CIPS L4M2 Defining Business Needs Online Training
CIPS L4M2 Online Training
The questions for L4M2 were last updated at Apr 15,2024.
- Exam Code: L4M2
- Exam Name: Defining Business Needs
- Certification Provider: CIPS
- Latest update: Apr 15,2024
Sealines Inc is developing its fleet of cargo ships. The company is planning to build a new ship powered by natural gas. Brian, the procurement manager at Sealines, suggests the project team to develop a through-life specification before engaging with the supplier.
Is this a correct approach?
- A . Yes, decommissioning and disposal costs will not be accounted in this approach
- B . Yes, this approach will lower the total cost of ownership
- C . No, a ship is used only once, through-life management is unnecessary
- D . No, the company just needs to select the lowest bidder
B
Explanation:
Through-life management is a approach applied to capital asset. According to Ward and Graves, Through-life Management involves the life-cycle management of the products, services and activities required to deliver a fully integrated capability to the customer, while reducing the cost of ownership for the customer.
According to CIPS study guide, through- life management comprises of 6 parts:
Sealines Inc is developing its fleet of cargo ships. The company is planning to build a new ship powered by natural gas. Brian, the procurement manager at Sealines, suggests the project team to develop a through-life specification before engaging with the supplier.
Is this a correct approach?
- A . Yes, decommissioning and disposal costs will not be accounted in this approach
- B . Yes, this approach will lower the total cost of ownership
- C . No, a ship is used only once, through-life management is unnecessary
- D . No, the company just needs to select the lowest bidder
B
Explanation:
Through-life management is a approach applied to capital asset. According to Ward and Graves, Through-life Management involves the life-cycle management of the products, services and activities required to deliver a fully integrated capability to the customer, while reducing the cost of ownership for the customer.
According to CIPS study guide, through- life management comprises of 6 parts:
Sealines Inc is developing its fleet of cargo ships. The company is planning to build a new ship powered by natural gas. Brian, the procurement manager at Sealines, suggests the project team to develop a through-life specification before engaging with the supplier.
Is this a correct approach?
- A . Yes, decommissioning and disposal costs will not be accounted in this approach
- B . Yes, this approach will lower the total cost of ownership
- C . No, a ship is used only once, through-life management is unnecessary
- D . No, the company just needs to select the lowest bidder
B
Explanation:
Through-life management is a approach applied to capital asset. According to Ward and Graves, Through-life Management involves the life-cycle management of the products, services and activities required to deliver a fully integrated capability to the customer, while reducing the cost of ownership for the customer.
According to CIPS study guide, through- life management comprises of 6 parts:
Sealines Inc is developing its fleet of cargo ships. The company is planning to build a new ship powered by natural gas. Brian, the procurement manager at Sealines, suggests the project team to develop a through-life specification before engaging with the supplier.
Is this a correct approach?
- A . Yes, decommissioning and disposal costs will not be accounted in this approach
- B . Yes, this approach will lower the total cost of ownership
- C . No, a ship is used only once, through-life management is unnecessary
- D . No, the company just needs to select the lowest bidder
B
Explanation:
Through-life management is a approach applied to capital asset. According to Ward and Graves, Through-life Management involves the life-cycle management of the products, services and activities required to deliver a fully integrated capability to the customer, while reducing the cost of ownership for the customer.
According to CIPS study guide, through- life management comprises of 6 parts:
Sealines Inc is developing its fleet of cargo ships. The company is planning to build a new ship powered by natural gas. Brian, the procurement manager at Sealines, suggests the project team to develop a through-life specification before engaging with the supplier.
Is this a correct approach?
- A . Yes, decommissioning and disposal costs will not be accounted in this approach
- B . Yes, this approach will lower the total cost of ownership
- C . No, a ship is used only once, through-life management is unnecessary
- D . No, the company just needs to select the lowest bidder
B
Explanation:
Through-life management is a approach applied to capital asset. According to Ward and Graves, Through-life Management involves the life-cycle management of the products, services and activities required to deliver a fully integrated capability to the customer, while reducing the cost of ownership for the customer.
According to CIPS study guide, through- life management comprises of 6 parts:
Sealines Inc is developing its fleet of cargo ships. The company is planning to build a new ship powered by natural gas. Brian, the procurement manager at Sealines, suggests the project team to develop a through-life specification before engaging with the supplier.
