[Jun-2026 Newly Released] L4M2 Dumps for CIPS Level 4 Diploma in Procurement and Supply Certified

Updated Verified L4M2 dumps Q&As - 100% Pass

NEW QUESTION # 177
Which of the following factors should be assessed to understand the competitiveness of a supply market?

• A. Number of suppliers within the market
• B. Gross National Product (GNP) of the country of manufacture
• C. Previous price paid for goods
• D. Presence of a minimum wage

Answer: A

Explanation:
Comprehensive and Detailed Explanation (from CIPS L4M2 - Market Management) The number of suppliers and market concentration determine competitiveness.
A market with many suppliers tends to be more competitive; fewer suppliers increase supplier power and reduce price competition.
Hence, Option C correctly identifies a key factor in market competitiveness.
Relevant L4M2 references:
* Section: "Assessing supply market structures"
* Model: "Porter's Five Forces - Supplier Power"

NEW QUESTION # 178
Which of the following is an assumption of Kano model?

• A. The relationship between product functionality and customer satisfaction is always linear
• B. All customer requirements are basic requirements
• C. Different types of customer requirements have different impact on customer satisfaction
• D. All types of customer requirements have the same impact on customer satisfaction

Answer: C

Explanation:
Kano model of excitement and basic quality (Kano et al, 1984; Berger et al, 1993; Matzler et al, 1996) brings a different perspective for the analysis of improvement opportunities in products and services because it takes in consideration the asymmetrical and non-linear relationship between performance and satisfaction. The Kano model classifies customers requirements in three categories (figure 3):
a) Basic Requirements. The basic requirements fulfill the basic functions of a product. If they are not present or their performance is insufficient, customers will be extremely dissatisfied. On the other hand, if they are present or have sufficient performance, they don't bring satisfaction. Customers see them as prerequisites. For instance, for luxury automobiles, "air bags" are considered basic. A customer won't feel satisfied if the automobile has "air bag", however he/she will not buy it if "air bag" is not present.
b) Performance Requirements. As for these requirements, satisfaction is proportional to the performance level
- the higher the performance, the higher the customer's satisfaction will be and vice-versa. Gas consumption in automobiles is an example of these requirements. Usually customers explicitly demand performance requirements.
c) Excitement Requirements. These requirements are key to customer satisfaction. If they are pre-sent or have sufficient performance, they will bring superior satisfaction. On the other hand, if they are not present or their performance is insufficient, customers will not get dissatisfied. For instance, a surprise gift at the end of a dinner in a restaurant will certainly bring satisfaction, but it will not cause dissatisfaction if not offered. These requirements are not demanded nor expected by customers.
Two other types of requirements may be identified in the Kano model: neutral and reverse ones. Neutral requirements do not bring either satisfaction or dissatisfaction. Reverse requirements bring more satisfaction if absent than if present.

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Reference:
- Integrating Kano model and QFD for Designing New Products
- CIPS study guide page 171-172

NEW QUESTION # 179
Which of the following would be an example of direct costs for a decorating contractor?

• A. Van
• B. Electricity
• C. Paint
• D. Ladder

Answer: C

Explanation:
Comprehensive and Detailed Explanation (paraphrased from CIPS L4M2 content) CIPS L4M2 explains that direct costs are those that can be directly traced to a specific product, job, or project.
For a decorating contractor:
* Paint (A) is clearly a direct cost - it is consumed on specific jobs, and the quantity and cost can be directly allocated to each project.
Items such as:
* Ladder (B) - a piece of equipment used across many jobs. Its cost is typically spread over multiple projects; this makes it an indirect (overhead) cost.
* Van (C) - used for transport across many contracts, again an indirect or overhead cost.
* Electricity (D) - usually treated as an indirect or overhead cost, not allocated to a single job unless specially metered.
Understanding the difference between direct and indirect costs is important for whole-life costing and building a business case, because misclassifying them can distort unit costs and profitability.
Relevant CIPS L4M2 areas:
* Cost classification: direct vs indirect, fixed vs variable
* Costing and pricing in business cases
* Whole-life cost and cost build-up analysis

NEW QUESTION # 180
One of the disadvantages of using standards in specification is that...

