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CIPS L4M5 (Commercial Negotiations) LO2 QUESTIONS AND ANSWERS
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CIPS L4M5 (Commercial Negotiations) LO2 QUESTIONS AND ANSWERS
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CIPS L4M5 (Commercial Negotiations) LO2QUESTIONS AND ANSWERS.
what is the mark-up?
Correct Answer -the amount added to the cost of an item to get to its
selling price and is expressed as a percentage
what is the margin?
Correct Answer -the amount added to the cost of an item expressed as a
percentage of the selling price.
how would you work out the mark-up?
Correct Answer -(price - cost)/cost x 100
how would you work out the margin?
Correct Answer -(price - cost)/price x 100
what is procure to pay?
Correct Answer -the system that connects the steps of the procurement
process - from obtaining the raw materials through to making the payment
what are saving levers and tactics?
Correct Answer -- volume concentration
- demand management
- best price evaluation
- global sourcing
- specification improvement
- joint process improvement
, - relationships restructuring
what is purchase price cost analysis?
Correct Answer -a method for gathering, analysing and using price and
cost information in a systematic way. this process allows the identification
of future savings and opportunities to improve current costs
what does purchase price cost analysis enable you to do?
Correct Answer -- set negotiating goals
- validate pricing or support a challenge to pricing
- identify cost drivers in the value chain
- identify opportunities for improvement
- establish a dialogue with a supplier based on cost vs price
- establish supply relationships based on cost-plus pricing
- identify loss leader quotes
when should you use purchase price cost analysis?
Correct Answer -- on big spend items, relative to total purchasing spend
- on items within categories that are strategic or planned to move into
strategic from leverage
- on items within categories that have major impacts on your cost base
what are the keys to success in purchase price cost analysis?
Correct Answer -- start building up detailed cost profiles on the categories
within the category management group
- shift the emphasis in discussion with suppliers from 'price' to 'cost'
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