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Latest L4M2 Exam Practice Questions

The practice questions for L4M2 exam was last updated on 2025-12-15 .

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Question#1

Which of the following is an advantage of competitive benchmarking over other types of bench-marking?

A. Limited access to competitor's data

B. Similarity among processes

C. Different corporate culture

D. Cost effectiveness

Explanation:
Explanation
Competitive benchmarking
Competitive benchmarking is a direct competitor-to-competitor comparison of a product, service, process, or method. This form of benchmarking provides an opportunity to know yourself and your competition better; combine forces against another common competitor. An example of competitive benchmarking within the Department of Defense, might include contrasting Army and Air Force supply systems for Joint initiatives. Within the private sector, two or more American car companies might benchmark for mutual benefit against common international competitor; or, rival chemical companies benchmark for environmental compliance.
Benefits
- Comparing like processes
- Know your competition better
- Possible partnership
- Useful for planning and setting goals
- Similar regulatory issues
Challenges
- Difficult legal issues
- Relatively low performance improvement
- Threatening
- Limited by trade secrets
- May provide misleading information
- May not get best-in-class comparisons
- Competitors could capitalize on your weaknesses Source: USN Benchmarking Handbook
Reference: CIPS study guide page 50
LO 1, AC 1.3

Question#2

When developing a business case for a new product, a procurement department must consider...

A. Terms and conditions of contract

B. The supply market

C. The supplier positioning model

D. Indirect costs

Question#3

A "modified re-buy" means ...

A. The existing specifications should be reviewed but not the supply market, as this type of purchase is complex

B. The specification should not be considered for future treatment as a stock item because of the modification

C. Both the specification and the market should be reviewed to manage the new circumstances

D. The existing supplier should be asked to supply the requirement because it is a modified re-buy of the same item

Question#4

Which of the following are considered as direct costs in a construction company? Select TWO options

A. Raw materials

B. An employee is hired to work on a project, either exclusively or for an assigned number of hours

C. The materials and supplies needed for the company’s day-to-day operations.

D. Advertising and marketing communication

E. Clerical assistants who maintain the office

Explanation:
Explanation
Direct costs are directly associated with the production of a good or service. In this question, 'An employee is hired to work on a project, either exclusively or for an assigned number of hours' and 'Raw materials' are directly related to producing the product.
Indirect costs are the general costs of the organisation - these costs cannot easily be attributed to specific products or services (also known as overheads). 'The materials and supplies needed for the company’s day-to-day operations' or 'Clerical assistants who maintain the office' or 'Advertising and marketing communication' is example of indirect cost.
Reference: CIPS study guide page 25-26
LO 1, AC 1.2

Question#5

Which of the following are typical benefits of through-life asset management to buying organisation? Select the TWO that apply.

A. Shorter specifications

B. Lower risks as there are many suppliers accountable for costs and service over the life of the asset

C. Lower total cost of ownership

D. Greater supplier's bargaining power

E. Better capability of supplier over time

Explanation:
Explanation
According to Andrew Graves, “Through-life Management involves the life-cycle management of the products, services and activities required to deliver a fully integrated capability to the customer, while reducing the cost of ownership for the customer.” Benefits of through-life asset management can be:
- Lower total life-cycle costs
- Better match between the asset and end-user's needs
- Better supplier capabilities over time because it gains experience of buying organisation's needs.
Reference: CIPS study guide page 131
LO 3, AC 3.2

Exam Code: L4M2Q & A: 304 Q&AsUpdated: 2025-12-15

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