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NEW QUESTION 53
What are service credits?
- A. A mechanism for performance management where the buyer has the right to deduct money from payments owed for under performance
- B. A type of payment where goods are delivered before payment is made
- C. A clause in a contract that allows for additional bonus payments for meeting KPIs
- D. When a buyer makes a purchase on credit
Answer: A
Explanation:
The correct answer is "A mechanism for performance management where the buyer has the right to deduct money from payments owed for under performance". A definition is provided on p.113 and states "If a supplier fails to meet the standard set in the service credits, the buyer has the right to deduct set amounts of money from payments owed to the supplier"
NEW QUESTION 54
The Pareto Principle is sometimes also known as what?
- A. Cost Engineering
- B. ABC Analysis
- C. Five Forces
- D. JIT
Answer: B
Explanation:
Pareto is the 80:20 rule- this can be adapted to talk about supplier relationships, where instead of having 2 categories there are now 3 (A B and C). CIPS use the terms Pareto and ABC interchangeably. See p.16 for further information
NEW QUESTION 55
Which of the following are primary activities, according to Porter's Value Chain? Select THREE.
- A. Procurement
- B. Human Resources
- C. Operations
- D. Marketing and Sales
- E. Inbound Logistics
Answer: C,D,E
Explanation:
This Question: refers to
Porter's Value Chain (p.35). There's a couple of questions on this in the exam so try to learn it. Primary activities are; inbound logistics, operations, outbound logistics, marketing and sales, after sales- service
NEW QUESTION 56
In a monopoly market, which of the following statements is true?
- A. There is strong rivalry
- B. bargaining power of suppliers is strong
- C. There is a threat of new entrants
- D. bargaining power of buyers is strong
Answer: B
Explanation:
In a monopoly there is only one supplier- therefore their power is strong. Buyers in this market are price takers and their power is weak. There is generally a strong barrier to entry into a monopoly market so the threat of new entrants is low. There is no rivalry. There are many questions in the exam on Porter's 5 Forces - see p. 39
NEW QUESTION 57
What is the correct order of the stages of team development?
- A. Storming, forming, performing, norming
- B. Storming, forming, norming, performing
- C. Forming, norming, performing, storming
- D. Forming, storming, norming, performing
Answer: D
Explanation:
The correct answer is Forming, storming, norming, performing (p.91). Note; some people add on two additional stages to this; mourning and adjourning. The study guide forgets to mention this, but the exam may ask you about these additional stages. So I strongly recommend doing some further reading on this (it's called the Tuckman Group Development Model)
NEW QUESTION 58
Richie has come up with a new idea for sourcing items for the business but feels that it will have mixed reviews within the team. He thinks that some people will be in favour of the idea, and some will be against it. He doesn't think the CEO will have a strong opinion either way. In order to decide whether to put a business case together and present his idea to the CEO- what should Richie do?
- A. Make vs Buy Analysis
- B. Force Field Analysis
- C. Cost Analysis
- D. Value Engineering Analysis
Answer: B
Explanation:
Richie should do a Force Field Analysis - this is explained on p.86 and is an idea of Kurt Lewin - it identifies the driving forces for a project and the restraining forces (basically who will be for it and who will be against it). The textbook doesn't go into much detail on this but there are questions on it in the exam- so have a quick google to familiarise yourself with Kurt Lewin's Force Field Analysis.
NEW QUESTION 59
Which of the following behaviours are you likely to see in a Partnership relationship?
- A. Secrecy and honest communication
- B. Honest communication and opportunistic behaviour
- C. Opportunistic behaviour and strong levels of trust
- D. Strong levels of trust and honest communication
Answer: D
Explanation:
The correct answer is 'Strong levels of trust and honest communication'. The questions on Partnership in the exam tend to be quite straightforward, but if you're struggling with this see p. 148 for further details of behaviour in Partnerships.
NEW QUESTION 60
Which of the following relationship types would you consider using for a Main Contractor on a building construction project, who will be responsible for co-ordinating the activities of other suppliers?
- A. closer tactical
- B. co-destiny
- C. partnership
- D. transactional
Answer: A
Explanation:
in tiered supply chains, a closer-tactical relationship could be used between a buyer and a supplier who will be responsible for co-ordinating the activities of other suppliers (p.8 of the textbook).
NEW QUESTION 61
Intellectual Property Rights (IPR) include items such as copywrite and trademarks. A buyer is considering entering into a partnership with their supplier to create a new product which will be released in two years' time. Should IPR be included into a contract between partners?
- A. No- a contract is not necessary if it is a partnership.
- B. Yes- IPR is a valid concern for both parties but will survive the termination of the agreement
- C. Yes- IPR should always remain with the buyer- this will protect those rights
- D. No- a separate legal agreement should be created to cover IPR
Answer: B
Explanation:
The correct answer is 'Yes- IPR is a valid concern for both parties but will survive the termination of the agreement' (p.112). See the section on 'Legal considerations' in chapter 2.4
NEW QUESTION 62
Which of the following are Intellectual Property Rights that you would you encounter in procurement and supply contracts? Select THREE.
- A. Method Statements
- B. Patents
- C. Copywrite
- D. Trademark
- E. Risk Assessments
Answer: B,C,D
Explanation:
Intellectual Property Rights include; Patents, Copywrite, Trademarks and Trade Secrets. P.114
NEW QUESTION 63
In public sector procurement, tenders are advertised with CPV codes, which provide a reference to describe the product or service being tendered. What does CPV stand for?
