Updated Apr-2025 Exam L4M2 Dumps - Pass Your Certification Exam [Q116-Q133]

Updated Apr-2025 Exam L4M2 Dumps – Pass Your Certification Exam [Q116-Q133]

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Updated Apr-2025 Exam L4M2 Dumps – Pass Your Certification Exam

Latest Real CIPS L4M2 Exam Dumps Questions

NEW QUESTION 116
Which of the following is a risk to buying organization when using conformance specification?

Buyer is responsible for product failure

Buyer may face liquidity risks

Buyer cannot control the inputs

Time to produce specification is shortened

When using conformance specification, the buying organisation is responsible for the performance of the purchase. If the product fails due to poorly designed specification, the buyer is wholly responsible for it. It cannot blame the supplier for the failure because they still provided ‘fit for purpose’ product.
‘Time to produce specification is shortened’: Conformance specification requires details on dimen-sion, materials, design, etc. With such requirements, time to produce a complete conformance specification is often longer than producing performance specification.
‘Buyer cannot control the inputs’: Conformance specification is a list of inputs from buyer, so buyer has control over the inputs that will make the product. It also means that buyer is responsible for any product failure.
‘Buyer may face liquidity risks’: Liquidity means that how quick a business turns its assets into cash. This is a financial term, it does not link directly with specification failure.
Reference:
LO 3, AC 3.1

NEW QUESTION 117
Which of the following indicates types of waste that procurement department concentrates on when adopting Lean methods?

DOWNTIME

VA/VE

OWN-IT

SCAMPER

Copious amounts of waste can occur in the workplace, particularly in a manufacturing process, but do you know what the eight most commons wastes are and how they impact your organization?
Taiichi Ohno, considered the father of Toyota Production System, created a lean manufacturing framework, which was based on the idea of preserving (or increasing) value with less work. Any-thing that doesn’t increase value in the eye of the customer must be considered waste, or “Muda”, and every effort should be made to eliminate that waste. The following 8 lean manufacturing wastes, mostly derived from the TPS, have a universal application to businesses today. The acro-nym for the eight wastes is DOWNTIME. Downtime stands for:
– Defects
– Overproduction
– Waiting
– Not utilizing talent
– Transportation
– Inventory excess
– Motion waste
– Excess processing
OWN-IT is the acronym for the process of collecting and analysing the data and information needed in any field SCAMPER is acronym for options addressing the underlying issues and achieving target VA/VE is value analysis and value engineering LO 3, AC 3.4

NEW QUESTION 118
OMK is a Russian steel firm that is expanding market abroad. It plans to build a steel plant in a foreign country. Due to intricate technical requirements, the plant design will be very complex. Procurement department or technical department alone cannot draft the specification. OMK senior management decides that this task must be treated as a project. Which of the following should be done before writing the specification for new steel plant?

Develop the performance framework for the supplier

Draft the terms and conditions for plant construction contract

Invite suppliers to the tendering process

Develop project initial document

The writing of a complex specification should be treated as a project because it requires the brain power from different stakeholders. Many tools and processes of project management can be applied to complex specification development. Before engaging with the stakeholders and implementing the project, the project initial document should developed.
A Project Initiation Document (PID) is one of the most important components of project manage-ment, which forms the foundation for a company project. It is a reference point during the entire project, for the client as well as for the project team.
A PID bundles documentation into a logical reference work that collects all important information needed to start and run a project from a good foundation. After that, Project Initiation Document must be transferred to all stakeholders, including business sponsors.
This forms the basis for the project management. The documentation from which the PID is com-posed include the business case in which the project’s justification can be found, the communica-tion plan and the project plan.
The PID is composed out of collected information and includes, among others, the following com-ponents:
– Project goal(s); what do you want to achieve with the project?
– Project size; how large is the project, how long does it take and how many people are involved?
– Project organisation; who are involved in the project, what are their tasks, responsibilities and authority?
– Limits and risks; what can cause a project to stagnate and are there risks related to the project?
– Stakeholders; who has a stake in the success of the project?
– Project checks and frame reporting; by carefully taking into account evaluation moments, it is clear to everyone what sample tests can be carried out during the process.
In addition, it is important that the Project Initiation Document also contains the following infor-mation:
– The background and occasion of the project, which together provide information about the con-text.
– The project organisational structure, which describes who has which management responsibility in the project.
– The project quality plan, describing who controls the quality of the products to be delivered and how it will take place.
– The total project planning, including the duration of all activities.
– The exception process, which describes how exceptions are dealt with and the steps of the escalation procedure.
– The risk log, including the measures that will be taken when there are unforeseen risks.
– The documentation structure of the project, in which the encoding and storage of all documents and products to be provided by the project has been recorded in advance.
Reference:
– CIPS study guide page 148
– Project Initiation Document (PID), a project management tool | ToolsHero LO 3, AC 3.3

