CIPS Level 4 Module 1- Questions and Answers
Scope of Procurement Correct Ans-1. Contributor of Added Value
2. Manages cost of procured materials & services on behalf of an organisation
3. Helps manage inventory
4. Works alongside logistics partner function
Support Activities - Firm Infrastructure, HR Management, Technology, Procurement
Action points for CAPEX purchasing Correct Ans-1. Documentation or guidline and
standard procedure
2. Cross-functional team for appraisal & evaluation
3. Appropriate project evaluation methology
4. Process automation (E-platform)
5. TCO / Life cycle costing
6. Regular review for better control & monitoring
, CIPS Level 4 Module 1- Questions and Answers
5 rights of procurement Correct Ans-Right Quality
Right Quantity
Right Price
Right Place
Right Time
Right Quality Correct Ans-goods which are of satisfactory quality and fit for their intended
purpose e.g. ensuring an accurate specification of the requirement and its quality standards.
Right Quantity Correct Ans-sufficient to meet demand and maintain service levels while
minimising stock holding e.g. by ensuring that there is accurate demand forecasting and
efficient inventory management.
Right Place Correct Ans-goods delivered to the appropriate delivery point, packaged and
transported so as to secure their safe arrival in good condition e.g. by including transport
instructions including packaging requirements as part of purchase orders.
Right Time Correct Ans-delivery of goods at the right time to meet demand, i.e. not too
late but not so early as to incur unnecessary inventory costs e.g. by ensuring accurate demand
management, placing orders in time for suppliers to provide timely delivery and ensuring that
suppliers are aware of delivery requirements.
Right Price Correct Ans-securing all of the above at a reasonable, fair, competitive and
affordable price. Ideally, minimising procurement costs in order to maximise profit e.g. by
, CIPS Level 4 Module 1- Questions and Answers
carrying out price and supplier cost analysis and/or by carrying out competitive tendering and
negotiation. The 'right' price is one that represents good value for money.
Life Cycle cost (LLC) Correct Ans-The total cost throughout its life including planning,
design, acquisition and support costs and any other costs directly attributable to owning or
using the asset".
Total Cost of Ownership (TCO) Correct Ans-1. TCA
2. Tooling
3. Insurance
4. Operation
5 Maintenance
6 Training
7. Storage
8. Disposal
The Purchasing process Correct Ans-1. Define Specification.
2. Select Supplier
3. Contract Agreement
4. Ordering
5. Expediting
6. Evaluation Follow up
, CIPS Level 4 Module 1- Questions and Answers
Definition of Procurement & Supply Correct Ans-recognition of the fact that the purchasing
function has a role in not just "buying inputs" but in "securing supply"
Direct Costs Correct Ans-These are costs which can be identified directly with the
production of a good or service; e.g. raw materials.
Usually strategic or leverae suppliers
Indirect Costs Correct Ans-These are costs which cannot be matched against each product
because they need to be paid whether or not the production of good or services takes place;
e.g. rent on the premises.
Kraljic Matrix Correct Ans-A tool for portfolio analysis: a four-box matrix that reflects the
segmentation of spend based on an assessment of the value of the spend relative to the
market risk to acquire
1. Leverage Suppliers
2. Strategic Suppliers
3. Routine Suppliers
4. Bottleneck Suppliers
CAPEX is Correct Ans-1. Capital expenditures are for major purchases that will be used in
the future.
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller GOLDTUTORS. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $16.99. You're not tied to anything after your purchase.