- A. Complete Procurement Vocabulary
- B. Common Procurement Vocabulary
- C. Condensed Procurement Vocabulary
- D. Clear Procurement Vocabulary
Answer: B
Explanation:
CPV stands for Common Procurement Vocabulary. This is explained briefly on p.72 but it doesn't really go into much detail as to what CPVs are or how they work. CPVs are a string of numbers which refer to an object that is being procured. For example the CPV for Fire Doors is 44221220. When a Tender gets advertised for Fire Doors, it will have this CPV code on, and any suppliers who provide fire doors will get a notification if they have this CPV code on their profile. It's basically a code that links suppliers with tender opportunities.
NEW QUESTION 64
Which of the following are characteristics that differentiate between a partnership relationship and traditional contracting relationships? Select THREE.
- A. Lower costs
- B. No defined end period
- C. Supplier KPIs
- D. Early supplier involvement
- E. No tender process
Answer: B,D,E
Explanation:
The correct answers are; no tender process, early supplier involvement and no defined end-period. A partnership wouldn't automatically mean lower costs, and in a partnership the KPIs are usually a joint performance measurement rather than set to the supplier. For more information on the difference between partnerships and contractual relationships see p.124-5
NEW QUESTION 65
Beyond Say is a manufacturer of diamond rings. It sources a lot of different parts to create its products including diamonds, gold, cardboard boxes for the rings to go in, as well as stationary and copier paper for the offices. Although it doesn't buy many diamonds, these represent a large part of Beyond Say's spend. Which category of spend would diamonds represent?
- A. Option
- B. Option
- C. It isn't possible to tell
- D. Option
Answer: D
Explanation:
This is category 'A' spend in the ABC model - they represent a large value and a small number of purchases / suppliers. See p.17 for more information on the ABC Analysis
NEW QUESTION 66
The ABC Analysis, also known as the Pareto Analysis, is a technique that can be used by procurement to which purpose?
- A. supplier positioning
- B. cost analysis
- C. cost engineering
- D. relationship spectrum
Answer: A
Explanation:
ABC / Pareto is a "Portfolio Analysis Technique to assess the relationships in a supply chain". This, along with the Kraljic Matrix are two examples of "Supplier Positioning Models". See chapter 2.1 p.17 for more details on this
NEW QUESTION 67
Andrew runs a factory that makes cakes. Vanilla Extract is a vital ingredient in Andrew's cakes and this is a monopolistic market. Andrew has noticed recently that the quality of the supplier's product has reduced, and this has led to several complaints from customers. Andrew is considering entering into a Partnership with this supplier as he believes this will help increase the supplier's performance. Is this the correct thing to do?
- A. No- Andrew should use an alternative supplier
- B. Yes- partnership sourcing will improve sales figures
- C. No- Andrew should outsource the vanilla extract.
- D. Yes- partnership sourcing can improve performance which will ultimately satisfy the end customer
Answer: D
Explanation:
The correct answer is 'Yes- partnership sourcing can improve performance which will ultimately satisfy the end customer'. The important thing to note in this Question: is the word 'monopolistic'. This means that there are no alternative suppliers- so the 'no' options are wrong- there are no alternative suppliers and no opportunity to outsource. The other answer is incorrect as sales figures isn't Andrew's concern - it's the complaints and quality of the product. Improving performance to satisfy end customers is therefore his main driver for considering a Partnership. See p. 127 for more information on Drivers of Partnership Sourcing. This comes up a lot in the exam
NEW QUESTION 68
A manufacturing company which produces showers struggles to get hold of a certain part called a mixer valve. It is impossible to make the showers without the mixer-valve and there is only one supplier in the market that produces them. The good news is they aren't very expensive to buy. What type of supplier is the supplier of mixer valves?
- A. bottleneck
- B. leverage
- C. routine
- D. strategic
Answer: A
Explanation:
This is a bottleneck supplier- refer to the Kraljic matrix on p.20; these types of supplier hold a monopoly in the marketplace and provide low-value items. There are lots of questions on Kraljic in the exam - do revise this topic and ensure you understand each of the four quadrants of the matrix
NEW QUESTION 69
What is collaborative inertia?
- A. the concept that the value and performance of two companies combined will be greater than the sum of the separate individual parts
- B. Where a third party is invited to join a partnership.
- C. When a partnership is unable to create new ideas
- D. A situation when the apparent output from collaboration is considerably less than expected
Answer: D
Explanation:
The correct answer is 'A situation when the apparent output from collaboration is considerably less than expected'. This is verbatim the definition given in the study guide on p.166 A synergy is the concept that the value and performance of two companies combined will be greater than the sum of the separate individual parts.
NEW QUESTION 70
In which procurement process is a PQQ not issued?
- A. Competitive Dialogue
- B. Restricted
- C. Competitive Procedure with Negotiation
- D. Open
Answer: D
Explanation:
Open Tender processes are a one-stage process which issues and ITT. It has no PQQ (selection) stage. P. 77
NEW QUESTION 71
The Kraljic Model is most useful for which aspect of procurement?
- A. risk management
- B. cost analysis
- C. category management
- D. cost reduction
Answer: C
Explanation:
The Kraljic model "plays a key part in category management" p.19 of the textbook. Category Management = the spend in an organisation, broken down into categories of related products (e.g. IT, facilities management, marketing). Each of these categories could be plotted on the Kraljic Matrix.
NEW QUESTION 72
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