CIPS L4M1 (Management) SCOPE AND INFLUENCE OF
PROCUREMENT AND SUPPLY COMPLETE STUDY GUIDE
QUESTIONS AND ANSWERS.
1. What is Procurement? Procurement is a STRATEGIC function of a
business obtains something Tangible as goods
or Intangible as services. Include Purchasing In-
ventory, Logistics, Supply, Waste Management
Quality, Cost, Added Value
2. What is Purchasing? Is the ACT of physically ordering and buying
something.
3. What is Supply? Is the INFRASTRUCTURE which ensures that
products and services get from supplier to the
customer.
4. What is inventory? the stock of goods, materials or products
5. What is a stock? Asset available in the warehouse
6. What is asset? Value of everything an organization owns
7. Fixed cost Costs do not change (Salaries, Insurance, Rent)
8. Variable Cost Costs do change as they are linked to the busi-
ness (Raw Material, Extra hours)
9. Directly Cost (Direct Pro-
curement)
13. Finished goods
10. Indirectly Cost (Indirect
Procurement)
11. Primary Sector of the
Economy
12. Secondary sector of the
Economy
, CIPS L4M1 (Management) SCOPE AND INFLUENCE OF
PROCUREMENT AND SUPPLY COMPLETE STUDY GUIDE
QUESTIONS AND ANSWERS.
Cost associated with the Job
or production (Raw material,
Man Power)
Not associated with the Job
(Clean Liquid, Sta- tionary,
Mobile phones contracts,
MRO - Main- tenance repairs
and Operations.
The part of the economy that
draws raw mate- rials from
the natural environment
(Cotton, Oil, Silver, Wheat)
The part of the economy that
transforms raw materials into
manufactured goods (Light
Bulbs, Nuts and Bolts, Metal
housing, Plastic fittings)
, CIPS L4M1 (Management) SCOPE AND INFLUENCE OF
PROCUREMENT AND SUPPLY COMPLETE STUDY GUIDE
QUESTIONS AND ANSWERS.
Units of products that have been completed
but not yet sold to customers (Shoes, Beds,
Clothes, Jewellery)
14. Stock Procurement In- Can be stored and inventory Raw Material,
cludes Components and Finished Goods.
15. Non-Stock Procurement Are not stored and not listed in the Organization
Includes inventory (Cleaning Services, Internet Contract,
Insurances, Advertising Campaigns)
16. Explain why the procure- Procurement can influence the majority of the
ment department should costs within an organization:
be consulted before an or- 1.- Evaluating potential suppliers
ganization spends mon- 2.- Involved in preparing specifications
ey. 3.- Review Quality standards
4.- Assess ethical requirements
5.- Compare buy or lease options
6.- Investigate transport
7.- Review packing options.
8.- Research total life cost
9.- Calculate currency differences
10.- Benchmark prices
11.- Ensure assets are fit for a propose
17. Total life Cost (TLC) The total amount a product will cost an organi-
zation.
18. Mentioned some exam- NON-STOCK TANGIBLE
ples of NON-STOCK IN- procurements.
TANGIBLE procurements.
19. Mentioned some exam-
ples of STOCK TANGIBLE
procurements.
20. Mentioned some ex-
amples of CAPITAL
, CIPS L4M1 (Management) SCOPE AND INFLUENCE OF
PROCUREMENT AND SUPPLY COMPLETE STUDY GUIDE
QUESTIONS AND ANSWERS.
Insurance, Marketing,
Salaries/Pensions, Cleaning, IT
and Catering Services, Staff
Devel- opment, Electricity, Gas,
Rent or Mortage.
Components, Stationary,
Uniforms
Machinery, Buildings, Lands,
Vehicles