• A. Standards tend to be rigid and they often don't encourage innovation
• B. Standards don't allow the buyers to add health and safety requirements into the specification
• C. Standards tend to be inaccurate and ambiguous, causing confusion among suppliers
• D. Standards lengthen the time to produce a specification

Answer: A

Explanation:
Using standards in specification is very convenient. They reduce the time and effort to produce. They tend to be very accurate with correct technical terminologies. They are well recognised and accepted by a wide range of suppliers and buyers. However, since a standard is very specific, complex and lengthy, it requires a lot of time to be drafted and approved. Therefore, standard tends to be static and don't encourage innovation. It may also not accommodate latest technology and trends.
Reference: CIPS study guide page 125
LO 3, AC 3.1

NEW QUESTION # 181
Which of the following are 'secondary sources' of data for costs and prices?
* Industry press
* Published economic indices
* Trade fairs
* Buyer's database on market data

• A. 2 and 3 only
• B. 1 and 2 only
• C. 3 and 4 only
• D. 1 and 4 only

Answer: B

NEW QUESTION # 182
Which of the following may allow suppliers free to choose the materials, manufacturing process or delivery process?

• A. Conformance specification
• B. Performance specification
• C. Design specification
• D. Technical specifications

Answer: B

Explanation:
The Performance Specifications define what the system being designed must do, and not how it must do it. In this step a list of needs and wants should be created. The needs are customer requirements, while the wants are engineering desires. If a buyer adopts performance specification, the supplier will be free to choose how to make and deliver the product.
A technical specification document outlines how you're going to address a technical problem by designing and building a solution for it.
A design specification is a detailed document providing a list of points regarding a product or pro-cess. For example, the design specification could include required dimensions, environmental fac-tors, ergonomic factors, aesthetic factors, maintenance that will be needed, etc. It may also give specific examples of how the design should be executed, helping others work properly (a guideline for what the person should do).
With conformance specification the buyer says what they want and how they want it and the supplier has to meet this

NEW QUESTION # 183
Which of the following roles are relevant to a 'services' market?
* A data researcher
* A warehouse manager
* A marketing consultant
* A logistics director

• A. 2 and 3 only
• B. 1 and 2 only
• C. 1 and 3 only
• D. 3 and 4 only

Answer: C

Explanation:
Detailed Explanation:Roles such as a data researcher and marketing consultant are directly tied to the provision of services, which are intangible and often knowledge-driven. Warehouse managers and logistics directors are more relevant to goods markets. Reference: CIPS Level 4, Services Procurement.

NEW QUESTION # 184
A buyer in Housing Authority is considering using performance specification in upcoming social housing project. What should buyer be aware when using this type of specification?

• A. In performance specification, specific brands and preferred suppliers must be appointed to avoid the competition
• B. Using performance specification means that the buyer will bear all the risks regarding the fitness for purpose of the facility.
• C. The buyer must be able to define the materials to be used, the execution and installation methods required and the specific design of the building
• D. The buyer must be able to clearly define the performance metrics to ensure that the of-fered solution will achieve the desired outcome

Answer: D

Explanation:
In construction, specifications are written documents that describe the materials and workmanship required for a development. They do not include cost, quantity or drawn information but need to be read alongside other contract documentation such as quantities, schedules and drawings.
Specifications vary considerably depending on the stage to which the design has been developed, ranging from performance (open) specifications that require further design by a contractor or sup-plier, to prescriptive (closed) specifications where the design is already complete when the project is tendered.
Prescriptive specifications give the client more certainty about the end product when they make their final investment decision (i.e. when they appoint the contractor), whereas a performance specification gives the contractor and suppliers more scope to innovate and adopt cost effective methods of work, potentially offering better value for money.
Typically, performance specifications are written on projects that are straight-forward, standard building types, whereas prescriptive specifications are written for more complex buildings, or buildings where the client has requirements that might not be familiar to contractors and where certainty regarding the exact nature of the completed development is more important to the client.
Performance specification has some disadvantages:
- Well-defined performance metrics are needed to ensure that the specified performance will achieve the desired outcome
- Require reliable, practical, economical tests of performance
- Evaluations are subjective and require additional time and effort to complete Therefore, if a performance specification is used, the buying organisation will have to ensure that they are able to define and conduct tests on whether supplier's solution can deliver the desired out-come.

NEW QUESTION # 185
What issue is a buyer most likely to experience if the technical specification sent to suppliers as part of a Request For Quotation (RFQ) is insufficient?

