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CIPS L4M2 Exam Syllabus Topics:

TopicDetails
Topic 1
  • Understand market management in procurement and supply: This section of the exam evaluates the expertise of Supply Chain Managers in managing and analyzing different markets. It includes understanding procurement considerations across sectors such as manufacturing, construction, retail, financial, agriculture, and services. Candidates are tested on their ability to compare competitive forces that influence markets, including supplier and buyer bargaining power, threats from substitutes, and new entrants. The section also focuses on differentiating between direct and indirect costs, identifying reliable sources of market data, and using this information to estimate costs, prepare budgets, and analyze potential cost variability.
Topic 2
  • Understand how to develop a business case for requirements to be sourced from external suppliers: This section of the exam measures the skills of Procurement Analysts and focuses on understanding how business needs influence sourcing decisions. It covers identifying different types of purchases such as new, modified, and straight rebuys, and analyzing their implications on procurement strategies. Learners are expected to understand how procurement contributes to developing a strong business case by assessing costs, prices, and market data. It also includes estimating direct and indirect costs, applying whole-life asset management principles, and using financial models and budgets to control purchasing activities.
Topic 3
  • Understand the use of specifications in procurement and supply: This part of the exam assesses the capabilities of Procurement Officers and focuses on how specifications are developed and used in procurement. It involves understanding various types of specifications, such as conformance and performance specifications, and identifying key information sources including internal expertise, external standards, and sustainability factors. The section highlights the importance of structuring specifications with clear scope, definitions, testing, acceptance, and change control mechanisms, while integrating environmental, social, and governance criteria. Additionally, it covers the risks of poor specification design and how to mitigate them through monitoring, review, and improvement. Candidates are also expected to recognize opportunities for standardization, value analysis, and value engineering to enhance specification quality and support long-term procurement performance.

Reference: https://www.cips.org/qualifications/diploma-in-procurement-supply/def%C4%B1ning-business-need

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CIPS Defining Business Needs Sample Questions:

Question #1

A purchaser is looking for alternative supplies if there is a major disruption to their supply chain, including logistics, manufacturing and all support services. Which of the following method is that purchaser applying?

  • A. Terminate the risk
  • B. Treat the risk
  • C. Transfer the risk
  • D. Tolerate the risk
Reveal Solution  Discussion  0

Correct Answer: B  🗳️

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Question #2

Which of the following might be the consequences of under-specification? Select TWO that apply:

  • A. Few suppliers can supply the full range of features
  • B. Additional cost to rework
  • C. Poor competition between suppliers
  • D. Unfit products or services
  • E. Higher cost due to inessential features
Reveal Solution  Discussion  0

Correct Answer: B,D  🗳️

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Question #3

Which of the following is a challenge of making a business case for straight re-buys?

  • A. Identifying suitable suppliers
  • B. Effective inventory control
  • C. Research of procurement process
  • D. Terms and conditions
Reveal Solution  Discussion  0

Correct Answer: B  🗳️

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Question #4

Which of these have a negative effect on cash flow?
A supplier reduces its payment terms
The bank grants a loan to the company
A customer agrees to pay upon purchase
An increase in the amount of stock held

  • A. 3 and 4 only
  • B. 2 and 3 only
  • C. 2 and 4 only
  • D. 1 and 4 only
Reveal Solution  Discussion  0

Correct Answer: D  🗳️

Question #5

Which of the following statements is the best definition of 'value engineering?

  • A. Building value into a new product from design stage onwards
  • B. Producing good value products right first time.
  • C. Analysing perceived value after the product is available for sale
  • D. Value achieved by an engineering department
Reveal Solution  Discussion  0

Correct Answer: A  🗳️

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