NEW QUESTION 119
Dana is an automobile manufacturer. It has a new electrification strategy that aims at making eco-friendly electric pick-up trucks. To implement this strategy, the procurement department must source new categories of parts that make motors, sensors, solenoids and stators. He starts to analyse the market by identifying specific supply market segments for those parts and finding suppliers who have the best capabilities in those segment. He intends to segment the market based on specific features of the products. Which variable is used by Dana procurement manager to shape and manage supply market?

Buyer segments

Channel segments

Geographical segments

Product segments

In sales and marketing, market segmentation is the process of trying to understand clusters of cus-tomers in terms of their buying behavior and their buying characteristics. There are some traditional segmentation approaches: geography, demography, types of industry and the benefits. Then there are newer segmentation approaches: behavioral, situational, and psychographic.
Procurement professionals can learn market segmentation from sales and marketing. Segmenting the market can help them to shape and manage the supply market effectively. According to Michael Porter, a market can be segment with array of products and buyers.
Text Description automatically generated

Source: Porter, Michael E.. Competitive Advantage: Creating and Sustaining Superior Performance (p. 234).
Free Press. Kindle Edition.
In the scenario, the products that Dana needs to source is distinct in their features. The best way is to segment the market by product varieties.

NEW QUESTION 120
Robert is a senior buyer at MMC Construction Ltd. His company is doing multiple development projects in the country, which increases procurement workload significantly. Meanwhile, most of the tasks are handled manually, which causes bottlenecks in the workflows. The procurement team is overwhelmed by the workload and complains from other departments. From previous experience, Robert knows that electronic system may help his procurement team. He writes a business case to submit to the senior management, in which he insists on the possible productivity improvement by adopting e-system in procurement. Is Robert’s action reasonable?

No, there’s no need to make a business case for new purchase

Yes, productivity improvement is a mandatory element in every business case

No, adopting e-system may make procurement department jobless

Yes, his reason may appeal the senior management

Composing a compelling business case requires the proposer to write in the language of the approvers.
Generally, approvers are business executives or important shareholders whose major interest is the profitability of the firm. Business case proposer may embed the following contents:
– Return on investment: according to Investopedia, Return on Investment (ROI) is a performance measure used to evaluate the efficiency of an investment or compare the efficiency of a number of different investments. ROI tries to directly measure the amount of return on a particular investment, relative to the investment’s cost. A business case would seem more attractive if the proposal is expected to have high ROI.
– Time to market: Time-to-market (TTM) refers to the time from which a company initially con-ceives a product or service idea to the point when the actual product or service is accessible to buyers in the market (Afonso et al., 2008). The speed at which companies can introduce products into the market is critical for sustaining competitive advantage, and the reduction of product development cycle time has become a strategic objective for many technology-driven firms.
– Customer satisfaction: Keeping existing customer to stay in the business can affect greatly on the profit margin of a firm. A new proposal that finds the way to innovate while keeping the current customers satisfied may gain the interest of senior management.
– Improving productivity: Productivity is the measure of how efficient and effective a firm is. Im-proving the productivity means that with the same or lesser input, better output is generated. In-creasing productivity also improves the profitability of a company.
– Risk management: Any business activity contains inherent risks. For example, for a mining company to be truly responsible, it must keep all of its workers safe, healthy and motivated, meet the expectations of the local community and government for the region in which it is operating, ensure it impacts on the environment positively if at all, as well as achieve the financial objectives set by its investors for both the short and long term. Managing risks well improves the production throughput and maintains customer satisfaction.
In the scenario, Robert is trying to convince the senior management to adopt e-procurement system by insisting on potential productivity improvement. This is the right approach. A business plan should engage and please senior management and directors. An appealing business case tells them how important things to the business (such as productivity, return on investment, customer satisfaction or costs) are affected by the plan.