• A. The buyer will receive quotes at different times from suppliers, which will require greater coordination with other members of the sourcing team
• B. The buyer will not be able to compare different suppliers' costs directly as the suppliers will have had to make assumptions on the specification
• C. The buyer will receive costs from suppliers in different formats, which will make it difficult to compare costs on a like-for-like basis
• D. The buyer will need to work with their finance colleagues and business stakeholders to adjust the budget available for the project

Answer: B

NEW QUESTION # 186
Which of the following are most likely to increase the buyer's bargaining power?
1. Buyers are price sensitive
2. High set-up cost for new entrants
3. Threat of forward integration is high
4. Threat of backward integration is significant

• A. 2 and 3 only
• B. 2 and 4 only
• C. 3 and 4 only
• D. 1 and 4 only

Answer: D

Explanation:
Price sensitivity is the degree to which the price of a product affects consumers' purchasing behaviours. Buyer power will be stronger if buying organisation are price sensitive and vice versa.
Backward integration is a form of vertical integration in which a buying organisation expands its role to fulfil tasks formerly completed by businesses up the supply chain. Buyer power is strong if threat of backward integration is high.
Set-up cost is a determinant of threat of new entry. Some industries require very expensive assets in order to make products. The financial risk of entering the industry and not succeeding can deter many potential new entrants. The fewer new entrants, the fewer available substitutes, then the bar-gaining power of buyer can be negatively affected.
Forward integration is a business strategy that involves a form of vertical integration whereby business activities are expanded to include control of the direct distribution or supply of a compa-ny's products. Threat of forward integration is a determinant of supplier's bargaining power.
Reference: CIPS study guide page 88-91
LO 2, AC 2.2

NEW QUESTION # 187
To improve the productivity, Plantation Ltd is planning to purchase a tractor, which it has never bought before. The project must be quick to catch up with the next growing season. Leanne, a jun-ior procurement staff at the company, assumes that she could skip market analysis stage to save time. Is this assumption reasonable?

• A. Yes, the company has extensive experience in purchasing tractor
• B. No, market analysis will inform the company of the pricing as well as latest technology trends
• C. Yes, Leanne just needs to purchase the tractor from her friend's company
• D. No, the company assesses supplier's performance solely based on market analysis

Answer: B

Explanation:
Market analysis is a stage in CIPS Procurement and Supply Cycle. This stage informs the purchaser about the number of suppliers, the average pricing, and product trends. Even urgent purchase should undergo market analysis. Without undertaking this stage, the buying organisation may not purchase the right product, or they may purchase at higher price.
Reference:
LO 2, AC 2.1

NEW QUESTION # 188
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?

• A. Benchmarking is a panacea for all WAS's problems
• B. It will help WAS analyse the competitors in the industry
• C. It helps WAS identify better ways to deliver service through a cookbook process
• D. It will help WAS create performance standards derived from an analysis of the best in business

Answer: D

Explanation:
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.
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NEW QUESTION # 189
Which of the following is an useful tool for value engineering?

• A. Star-burst method
• B. Kraljic Portfolio Matrix
• C. Kano model
• D. SAMOA

Answer: C

Explanation:
Value Engineering (VE) is concerned with new products. It is applied during product development. The focus is on reducing costs, improving function or both, by way of teamwork-based product evaluation and analysis.
This takes place before any capital is invested in tooling, plant or equipment.
This is very significant, because according to many reports, up to 80% of a product's costs (throughout the rest of its life-cycle), are locked in at the design development stage. This is under-standable when you consider the design of any product determines many factors, such as tooling, plant and equipment, labour and skills, training costs, materials, shipping, installation, maintenance, as well as decommissioning and recycle costs.
The Kano model is a theory for product development and customer satisfaction developed in the 1980s by Professor Noriaki Kano, which classifies customer preferences into five categories. Both Kano model and Value Engineering aims at optimising new product, so they can be combined to-gether. CIPS L4M2 study guide consider Kano model is a tool of Value Engineering

Example of Kano model (source: Wikipedia)
Reference: CIPS study guide page 171-172
LO 3, AC 3.4

NEW QUESTION # 190
A company buys components from its supplier. However, the supplier has not sent the invoice to the buyer and the buyer will not pay until next month. How will that amount of money be shown in the financial statements of the buying organization?

• A. Accounts payable
• B. Accrued interest
• C. Tax liabilities
• D. Accrued expense

Answer: D

Explanation:
The buyer won't pay the supplier until next month. This is a liability to the buyer. This amount can be recorded as accrued expense or accounts payable. On the other hand, the supplier has not sent the invoice, so it should be accrued expense.
Both accounts payables and accrued expenses are liabilities. Accounts payable is the total amount of short- term obligations or debt a company has to pay to its creditors for goods or services bought on credit. With accounts payables, the vendor's or supplier's invoices have been received and recorded.
On the other hand, accrued expenses are the total liability that is payable for goods and services that have been consumed by the company or received. However, accrued expenses are those bills in which an invoice or bill has not yet been received. As a result, accrued expenses can sometimes be an estimated amount of what's owed, which is adjusted later to the exact amount, once the invoice has been received.
Conversely, accounts payable should represent the exact amount of the total owed from all of the invoices received.

