CIPS L4M8 Dumps

A cross-function Team is the involvement of all departments that are in an organization to contribute knowledge, skills and innovation towards adding value to achieving the organization’s strategic goal. Example, procurement, maintenance, marketing, finance, human resources working together in procurement activity to come up with the best strategy or selecting the supplier that best suit the organization.

When working in a cross-functional team, members of the organization give support by believing in the end goal, assist during difficult time, help troubleshoot any issue, providing the required resources and sharing information

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

Condition performance monitoring is a surveillance system that is designed to get the maximum production uptime and availability out of an asset. And this can be achieved by timely monitoring and measuring of temperature, vibration, output, speed, noise, emissions and quality. With this, decision has to be made as to what, if any, action needs to be taken. The five approaches to condition performance monitoring are as follows:

1. Do nothing: Use like a commodity. This will bring worries later.

2. Reactive: Fix it when it breaks. This will run to failure.

3. Preventive: Scheduled maintenance.

4. Predictive: Fix it before it breaks. Predict faults.

5. Proactive: Continuous improvement defect elimination.

The most cost-effective approach is ‘Proactive’, because is the only approach that has continuous improvement in the process, people and policies to minimize downtime. Being proactive takes defect out of the system and continuously harness opportunity that will optimize the system

A current ratio of 1 shows that the organization has enough assets to repay (cover) it liability

Buyers can be encouraged to deal with these suppliers after if they considered proven and strong in other areas.

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Terms are the right and duties agreed which are then documented in a contract. Five types of con-tract terms that a procurement professional should create with a supplier when forming an agree-ment includes;

Price term is when the buying organization wants to protect its budged and spending, it include price terms in the contract, for the buyer to buy goods or services in response to a need they some-time enshrine a bespoke specification in the contract.

Payment Term is to specify when and how the buyer will pay the supplier. The buyer may include a payment term in the contract.

Warrantee is when the buyer requires a promise from the supplier that the product or service will meet the specified need in the contract.

Time is of the essence term is included in the contract to detail when a product or service should be delivered and explains the potential losses of business if time is not observed.

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Continuous improvement relates to removing waste from the supply chain and improving processes to increase efficiency within whole life asset management in a full power project (a flour producing firm) can benefit from continuous improvement in the following ways;

1) Reduce cost of spears by recondition parts, instead of disposing them out rightly.

2) Can reduce down time by conducting routine maintenance after hours.

3) Can reducing accident by up skilling operators on safety

4) Can reduce waste oil by following owner’s manual instead of relying on experience.

5) Create efficiencies by operating a 24/7 shift pattern.

ILO stands for International Labour Organization- It is a United Nations agency whose mandate is to advance justice and promote decent work by setting international labor standard.

ETI is Ethical Trading Initiative: It is a leading alliance of companies, trade unions and NGOs that promote respect for workers right around the globe. Its vision is a world where all workers are free from exploitation and discrimination and enjoys condition of freedom, security and equity.

When an organization want to purchase an asset, it considers the depreciation and deterioration in the whole life of the asset and how it will be manage.

Depreciation is the reduction in value of a tangible and a fixed asset over time. The purpose of calculating the depreciation of the asset is to give the organization a fair and current view of what the asset is worth at a particular time. Depreciation is a way of converting the cost of an asset into an expense over a period of time. Depreciation is a permanent feature listed against an asset throughout its life time and it based on wear and tear, reduction in performance and reduction in value.

Deterioration is the process of something becoming lower in quality or performance. The longer the asset can last without deteriorating the better value the asset represents.

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When a fixed asset reaches the end of its life, it requires decommissioning before reconditioning or disposal.

Decommissioning is to observe all the safety measures and technical procedures and stop active machinery or an asset from operation (example; gas plant, power generator, transformer etc.

Decommissioning process include the following aspect

1) Preparation: Plan the process

2) Dismantle: Take the asset apart and remove hazardous waste

3) Processing: make safe any hazardous waste

4) Disposal: Ensure paper work is received to confirm removal and disposal

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When organization has made the decision about which option is best for sourcing the asset, it can then begin to work on the whole life asset management strategy.

Whole life asset management is the process of evaluating the total price and all associated costs of a product to make an informed decision as to which option will provide the organization with the best value for money. This strategy is only under taken for large-value procurements because; 1) It takes considerable time (2) It involves many stakeholders and require numerous resources; If whole life asset management were conducted on every purchase it would not create value for the organization and that may tie up valuable resources.

