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.
Correct Answer: A,D
Detailed Explanation: * 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.
L4M2 Exam Question 102
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?
Correct Answer: C
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. Reference: CIPS study guide page 119-124 LO 3, AC 3.1
L4M2 Exam Question 103
Which of the following are likely to be disadvantages of using outcome-based specifications? Select THREE that apply
Correct Answer: C,D,F
An Outcome Based Specification (OBS) focuses on the desired outcome of a service in business terms, rather than a detailed technical specification of how the service is to be provided; this allows providers scope to propose innovative solutions that might not have occurred to the procurement team. Outcome should be distinguished from output, which is the measurable results of a set of inputs. The example of difference between outcome and output is written at the bottom of page 123 in the study guide. Outcomes should be the starting point in making new specification. However, using outcome-based specification has some setbacks: - First, it is not easy to measure the outcomes. Usually, outcome of a project is a statement like 'increase customer satisfaction', 'maintain ambient temperature' or 'provide a convenient way to do something'. They are not easy to measure as output. - Second, sometimes the desired outcomes require time to be materialised - Third, outcomes can be ambiguous Reference: CIPS study guide page 122-123 LO3, AC 3.1
L4M2 Exam Question 104
Which of the following technology is likely to be an innovation in financial sector?
Correct Answer: D
Traditional financial systems operate with a centralised database, usually with a single point of authority. Blockchain technology, on the other hand, allows for a distributed database that holds a growing number of records. Instead of existing in one place, the ledger is continually updated and synchronised across multiple computers in a network. Therefore, any participant in the network with the proper authorisation can view the entire ledger - without relying on an intermediary or any one authority. Another key feature of blockchain technology is a "smart contract," which is a self-executing protocol that enforces a previously agreed arrangement. For example, a smart contract could trigger an automatic refund under certain conditions or the automatic payment of an agreed commission after a sale. These smart contracts can eliminate delays in traditional Finance processes, while increasing transparency and reducing reliance on middlemen to follow through on their commitments. Moreover, like other parts of a blockchain, smart contracts are immutable, so they can enhance accuracy in the financial statements. LO 2, AC 2.1
L4M2 Exam Question 105
Which of the following would be considered to be direct costs? Select TWO that apply:
Correct Answer: A,D
Detailed Explanation: A (Production materials): These are directly tied to the production of goods and are variable costs. D (Manufacturing staff wages): Labour directly involved in the production process is a direct cost. Indirect costs like salaries, depreciation, and insurance are related to overheads and not directly tied to production. Reference: CIPS Level 4, Cost Structures.