NEW QUESTION # 191
Which of the following problems may be identified as closed problems? Select TWO that apply:

• A. Shortage of key medicines in healthcare industry
• B. A cyber attack takes down whole company's IT system
• C. The suppliers don't comply with the company's policy on underage labour.
• D. Logistics costs incur a large portion in wholesale prices
• E. There are not enough data for procurement analytics

Answer: A,B

Explanation:
Closed problem is something happens that should not have happened. To solve this type of prob-lem, procurement professional should find a way to correct the situation or try to adapt to it. On the other hand, open ended problem is a obstacle to your short-term objective. You will need to overcome this obstacle.
Shortage of key medicines is a situation in which procurement must find a substitution or try to save the current stock.
In case of cyber attack, procurement should find a way to recover the IT system as soon as possible.
Otherwise, 'There are not enough data for procurement analytics' is an open-ended problem be-cause it prevents company to conduct procurement analytics (an objective).
'Logistics costs incur a large portion in wholesale prices': In this situation, logistics costs are hur-dles that prevent companies to reach lower wholesale.
'The suppliers don't comply with the company's policy on underage labour': In this situation, pro-curement should seek ways to help supplier comply with the company's labour policy.
LO 1, AC 1.1

NEW QUESTION # 192
Which of the following are recognised competitive strategies?
1. Winning new business at all cost
2. Getting more customers' attention
3. Creating stand-out products and brands
4. Focusing on niche market
5. Acquiring competitors

• A. 3 and 4 only
• B. 1 and 2 only
• C. 3 and 5 only
• D. 2 and 5 only

Answer: A

Explanation:
"A firm's relative position within its industry determines whether a firm's profitability is above or below the industry average. The fundamental basis of above average profitability in the long run is sustainable competitive advantage. There are two basic types of competitive advantage a firm can possess: low cost or differentiation. The two basic types of competitive advantage combined with the scope of activities for which a firm seeks to achieve them, lead to three generic strategies for achieving above average performance in an industry: cost leadership, differentiation, and focus." (Reference: Porter, Michael E., "Competitive Advantage". 1985, Ch. 1, pp 11-15. The Free Press. New York.) Creating stand-out products and brands is considered as Differentiation. An organisation that is not clear about which of these three strategies to use is described as 'stuck in the middle' LO 2, AC 2.1

NEW QUESTION # 193
Which of the following is a tool to define roles and responsibilities of a project team?

• A. RACI Matrix
• B. STEEPLE Analysis
• C. SCAMPER Method
• D. Monte Carlo model

Answer: A

Explanation:
A responsibility assignment matrix[1] (RAM), also known as RACI matrix[2] (/relsi/) or linear responsibility chart[3] (LRC), describes the participation by various roles in complet-ing tasks or deliverables for a project or business process. RACI is an acronym derived from the four key responsibilities most typically used: responsible, accountable, consulted, and informed.[4] It is used for clarifying and defining roles and responsibilities in cross-functional or departmental projects and processes.[5] There are a number of alternatives to the RACI model.
Role distinction[edit]
There is a distinction between a role and individually identified people: a role is a descriptor of an associated set of tasks; may be performed by many people; and one person can perform many roles. For example, an organization may have ten people who can perform the role of project manager, although traditionally each project only has one project manager at any one time; and a person who is able to perform the role of project manager may also be able to perform the role of business analyst and tester.
R = Responsible (also recommender)Those who do the work to complete the task.[6] There is at least one role with a participation type of responsible, although others can be delegated to assist in the work required (see also RASCI below for separately identifying those who participate in a sup-porting role).
A = Accountable (also approver or final approving authority)The one ultimately answerable for the correct and thorough completion of the deliverable or task, the one who ensures the prerequi-sites of the task are met and who delegates the work to those responsible.[6] In other words, an accountable must sign off (approve) work that responsible provides. There must be only one accountable specified for each task or deliverable.[7] C = Consulted (sometimes consultant or counsel)Those whose opinions are sought, typical-ly subject-matter experts; and with whom there is two-way communication.[6] I = Informed (also informee)Those who are kept up-to-date on progress, often only on completion of the task or deliverable; and with whom there is just one-way communication.[6] Very often the role that is accountable for a task or deliverable may also be responsible for com-pleting it (indicated on the matrix by the task or deliverable having a role accountable for it, but no role responsible for its completion, i.e. it is implied). Outside of this exception, it is generally recommended that each role in the project or process for each task receive, at most, just one of the participation types. Where more than one participation type is shown, this generally implies that participation has not yet been fully resolved, which can impede the value of this technique in clarifying the participation of each role on each task.
Reference:
- CIPS study guide page 17
- Responsibility assignment matrix - Wikipedia
LO 1, AC 1.1

NEW QUESTION # 194
After a project, the procurement team at CLK Ltd meets up and summarises on the performance. They see that they actually spent $5,000 less than planned budget. The team tries to identifies why there is such difference. This activity is known as...?