Is this a correct approach?
- A . Yes, decommissioning and disposal costs will not be accounted in this approach
- B . Yes, this approach will lower the total cost of ownership
- C . No, a ship is used only once, through-life management is unnecessary
- D . No, the company just needs to select the lowest bidder
B
Explanation:
Through-life management is a approach applied to capital asset. According to Ward and Graves, Through-life Management involves the life-cycle management of the products, services and activities required to deliver a fully integrated capability to the customer, while reducing the cost of ownership for the customer.
According to CIPS study guide, through- life management comprises of 6 parts:
Sealines Inc is developing its fleet of cargo ships. The company is planning to build a new ship powered by natural gas. Brian, the procurement manager at Sealines, suggests the project team to develop a through-life specification before engaging with the supplier.
Is this a correct approach?
- A . Yes, decommissioning and disposal costs will not be accounted in this approach
- B . Yes, this approach will lower the total cost of ownership
- C . No, a ship is used only once, through-life management is unnecessary
- D . No, the company just needs to select the lowest bidder
B
Explanation:
Through-life management is a approach applied to capital asset. According to Ward and Graves, Through-life Management involves the life-cycle management of the products, services and activities required to deliver a fully integrated capability to the customer, while reducing the cost of ownership for the customer.
According to CIPS study guide, through- life management comprises of 6 parts:
Which of the following activities are considered as secondary activities of an organization? Select TWO that apply
- A . Component fabrication
- B . Training
- C . Information system development
- D . Shipping
- E . Service response
B,C
Explanation:
According to Porter’s value chain, secondary activities consist of firm infrastructure, human re-source management, technology development and procurement.
Training is an example of human resource development, while information system is a part of firm infrastructure.
LO 2, AC 2.1
A procurement manager is writing a conformance specification for a non-core component. She thinks that if the requirements in specification are higher than ISO standards, her company can achieve greater cost-savings.
Is the procurement manager’s opinion correct?
- A . No, because higher specification may incur additional costs for the buyer
- B . No, because higher requirements in specification, the greater bargaining power of buying organisation
- C . Yes, because optimising the specification is the only method to achieve value for money
- D . Yes, because higher requirements will help buying organisation find the best supplier
A
Explanation:
The specification that is produced too detailed will incur unnecessary cost because it does not allow suppliers to use their expertise in finding the most efficient way to produce it. ‘No, because higher requirements in specification, the greater bargaining power of buying organi-sation’: more detailed specifications could tighten the supplier base and potentially leave buying organisation with fewer potential supplier. This may reduce buyer’s bargaining power in negotia-tion.
‘Yes, because higher requirements will help buying organisation find the best supplier’: in some circumstances, higher requirements will lead to smaller supplier base. In the worst scenario, there is no supplier who has capability to carry out those requirements
‘Yes, because optimising the specification is the only method to achieve value for money’: There are other methods to achieve cost saving and value for money, inter alia, volume concentration, relationship restructuring, etc.
Reference: CIPS study guide page 118-119
LO 3, AC 3.1
A procurement manager is writing a conformance specification for a non-core component. She thinks that if the requirements in specification are higher than ISO standards, her company can achieve greater cost-savings.
Is the procurement manager’s opinion correct?
- A . No, because higher specification may incur additional costs for the buyer
- B . No, because higher requirements in specification, the greater bargaining power of buying organisation
- C . Yes, because optimising the specification is the only method to achieve value for money
- D . Yes, because higher requirements will help buying organisation find the best supplier
A
Explanation:
The specification that is produced too detailed will incur unnecessary cost because it does not allow suppliers to use their expertise in finding the most efficient way to produce it. ‘No, because higher requirements in specification, the greater bargaining power of buying organi-sation’: more detailed specifications could tighten the supplier base and potentially leave buying organisation with fewer potential supplier. This may reduce buyer’s bargaining power in negotia-tion.
‘Yes, because higher requirements will help buying organisation find the best supplier’: in some circumstances, higher requirements will lead to smaller supplier base. In the worst scenario, there is no supplier who has capability to carry out those requirements
‘Yes, because optimising the specification is the only method to achieve value for money’: There are other methods to achieve cost saving and value for money, inter alia, volume concentration, relationship restructuring, etc.
Reference: CIPS study guide page 118-119
LO 3, AC 3.1
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