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CIPS L4M2 Exam Questions
- Topic 1: Monitor specification creation by colleagues and other internal stakeholders/ Analyse how business needs influence procurement decisions
- Topic 2: Approaches to total costs of ownership/whole life cycle costing/ Interpret financial budgets for the control of purchases
- Topic 3: Identify opportunities to regulate short and longer term specifications/ Procurement’s role in developing a business case
- Topic 4: Provide guidance to internal stakeholders on implementation/ Implications of the business needs on the types of purchase
- Topic 5: Output or outcome, statement of work based specifications/ Types of market data that can provide information on costs and prices
- Topic 6: Identify sections of specifications for through life contracts/ Identify how costs and prices can be estimated for procurement activities
- Topic 7: Analyse the criteria that can be applied in the creation of a business case/ Availability of substitutes and threat of entry Understand market management in procurement and supply/ Compare the competitive forces that influence markets
- Topic 8: Understand the use of specifications in procurement and supply/ Analyse the different types of markets utilised by procurement and supply
- Topic 9: Identify the risks that can result from inadequate specifications and mitigation approaches/ Use information to prepare budgets or to negotiate prices
- Topic 10: Understand how to devise a business case for requirements to be sourced from external suppliers/ Producing estimated costs and budgets
Free CIPS L4M2 Exam Actual Questions
Note: Premium Questions for L4M2 were last updated On Jan. 26, 2025 (see below)
Category buyer Raheem has been tasked with receiving innovative bids from coaching and development service providers. How can he achieve this? Select TWO that apply.
A (Early supplier involvement): Engaging suppliers early fosters innovation by leveraging their expertise in developing solutions.
D (Outcome-based specification): Focusing on outcomes rather than rigid inputs encourages creative and flexible proposals.
Conformance specifications (C) restrict innovation, and standards (E) limit supplier flexibility. Reference: CIPS Level 4, Innovation in Procurement Specifications.
A garment manufacturer supplies global retailers with t-shirts, shirts, and linen trousers. Because of currency fluctuations, the manufacturer is aware that they must control their direct costs in order to ensure profits. Which of the following is a direct cost for the garment manufacturer?
Cotton fabric is a direct cost because it is directly attributable to the production of the garments. Costs like rent, utilities, and payroll are indirect costs associated with running the business. Reference: CIPS Level 4, Cost Categorization in Procurement.
A food manufacturer wants to predict the pricing point for a new and innovative health drink. Which method of market research would be beneficial to receive the most accurate information?
Consumer data provides specific, measurable insights into purchasing behavior, preferences, and willingness to pay. This is the most accurate method for setting a pricing strategy, as it uses real-world data rather than subjective opinions or generic trends. Reference: CIPS Level 4, Market Research Techniques.
Which of the following always impact negatively on a company's cash flow? Select TWO that ap-ply
To answer this question, candidates are required to remember the cash flow cycle and cost entries as well as the impact of their timing on a business.
Source: https://cfoperspective.com/free-your-cash-trapped-in-the-cash-conversion-cycle/
Shorter payment term and more inventory are likely to have negative impact on the cash flow be-cause the buyer has to pay sooner and greater.
'Customers agree to pay immediately' will increase the organisation's bank account sooner.
Depreciation has no impact on cash flow as it is only listed in Profit and Loss statement.
Increasing revenue may have negative or positive impact on cash flow, depending on the real situation.
LO 1, AC 1.4
A procurement organisation is keen to encourage innovation available within the supply market in the execution of an upcoming significant contract opportunity. A team member suggests that the specification should define the performance indicators so that supplier's solution can be checked against them. Which of the following will enable the organisation to achieve this goal?
The buying organisation is keen to encourage innovation so they should use the outcome or output based specification. In an outcome-based specification, umbrella statements like 'good quality', 'ambient temperature', 'convenient way' are often used. This may confuse the suppliers, and it's hard to check the solution that supplier offers. On the other hand, ouput-based specifications often include measurable requirements. For example, a specification for air conditioning system states that the system should maintain the room temperature at 19-24 degrees Celsius. Therefore, output specification is more appropriate in this case.
LO 3, AC 3.1
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