L4M2 Exam Dumps - Defining Business Needs

Detailed Explanation:

1 (Make in-house): The ability to produce in-house reduces dependency on suppliers, strengthening buyer power.

4 (High spend proportion): A high proportion of spend gives buyers leverage over suppliers who are reliant on their revenue.Limited suppliers (2) and high switching costs (3) reduce buyer bargaining power. Reference: CIPS Level 4, Market Power Analysis.

Detailed Explanation:

Conformance specifications are appropriate when the buyer has precise requirements that must be met. This ensures the final product aligns perfectly with the company’s needs, even if it limits supplier flexibility. Reference: CIPS Level 4, Conformance Specification in Procurement.

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”

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)

Detailed Explanation:

Social sustainability focuses on ethical considerations like fair labour practices, inclusivity, and community development. By addressing these criteria, FSB Group aligns with responsible business practices. Reference: CIPS Level 4, Sustainability in Procurement.

Comprehensive and Detailed Explanation (from CIPS L4M2: Business Case Development)

A business case should include:

Costs and risks (financial, operational, reputational)

Expected business benefits (value, performance, compliance)

Supplier lists or informal notes are not part of a formal business case.

Relevant CIPS L4M2 Sections:

Key contents of a business case

Risk and benefit analysis in procurement justification