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At the early stages In procurement and supply cycle, buyers begin segmenting current supplies in the categories, depending on their level of integration into the organization. To help get this done, the buyer may use the Kraljic portfolio matrix. The kraljic portfolio matrix segment suppliers into four categories, which are;

1) Routine 2) Bottleneck 3) Leverage 4)strategic supplier

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Bribery is the act of giving someone something of value to persuade them to do something that benefits you. Ethical and responsible sourcing requires conducting due diligence on bribery before going into contractual relationship because failure to this might lead to loss in reputation.

In other for an organization to defend itself against a case of suspected bribery, the United Kingdom bribery Act introduced in 2010 suggests that organizations should have adequate procedures’ in place.

The following are six procedures an organization should have in place to be able to defend itself against bribery

1) Proportionate procedure

2) Top level commitment

3) risk assessment

4) due diligence

5) communication

6) monitoring and reviewing

Bribery is the act of giving someone something of value to persuade them to do something that benefits you. Ethical and responsible sourcing requires conducting due diligence on bribery before going into contractual relationship because failure to this might lead to loss in reputation.

In other for an organization to defend itself against a case of suspected bribery, the United Kingdom bribery Act introduced in 2010 suggests that organizations should have adequate procedures’ in place.

The following are six procedures an organization should have in place to be able to defend itself against bribery

1) Proportionate procedure

2) Top level commitment

3) risk assessment

4) due diligence

5) communication

6) monitoring and reviewing

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Though strong due diligence procurement professionals can assess which suppliers or potential suppliers appear to meet the criteria associated with ethical practice.

Prior to the contract being awarded, strong due diligence can save the organization from the following cost:

1) Cost of reputation

2) Environmental damage

3) Stakeholders dissatisfaction,

4) poor quality and rework

5) Breach of contract

6) Ethical concerns

Commissioning is bringing something new into working condition, e.g start running a gas plant after building it. Commissioning is one of the eight elements that form the cycle of whole life asset management. The commissioning of an asset has the following associated costs, installation, training insurance, testing, operational efficiencies/performance and quality.

Supply chain involves a network of individuals, organizations, technology activities and resources to make sure goods or services flow along the chain. If one point fails, every part further along the chain fails.

Fullpower projects (a flour manufacturer) supply chain begins with producers (raw materials, wheat farmers), suppliers, manufactures, distributors, retailers and end users (customer).

Fullpower projects supply chain falls within the primary sector (producers of wheat), the secondary sector include the manufacturing (those that converts the wheat the suppliers brings into flour) and tertiary sector (the distributor those that takes the wheat to the end users).

Carter’s 10cs is a detailed mechanism that procurement professional uses to evaluate potential supplier. What the procurement professional should consider in supplier are the following 10 things.

1) Competency 2) capacity 3) Cost 4) Cash 5) Clean 6) Consistency 7) Control 8) Cul-ture 9) Commitment 10) Communication.

Trying to measure how sustainable an organization was used to be challenging undertaking. How-ever, during the 1990s, a concept brought up by American John Elkington change the way sustainability was measured. This framework is known as the triple bottom line (TBL) and measures sustainability in relation to organizational performance and investment against the 3Ps (1) Profits (2) People (3) Planet. For example;

Profit: A packaging manufacturer reinventing its profits in a State- of-the-art recycling machinery for it wasted cardboard.

People: A large privately owned call center donate its end of life computers to a local youth clubs and social groups to help gain internet cases.

Planet: A driving instructors using only hybrid vehicles to teach her learners, thus to reducing Co2 emission.

The TBL, although a useful tool, is simply a way of recording how sustainable an organization is. Alone, it does not contribute towards any improvements or generate any actions promoting a more favorable, sustainable outlook. Objectives should be set in relation to what the 3Ps show and then monitored by implementing KPIs or other measuring methods.

Working cross-functionally is the involvement of all departments involved in an organization to contribute knowledge, skills and innovation towards adding value of achieving the organization’s strategic goal. All functions may include; procurement, maintenance, marketing, finance, human resources working together in procurement activity to come up with the best strategy or selecting the supplier that best suit the organization.

When working cross functionally, members of the organization gives support by believing in the end goal, assist during difficult time, help troubleshoot any issue, providing the required resources and sharing information.

