Quiz about Certification Exam, CIPS, L4M8: CIPS Procurement and Supply in Practice

Question 1

What Incoterm applies here?
The goods are considered ‘delivered’ at the point of release from the supplier’s premises or another
name place. The supplier is not responsible for loading or transporting the goods and does not have
to arrange export clearance – this must be arranged by the buyer. The risk is on the buyer from this
point.
a) EXW – Ex Works
b) FCA – Free Career
c) CPT – Carriage Paid To
d) CIP – Carriage and Insurance Paid to

Accepted Answer

EXW – Ex Works

Answer

FCA – Free Career

Answer

CPT – Carriage Paid To

Answer

CIP – Carriage and Insurance Paid to

Question 2

Which sector most frequently uses invitation to tender?

Accepted Answer

The public sector uses tenders a lot more in the working environment than private sector.

Question 3

What two areas of an organization do the Kraljic Portfolio matrix uses to establish the category of a
product or service?

Accepted Answer

The Kraljic Portfolio Matrix shows where a product or services fits into in an organization. It is based
on two areas 1) the risk of supply (Risk Impact). 2) Effect it has on profit (cost impact).

Question 4

Create a list of tangible, intangible, direct and indirect needs within an organization with which you
are familiar.

Accepted Answer

Tangible costs are the cost an organization incur acquiring items that can be physically touched and
or seen. Examples includes; 1) Capital Purchase 2) Raw materials 3) Sundry items 4) Vehi-
cles/transport 5) Utilities
Intangible costs are the cost an organization incurs acquiring something that cannot be physically
seen or touched. Examples include; 1) Insurance 2) Marketing 3) Research and development 4)
Salaries and/pension 5) Services 6) Training.
Direct costs – These are costs that an organization incurs acquiring product and services directly
attributable/traceable to its production, for example, the cost of labour and materials directly uses to
produce the goods/services which the organization sells. In the case of buying and running a Lorry for
transport fleet, this would be 1) total cost of acquiring the lorry,) Tooling 3) Operation.
Indirect cost - These are costs that are not directly associated to production, for example, materials
and services not used in production, labour/ staff cost not directly attributed to production, such as
management, sales and marking, ICT support, rents. In the case of buying and running a Lorry for
transport fleet. Examples are; 1) Insurance 2) Disposal.
•
Go back to the question column and study the Questions and response

Question 5

Create a list of tangible, intangible, direct and indirect needs within an organization with which you
are familiar.

Accepted Answer

Tangible costs are the cost an organization incur acquiring items that can be physically touched and
or seen. Examples includes; 1) Capital Purchase 2) Raw materials 3) Sundry items 4) Vehi-
cles/transport 5) Utilities
Intangible costs are the cost an organization incurs acquiring something that cannot be physically
seen or touched. Examples include; 1) Insurance 2) Marketing 3) Research and development 4)
Salaries and/pension 5) Services 6) Training.
Direct costs – These are costs that an organization incurs acquiring product and services directly
attributable/traceable to its production, for example, the cost of labour and materials directly uses to
produce the goods/services which the organization sells. In the case of buying and running a Lorry for
transport fleet, this would be 1) total cost of acquiring the lorry,) Tooling 3) Operation.
Indirect cost - These are costs that are not directly associated to production, for example, materials
and services not used in production, labour/ staff cost not directly attributed to production, such as
management, sales and marking, ICT support, rents. In the case of buying and running a Lorry for
transport fleet. Examples are; 1) Insurance 2) Disposal.

Question 6

What information should be included on a purchase requisition?

Accepted Answer

RESPONSE
A purchase requisition should contain the following information
1) Date of the requisition
2) Description of what is required
3) Supplier if known
4) The quantity
5) when the need is required
6) why the need is required
7) who identified the need
8) who approved the need
9) if it’s a re-buy

Question 7

What information should be included on a purchase requisition?

Accepted Answer

A purchase requisition should contain the following information
1) Date of the requisition
2) Description of what is required
3) Supplier if known
4) The quantity
5) when the need is required
6) why the need is required
7) who identified the need
8) who approved the need
9) if it’s a re-buy

Question 8

What do STEEPLE and SWOT stand for?

Accepted Answer

RESPONSE
After a need in an organization has been identified/understood, defined, justified and authorized, the
next stages are to understand how commodity prices are reacting, which suppliers are available and
their strength. The make or buy decision can be reached with knowledge from this; the procurement
professional can consider the organization external environment, strength, weakness opportunity
and threat to develop strategy/plan of how to achieve the procurement.
‘STEEPLE’ is an effective way to evaluate the external environment. It helps buyers to assess factors
that could affect the need in hand and helps them to develop the plan accordingly. ‘STEEPLE’ is an
acronym which stands for,
Social, Technology, Economic, Environment, Political, Legal, Ethical
‘SWOT’ helps the organization to analyze its strength and within the organization and the oppor-
tunity and threats outside the organization.
‘SWOT’ is an acronym which stands for, strength, weakness, opportunity and threats.
•
Refer to the question column

Question 9

What do STEEPLE and SWOT stand for?

Accepted Answer

After a need in an organization has been identified/understood, defined, justified and authorized, the
next stages are to understand how commodity prices are reacting, which suppliers are available and
their strength. The make or buy decision can be reached with knowledge from this; the procurement
professional can consider the organization external environment, strength, weakness opportunity
and threat to develop strategy/plan of how to achieve the procurement.
‘STEEPLE’ is an effective way to evaluate the external environment. It helps buyers to assess factors
that could affect the need in hand and helps them to develop the plan accordingly. ‘STEEPLE’ is an
acronym which stands for,
Social, Technology, Economic, Environment, Political, Legal, Ethical
‘SWOT’ helps the organization to analyze its strength and within the organization and the oppor-
tunity and threats outside the organization.
‘SWOT’ is an acronym which stands for, strength, weakness, opportunity and threats.

Question 10

Explain three strategic decisions that could be made or enhanced by using the STEEPLE or SWOT
analysis

Accepted Answer

By using STEEPLE and SWOT analysis, the organization can reach out to the following strategic
decision in how it will engage with its external environment, and utilize it strength to cover up for its
weakness and achieve its strategic goals;
1) STEEPLE can aid an organization to come up with informed decision by understanding when is the
right time to procure goods or services?
2) STEEPLE and SWOT analysis can uncover the quantity that could be most economical to ac-quire at
the point in time.
3) When an organization want to decide on the currency that could be most favorable for the buy, it
will analyze the countries involved and the strength of their currency and make its decisions on
which currency that the supplier should be paid that will not make the organization to lose
unnecessary money to exchange.
4) Should the product or services be made or bought?
5) Should the product or services be resourced?
6) Should the product or services be placed?
•
Refer to the question column

Quiz L4M8: CIPS Procurement and Supply in Practice

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