NEW QUESTION 121
When should procurement professional tolerate a risk?

When the risk may disrupt the production

When the risk imposes an existential threat

When the risk causes some trivial annoyance

When the risk breaks the relationship with the strategic supplier

Risk control is the process by which an organization reduces the likelihood of a risk event occurring or mitigates the effects that risk should it occur. Our preferred way to determine your risk control strategy is to use the four T’s Process:
Transferring Risk can be achieved through the use of various forms of insurance, or the payment to third parties who are prepared to take the risk on behalf of the organization Tolerating Risk is where no action is taken to mitigate or reduce a risk. This may be because the cost of instituting risk reduction or mitigation activity is not cost-effective or the risks of impact are at so low that they are deemed acceptable to the business (such as some trivial annoyance). Even when these risks are tolerated they should be monitored because future changes may make it no longer tolerable.
Treating Risk is a method of controlling risk through actions that reduce the likelihood of the risk occurring or minimize its impact prior to its occurrence. Also, there are contingent measures that can be developed to reduce the impact of an event once it has occurred.
Terminating Risk is the simplest and most often ignored method of dealing with risk. It is the ap-proach that should be most favored where possible and simply involves risk elimination. This can be done by altering an inherently risky process or practice to remove the risk. The same can be used when reviewing practices and processes in all areas of the business.
If an item presents a risk and can be changed or removed without it materially affecting the busi-ness, then removing the risk should be the first option considered; rather than attempting the treat, tolerate or transfer it.

NEW QUESTION 122
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?

Treat the risk

Terminate the risk

Tolerate the risk

Transfer the risk

Risk control is the process by which an organization reduces the likelihood of a risk event occurring or mitigates the effects that risk should it occur. CIPS preferred way to determine your risk control strategy is to use the four T’s Process:
Transferring Risk can be achieved through the use of various forms of insurance, or the payment to third parties who are prepared to take the risk on behalf of the organization Tolerating Risk is where no action is taken to mitigate or reduce a risk. This may be because the cost of instituting risk reduction or mitigation activity is not cost-effective or the risks of impact are at so low that they are deemed acceptable to the business. Even when these risks are tolerated they should be monitored because future changes may make it no longer tolerable.
Treating Risk is a method of controlling risk through actions that reduce the likelihood of the risk occurring or minimize its impact prior to its occurrence. Also, there are contingent measures that can be developed to reduce the impact of an event once it has occurred. Finding an alternative sup-plier is an example of treating the risk.
Terminating Risk is the simplest and most often ignored method of dealing with risk. It is the ap-proach that should be most favored where possible and simply involves risk elimination. This can be done by altering an inherently risky process or practice to remove the risk. The same can be used when reviewing practices and processes in all areas of the business.
If an item presents a risk and can be changed or removed without it materially affecting the busi-ness, then removing the risk should be the first option considered; rather than attempting the treat, tolerate or transfer it.
Reference:
LO 3, AC 3.3

NEW QUESTION 123
Which of the following specific markets is most likely to have product shortage by nature?

Retail

Financial

Construction

Services

Agriculture

Products used in agriculture can be subject to shortage due to natural disasters.
Reference:
LO 2, AC 2.1

NEW QUESTION 124
When preparing through-life specification, which of the following requirements should procure-ment team define besides the physical asset? Select TWO that apply.

