L3M2 Questions and Answers

Explanation

Lifetime costing, TCO and whole life costing are essentially the same concept - looking at buying based on total costs over the useful life of an asset, not just the purchase price. Although this con-cept seems obvious once you know it, very many people, including senior managers as well as politi-cians, seem to be unfamiliar with the notion.

Explanation

Requirements are 'called off' from a single contract.

Explanation

Audits, CIPS membership and effective training are all likely to foster an ethical culture in a pro-curement department.

Poor salaries or uncontrolled out-of-hours liaisons with supply companies may facilitate undesirable behaviour.

Explanation

Value engineering, like value analysis, but at the design stage, seeks to create at least as great an output, but with fewer components / inputs.

Explanation

SMART

Specific, measurable, achievable, realistic, timebound or similar.

Explanation

Actual cost and budgeted costs may / will vary. Examples might include materials variances and labour variances.

Explanation

Reverse e-auction.

This term is used in your syllabus.

Explanation

This is the Pareto Principle, which can be invaluable as a guide for any procurement person, or any manager.

The other names shown here are those of other well-known thinkers, all much earlier than Pareto.

Explanation

The product has a defect; it might be rejected, then it would be a reject.

The effect of this might be that it would affect profitability.

Explanation

How powerful are stakeholders?

How much interest do they have?

Using these measures to help manage stakeholders effectively.

Explanation

Quality, like most things in business, is ultimately about the customer.

Explanation

Value analysis.

This is simply a distinction between VA and VE.

Explanation

Expediting - a task, which in an ideal world would not normally need to exist - is seeking to ensure delivery is made in line with contract and / or organisational needs.

It has nothing to do with permission to spend, auditing, or preparing for an expedition.

Explanation

A force majeure clause in a contract may give rights to either party to suspend its obligations in the event of something untoward happening which is outside the control of the parties.

Examples might volcanic dust clouds, tidal waves or a pandemic. Often lesser events trigger (or are used to try to trigger) the use of such a clause.

Explanation

The correct answers to the QUESTION NO: are: 'unimaginable' and 'permeable'. 'Permeable' makes no sense here; and it is possible to imagine both physical products and services.

The other four answers are distinguishing features of services, which result in services being more challenging to buy.

Explanation

All aspects of an acquisition may be impacted by the use of competition - normally favourably - but the one we are most likely to see immediate impact on is 'price'.

Explanation

Key Performance Indicators should be specific, measurable, achievable, realistic and time-bound; or words very similar to those, meaning broadly the same.

Explanation

While one can take the view that your weekend is yours and nothing to do with your main employ-er, many contracts of employment prohibit extra work unless pre-agreed. In any event, it is likely to be seen as polite and respectful to seek permission from your main employer. The point about need-ing to rest at weekends (and during annual holidays) is a serious point: we should be able to func-tion effectively during normal working hours.

If your main employer does not give consent, you may wish to ask for a pay rise. :)

Explanation

Procurement professionals may be faced with offers of gifts including money in return for awarding contracts to a particular bidder, or similar. This is an attempt at bribery, which is illegal in most countries, and would be a breach of the CIPS Code of Conduct if the buyer were to accept.

Anti-bribery legislation in countries such as the UK and US extends across borders, and penalties for breach of this legislation can include imprisonment.

Explanation

Revenue.

Added value is really measured through the customer's eyes. I have a choice of six coffee shops from which to buy my morning coffee. One has an attractive mix of cleanliness, tasty coffee, effi-cient and friendly service - more than the others. This appealing all-round mix 'adds value' as far as I am concerned and I give it daily repeat business, visiting the others only occasionally. That added value offering generates the repeat business, and helps make the coffee shop more profitable.

Explanation

This is the notion that the way people behave (and are treated) inside the organisation is likely to reflect the way they behave to others outside the organisation.