• A. Cost modelling
• B. Rolling budget
• C. Variance analysis
• D. Cash flow analysis

Answer: C

Explanation:
The procurement team in the scenario is analysing the difference between the plan and actual spend. This activity is known as variance analysis. The sum of all variances gives a picture of the overall over- performance or under-performance for a particular reporting period. For each item, companies assess their favorability by comparing actual costs to standard costs in the industry.
For example, if the actual cost is lower than the standard cost for raw materials, assuming the same volume of materials, it would lead to a favorable price variance (i.e., cost savings). However, if the standard quantity was 10,000 pieces of material and 15,000 pieces were required in production, this would be an unfavorable quantity variance because more materials were used than anticipated.

NEW QUESTION # 195
A sports organisation requires additional racing equipment to match exact technical specifications for compatibility. Which type of specification is most appropriate?

• A. Outcome specification
• B. Product specification
• C. Performance specification
• D. Conformance specification

Answer: D

Explanation:
Comprehensive and Detailed Explanation (from CIPS L4M2 - Specification Control) A conformance specification defines exact technical details (dimensions, materials, design).
It ensures identical compatibility with existing items.
Hence, Option A is correct.
Performance or outcome specifications would allow variations, which are not acceptable here.
Relevant L4M2 references:
* "Conformance vs performance specifications"
* "Specification alignment for compatibility"

NEW QUESTION # 196
John has been asked to develop a business case before obtaining approval to purchase a large piece of capital equipment for a glove manufacturing unit. Is this the right thing to do?

• A. Yes, because this will help compare alternatives and options
• B. Yes, because this will assist the purchase order
• C. No, because risk consideration is not John's responsibility
• D. No, because this can lead to business-focused thinking

Answer: A

Explanation:
Detailed Explanation:A business case allows for the evaluation of alternatives and ensures alignment with strategic goals. It also assesses risks, benefits, and financial impact, providing a comprehensive basis for decision-making. Reference: CIPS Level 4, Capital Expenditure and Business Case Development.

NEW QUESTION # 197
In Kano model, which of the following types of requirement should be excluded from the product or service?

• A. Performance requirements
• B. Must-be requirements
• C. Reverse requirements
• D. Attractive requirements

Answer: C

Explanation:
Kano model of excitement and basic quality (Kano et al, 1984; Berger et al, 1993; Matzler et al, 1996) brings a different perspective for the analysis of improvement opportunities in products and services because it takes in consideration the asymmetrical and non-linear relationship between performance and satisfaction. The Kano model classifies customers requirements in three categories (figure 3):
a) Basic Requirements (or Must-be requirement). The basic requirements fulfill the basic func-tions of a product. If they are not present or their performance is insufficient, customers will be extremely dissatisfied.
On the other hand, if they are present or have sufficient performance, they don't bring satisfaction. Customers see them as prerequisites. For instance, for luxury automobiles, "air bags" are considered basic. A customer won't feel satisfied if the automobile has "air bag", however he/she will not buy it if "air bag" is not present.
b) Performance Requirements (or One-dimensional requirements). As for these requirements, satisfaction is proportional to the performance level - the higher the performance, the higher the customer's satisfaction will be and vice-versa. Gas consumption in automobiles is an example of these requirements. Usually customers explicitly demand performance requirements.
c) Excitement Requirements (or Attractive requirements). These requirements are key to cus-tomer satisfaction. If they are present or have sufficient performance, they will bring superior satisfaction. On the other hand, if they are not present or their performance is insufficient, customers will not get dissatisfied. For instance, a surprise gift at the end of a dinner in a restaurant will certainly bring satisfaction, but it will not cause dissatisfaction if not offered. These requirements are not demanded nor expected by customers.
Two other types of requirements may be identified in the Kano model: neutral and reverse ones. Neutral requirements do not bring either satisfaction or dissatisfaction. Reverse require-ments bring more satisfaction if absent than if present.
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NEW QUESTION # 198
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