Customer service

Objectives

Market analysis

Logistics and installation

Available substitute

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.
Diagram, table Description automatically generated

Source: Andrew Graves
With through-life management, buyer not only cares about the physical asset but also other factors like customer services and maintenance.

NEW QUESTION 125
This is the information on an organisation’s activities over the past year
* Sale were $5,000,000. The value of accounts receivable was $450,000 at the start of the year and $525,000 at the end of the year
* The value of direct costs was $2,500,000 and 75% of this was bought on credit
* Indirect costs were $3,000,000 and 25% of this was bought on credit
* During the year the organization spent $1,500,000 on new assets and sold $150,000 of old assets.
$1,000,000 of the spend on assets was funded by a bank loan
* The organization declared a dividend of $200,000 at the end of the year but this was not paid for another two months
* Opening balance was $175,000
Which of the following is the bank balance of that organization at the end of the year?

$1,675,000

$1,875,000

$1,700,000

$2,025,000

In this question, you should understand the concept of cash flow and formula of cash flow. Cash flow calculates the physical money moving in and out a company’s bank balance. The cash flow from sale activity is:
cash flow from sale = account receivable at beginning of the year + revenue – account receivable at the end of the year = $450,000 + $5,000,000 – $525,000 = $4,925,000
75% of direct costs was bought by credit, therefore, the company spent 25% on direct cost: -$2,500,000*25
/100 = -$625,000
25% of indirect costs was bought on credit. Cash flow out on indirect costs is: -$3,000,000*75/100 =
-$2,250,000
Company spent $1,500,000 on new assets funded by a loan of $1,000,000. Cash flow out from this activity is
-$500,000
Company received $150,000 from selling old assets
Dividends have not been paid for another 2 months, thus, they are not accounted as cash flow out.
The bank balance at the end of the year is: $175,000 + $4,925,000 – $625,000 – $2,250,000 – $500,000 +
$150,000 = $1,875,000
LO 1, AC 1.4

NEW QUESTION 126
Warwickshire Ambulance Service (WAS) is an NHS Trust. It operates throughout Warwickshire and the neighbouring areas. It has three core areas of activity, namely the provision of Emergency Ambulance Services, routine Patient Transport Services, and Logistic Medical Services. The agency is working towards higher service level through benchmarking. Which of the following is the benefit of benchmarking to WAS?

Benchmarking is a panacea for all WAS’s problems

It will help WAS create performance standards derived from an analysis of the best in business

It helps WAS identify better ways to deliver service through a cookbook process

It will help WAS analyse the competitors in the industry

Benchmarking is ‘the pursuit by organisations of enhanced performance by learning from the suc-cessful practices of others. Benchmarking is a continuous activity; key internal processes are adjusted, performance is monitored, new comparisons are made with the current best performers and further changes are explored.
Where information about these key processes is obtained through a co-operative partnership with specific organisations (rather than via a third party such as an independently-maintained database), there is an expectation of mutual benefit over a period of time.
Text Description automatically generated

Graphical user interface, text, application, email Description automatically generated

NEW QUESTION 127
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?

Yes, decommissioning and disposal costs will not be accounted in this approach

Yes, this approach will lower the total cost of ownership

No, a ship is used only once, through-life management is unnecessary

No, the company just needs to select the lowest bidder

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:
1. Design
2. Manufacture
3. Installation
4. In-service support
5. Decommission and disposal
6. Customer support
In this scenario, the company is planning to procure a ship, which is a capital asset. Through life management is a good approach. Sealines can start with developing through-life specification. This approach may have several benefits:
– It lowers the costs over the whole life of the asset
– It lowers the risks as there is a single company accountable for costs and service over the life of the asset
– A closer match between the asset delivered and the users’ needs
– Development of capability over the life of the asset as the supplier continues to get experience of the users’ needs and can adapt services to meet them.