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Ones the need is understood, the procurement professional develops the specifications while working together with stakeholders and colleagues to ensure that the final design is fit for purposes that it meets the generated need.

Specification can be focus on performance or conformance.

Performance specification states what the product or service must do or how it should perform but leave the supplier the freedom to achieve this, however they wish.

Performance specification brings the following advantages; it allows supplier innovation, promote competition in the market place, shorter document, quick to prepare. The disadvantage of perfor-mance specification is that buyers may not know exactly what they will be getting.

Conformance specification gives clear instructions to the supplier about what is required and how it should be achieved. Examples of conformance specifications are chemical formulae, recipes and technical drawings. Conformance specification specifies which standards a requirement must meet or exceed. The advantage of using it is; buyers know exactly what they will get. It has the following disadvantages; the buyer bears the risk, it does not encourage supplier to innovate, take longer and complex documentation.

Key performance Indicators (KPIs) and service level Agreement (SLA) are measures that demon-strate the effectiveness of a supplier. By using KPIs and SLAs as part of suppliers management, procurement professionals can monitor and evaluate performance and identify areas that need attention or improvement. KPIs and SLAs are used for product and service contract respectively.

Two KPI

1) Number of defects: Not more than two defects is allowed on the generator and its accessories

2) Supplier Lead Time: Delivery after placing order should not be anytime longer than 14 days.

Two SLAs

1) The toilet should be washed with soap, and deodorant should be sprayed twice a day

2) Bathroom and toilet should not be allowed to smell out to the passage. Bathroom smelling out to the passage twice a month is a violation of the contract.

Retention of title (ROT) states when ownership transfers from supplier to buyer.

The retention of title terms also referred to as the Romalpa clause, which is related to a legal case from 1976 between Aluminum industries Vaassen BV and Romalpa Aluminum LTD

A new buy is the purchase of goods and services by an organization or an individual for its first time. For example a transport organization for the very first time contracting the purchase of a Lorry out to an external supplier. In situations like this, it is advisable to start the procurement cycle from the very first stage. Which is understanding the need and developing high level specification.

Modified re-buy is the purchase of goods or services that an organization has bought before there was a need but with changes to the specification or supplier or quantity or quality. In carrying out modified re-buy, procurement professional should start from the very first stage of the procurement cycle to justify the added need and follow through. Not in all cases that buyer would have to start from understanding the need. In a situation where the changes required is a change of supplier, the organization will start from its preferred suppliers list and contract the next ranking supplier as the case may be.

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In the decision to not run out of supplies, organizations can anticipate a peak were by it products will be in a high demand or a period of scarcity of raw materials and may want to increase the in-ventory. However, if this forecast is not accurate, it may lead the organization to holding excess inventory. This can expose the organization to some negative factors.

Acquisition Cost: The organization will incur an acquisition cost for the excess inventory which is inclusive of the cost of placing the order and the cost of purchasing the goods.

Holding Cost: The organization will spend more money holding the stock, trying to keep it in good condition by providing the required light, temperature, skilled handlers and so on.

Working Capital not adding value: This will off shoot the holding cost. Also valuable working capital in excess stock which in the time not adding value, can affect the liquidity of the business. This is also an opportunity cost and increase solvency.

Condition performance monitoring is a surveillance system that is designed to get the maximum production uptime and availability out of an asset. And this can be achieved by timely monitoring and measuring of temperature, vibration, output, speed, noise, emissions and quality. With this, decision has to be made as to what, if any, action needs to be taken. The five approaches to condition performance monitoring are as follows:

1. Do nothing: Use like a commodity. This will bring worries later.

2. Reactive: Fix it when it breaks. This will run to failure.

3. Preventive: Scheduled maintenance.

4. Predictive: Fix it before it breaks. Predict faults.

5. Proactive: Continuous improvement defect elimination.

The most cost-effective approach is ‘Proactive’, because is the only approach that has continuous improvement in the process, people and policies to minimize downtime. Being proactive takes defect out f the system and continuously harness opportunity that will optimize the system

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Refer to the question column for response

Retention of title (ROT) states when ownership transfers from supplier to buyer.

The retention of title terms also referred to as the Romalpa clause, which is related to a legal case from 1976 between Aluminum industries Vaassen BV and Romalpa Aluminum LTD