurement professional should create with a supplier when forming an agree-ment includes; Price term is when the buying organization wants to protect its budged and spending, it include price terms in the contract, for the buyer to buy goods or services in response to a need they some-time enshrine a bespoke specification in the contract.
Payment Term is to specify when and how the buyer will pay the supplier. The buyer may include a payment term in the contract.
Warrantee is when the buyer requires a promise from the supplier that the product or service will meet the specified need in the contract.
Time is of the essence term is included in the contract to detail when a product or service should be delivered and explains the potential losses of business if time is not observed.
NEW QUESTION # 57
What are Carter's 10Cs?
Answer:
Explanation:
Carter's 10cs is a detailed mechanism that procurement professional uses to evaluate potential supplier. What the procurement professional should consider in supplier are the following 10 things.
1) Competency 2) capacity 3) Cost 4) Cash 5) Clean 6) Consistency 7) Control 8) Culture 9) Com-mitment 10) Communication.
NEW QUESTION # 58
Which sector most frequently uses invitation to tender?
Answer:
Explanation:
The public sector uses tenders a lot more in the working environment than private sector.
NEW QUESTION # 59
Which Incoterm applies here?
The supplier is responsible for delivering the goods to the buyer's premises include arranging any custom clearances that applies, bearing all risk up until this point.
- A. DAP - Delivered At Place
- B. DDP - Delivery Duty Paid
- C. FAS - Free Alongside Ship
- D. DAT - Delivered At Terminal
Answer: B
NEW QUESTION # 60
Think of a supply chain with which you are familiar and distinguish between the primary, second-ary and tertiary sector organization within it.
Answer:
Explanation:
Supply chain involves a network of individuals, organizations, technology activities and resources to make sure goods or services flow along the chain. If one point fails, every part further along the chain fails.
Fullpower projects (a flour manufacturer) supply chain begins with producers (raw materials, wheat farmers), suppliers, manufactures, distributors, retailers and end users (customer).
Fullpower projects supply chain falls within the primary sector (producers of wheat), the secondary sector include the manufacturing (those that converts the wheat the suppliers brings into flour) and tertiary sector (the distributor those that takes the wheat to the end users).
NEW QUESTION # 61
Explain how procurement should decide whether to make or buy a product or service.
Answer:
Explanation:
Make or buy decision are about whether a products or services should be made within the organization or bought-in from an external supplier.
For a procurement professional to establish which method (make or buy) offers the best value, the item in question must be thought through if it is core to the organization and which option will add more value to the organization, as regards achieving its strategic goals. If it is core the procurement professional decide to make it and if it is not core the product or services can be bought in.
NEW QUESTION # 62
What is PQQ and what does it include?
Answer:
Explanation:
Pre-qualification questionnaire (PQQ) is often standard forms that buyers send to potential suppli-ers. The purpose is to ensure that these potential suppliers could, if they win the contract, supply the product or service to the standard required. PQQ includes requesting details from the potential suppliers on the following information
1. Company Details
2. Environment policies
3. Trading history
4. Ethical policies
5. Financial information
6. Health and safety policies
7. Quality standards
8. References
9. Insurance.
NEW QUESTION # 63
Explain how a lack of understanding of a global supplier's culture and ethical behavior could cost buying organization money.
Answer:
Explanation:
Organizational culture is made up of behaviors, traits, values and beliefs and these differ signifi-cantly across the globe. Gestures that may be positive in one country can be highly offensive in another. This culture could mean; for example, individualistic/collectivistic, masculine/feminine, uncertainty avoidance, power distance, Time perspective, indulgence/restraint.
When negotiating and forming contracts within the extended supply chain, it is important that the culture of the suppliers is understood to be compatible with the buying organization or else their might be loss of reputation, time, money material and equipment.
Also, being not aware of what is an acceptable ethically behavior in global sourcing can cost a buying organization. In some countries, bribery and kickbacks are a standard part of doing business. If procurement professional is not aware of the fact that some countries methods of doing business involves or expect kickbacks, for example, this could be costly to the organization and cancel out any savings that had originally been seen.
Cost of poor quality and rework: if the product or service quality is poor the organization may not satisfy it customers and this can lead to a loss of reputation in the market. For example, a residential building construction company contracting a supplier that supply would require home owners to reinstall a new door within three months. The organization would spend more funds in carrying out rework.
More administrative cost in contract management: an organization will have to manage it sup-pliers and the contracts to ensure they are delivering what they were contracted to do. A poor con-tract management is a waste in the process of delivery that can lead to loss of money. Also, to cor-rect this would cost the organizations administrative cost.
NEW QUESTION # 64
Describe two negative factors associated with ordering excess inventory.
Answer:
Explanation:
In the decision to not run out of supplies, organizations can anticipate a peak were by it products will be in a high demand or a period of scarcity of raw materials and may want to increase the in-ventory. However, if this forecast is not accurate, it may lead the organization to holding excess inventory. This can expose the organization to some negative factors.
Acquisition Cost: The organization will incur an acquisition cost for the excess inventory which is inclusive of the cost of placing the order and the cost of purchasing the goods.
Holding Cost: The organization will spend more money holding the stock, trying to keep it in good condition by providing the required light, temperature, skilled handlers and so on.