NEW QUESTION 128
Lucy, a junior procurement analyst, has been asked to assess the competitive forces in the garden furniture market. XYZ Ltd is the largest producer of garden furniture in the country. It produces 70% of all the garden furniture manufactured, while the second largest manufacturer produces less than 5% of the garden furniture for the country. Which power does XYZ Ltd possess?

Purchasing power

Substitute power

Supplier bargaining power

Buyer bargaining power

NEW QUESTION 129
When analyzing direct and indirect costs of potential suppliers for negotiations and planning pur-chasing budget, the procurement manager collects reports from specialist organisations like Mintel, Gartner and Forrester. Which kind of information source is used by the procurement manager?

Company annual report

Technical data

Market data

RFI

Using Porter’s value chain helps procurement professionals know what are direct and indirect costs of supplier. Information on direct and indirect costs will have been collected as part of the market analysis.
Information sources that may help include the following:
– Company annual reports
– Market data
– Technical data
– Request for information
– Plan visits
– Discount lists
Market data is the information that is collected and analysed by specialist organisations like Mintel, Gartner, Forrester,…

NEW QUESTION 130
When analysing competitive forces in a market, which of the following can be seen as a supplier having low bargaining power? Select TWO that apply.

Low switching costs between products

A high number of substitutes available

Low competition in the marketplace

High quality products

Low levels of innovation

NEW QUESTION 131
Which kind of these following costs belong to fixed costs? Select TWO that apply.

Energy consumption in manufacturing

The annual income tax charged by local authorities

The packaging and distribution costs

The depreciation of capital inputs

The costs of leasing or purchasing capital equipment

Based on variability, the costs has been classified into three categories, they are fixed, variable and semi variable. Fixed costs, as its name suggests, is fixed in total i.e. irrespective of the number of output produced.
Variable costs vary with the number of output produced. Semi-variable is the type of costs, which have the characteristics of both fixed costs and variable costs (Source: Key Differences).
Among above costs, leasing and depreciation are relatively static and do not change if volume of business activities increase or reduce.
Packaging, utilities and annual business rate (tax) are variable costs.

NEW QUESTION 132
ABC Ltd has recently set up a stationery contract with a large stationery provider, obtaining fixed prices on core stationery items. The brochures have been distributed within ABC Ltd and one of the key users wants to order a corner desk and office chair from the brochure. Is this within scope?

No, because the contract is for stationery only and not furniture

No, because the corner desk wouldn’t match existing furniture

Yes, because the contract is with the company and not just stationery

Yes, because the office equipment is in the brochure and must be covered

NEW QUESTION 133
Royal Navy is preparing a through-life contract. They put to the contract a term on rectification of operational defects and planning and delivery of Fleet Time Support Periods. Which part of through-life requirement does this term belong to?

Installation

In-service support

Manufacture

Customer support

There are 6 main components of the through-life requirements of an asset: Design, Manufacture, Installation, In-service support, Decommission and disposal and Customer support.
Rectification of operational defects and planning and delivery of Fleet Time Support Periods are maintenance activities which belong to in-service support. You may have chosen Customer support. However, in through- life asset management context, customer support does not include maintenance services. Instead, it is the services that go along the stages of asset life. It may include consulting, communication and information exchange.
Diagram, table Description automatically generated

Source: Andrew Graves

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CIPS L4M2 course covers a range of topics related to defining business needs, including the identification of business requirements, the development of business cases and the creation of procurement strategies. L4M2 course also covers the use of market analysis and stakeholder engagement to ensure that procurement activities are aligned with business needs. L4M2 course is designed to provide a comprehensive understanding of the importance of defining business needs in procurement and how it can contribute to the success of an organization.

The Defining Business Needs certification exam is open to professionals from all industries, including business analysts, project managers, product managers, and IT professionals. It is particularly useful for professionals who are involved in the planning and execution of business projects, as well as those who wish to enhance their career prospects in the field of business analysis.

L4M2 Dumps To Pass CIPS Level 4 Diploma in Procurement and Supply Exam in One Day: https://www.latestcram.com/L4M2-exam-cram-questions.html

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