Working Capital not adding value: This will off shoot the holding cost. Also valuable working capital in excess stock which in the time not adding value, can affect the liquidity of the business. This is also an opportunity cost and increase solvency.
NEW QUESTION # 65
Describe one qualitative and one quantitative measures of social impact for an organization with which you are familiar.
Answer:
Explanation:
Information gathered in relation to social impact for an organization is both qualitative and quantitative.
Fullpower consult is a project/procurement training company that has gotten a measure of its social impact.
The qualitative measure of the organization is its stakeholders perception. Stakeholders knows that fullpower will do all it can to always give the best value for money.
Fullpower has the policies to give 10% of its profit share back to the community, by sponsoring free trainings for both professionals and vocational.
Addition
Qualitative and quantitative measures of social impact
Qualitative
Stakeholder perception
Reputation
Good Ethical practice
Benefit to the economy
Quantitative
20% Reduction in emission
Amount of funding donated
Amount of train courses delivered
Percentage of Resources Replaced
*
Refer to the question column for response
NEW QUESTION # 66
Explain why the behavior of an organization with which you are familiar could affect its business.
Answer:
Explanation:
The social impact of an organization is formed by various behaviors. If an organization; behavior is poor this will create social impact which is likely to be reflected in the business performance. Organizations which display poor behavior face outcomes such as the following.
1. Reduce brand loyalty
2. Difficulty in recruiting
3. Negative media coverage
4. Reduced sales/profit
5. reputation damage
NEW QUESTION # 67
Create two KPIs and two SLAs for a contract with which you are familiar.
Answer:
Explanation:
Key performance Indicators (KPIs) and service level Agreement (SLA) are measures that demon-strate the effectiveness of a supplier. By using KPIs and SLAs as part of suppliers management, procurement professionals can monitor and evaluate performance and identify areas that need attention or improvement. KPIs and SLAs are used for product and service contract respectively.
Two KPI
1) Number of defects: Not more than two defects is allowed on the generator and its accessories
2) Supplier Lead Time: Delivery after placing order should not be anytime longer than 14 days.
Two SLAs
1) The toilet should be washed with soap, and deodorant should be sprayed twice a day
2) Bathroom and toilet should not be allowed to smell out to the passage. Bathroom smelling out to the passage twice a month is a violation of the contract.
NEW QUESTION # 68
What matrix helps to define how to manage stakeholders?
Answer:
Explanation:
Stakeholders are individuals or organizations who are directly affected by a decision for example, community, shareholders, employees, suppliers, distributors, customers etc. stakeholders can be internal (employers, staffs), connected (such as suppliers, shareholders, financers and customers) external (Government, pressure groups, and community).
The matrix that helps define how to manage stakeholders is mendelow's stakeholders manage-ment matrix. This matrix is based on the theory that the level of management stakeholders require depends on the level of their power and interest within the project or organization The matrix groups stakeholders in to four quadrants according to their power and interest and ad-vice how to manage them.
1) Low power - Low interest (minimum effort)
2) Low power - High interest (keep inform)
3) High power - Low interest (keep satisfied)
4) High power - high interest (manage closely)
NEW QUESTION # 69
Describe four factors that could damage reputation within the supply chair
Answer:
Explanation:
The reputation of all the organizations within a supply chain is linked. A Company's reputation is an intangible asset that can contribute to the failure of an organization if damaged. Factors that could damage organizational reputation within the supply chain are;
1. Quality: if the product or service quality is poor the organization may not satisfy it customers and this can lead to a loss of reputation in the market. For example, a residential building construction company contracting a supplier that would do a bad job which in three months may require home owners to reinstall new doors.
2. Sustainability: if the organization is not replenishing that which it is extracting, it will some day run out of business or probably loss loyal customers. For example a drilling company that spills hydrocarbon as it drills.
3. Fit for purpose: if an organization produce a product or carry out services that are not fit for purpose, it may run at loss for there will be so much rejection and rework. This can lead to customers switching to another organization which product or services are fit for their purpose.
4. Contract management: an organization will have to manage its suppliers and the contracts to ensure they are delivering what they were contracted to do. A poor contract management is a waste in the process of delivery that can lead to reputational loss.
NEW QUESTION # 70
Which Incoterm applies here?
The supplier is responsible for delivering the goods directly onto the vessel that will transport them to their named destination. As soon as the goods are on the vessel, the risk transfers to the buyer
- A. CIF - Cost Insurance and Freight
- B. DAP - Cost and Freight
- C. FAS - Free Alongside Ship
- D. FOB - Free On Board
Answer: D
NEW QUESTION # 71
Which contract term contains details of when a product or service should be delivered and ex-plained the potential loss of business?
Answer:
Explanation:
Contract terms are the right and duties agreed between parties with which are then documented in contract. Terms can be either implied or expression.
Implied terms are always present in a contract and are set by national laws; like the sales of goods act, whereas express terms are negotiated and created, for example; time is of the essence. When the procurement professional is setting key performance indicators, where which the supplier's performance will be monitored and managed, the KPI is expected to be SMART. The SMART is an acronym that is used to set KPI and specification. It means:
Specific
Measurable
Achievable
Relevant
Time bound
NEW QUESTION # 72
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