QUESTION: 41

Which of the following might be the consequences of under-specification? Select 2 that apply:

Few suppliers can supply the full range of features
Additional cost to rework
Unfit products or services
Poor competition between suppliers
Higher cost due to inessential features

Answer(s): B,C

Explanation:

Main risks involved in an under-specified requirement
- The product or service is not fit for use since it does not match the actual needs
- Higher cost due to corrections or reworks (proposal evaluations, scope or work monitoring, change in insulation materials or systems, reduced productivity, etc.).
- Higher operating cost on many fronts: process control, energy consumption, maintenance, etc.
- Other problems like corrosion under insulation, mold development, safety-related concerns, etc.
LO 3, AC 3.3

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QUESTION: 42

EV Inc is facing the following challenges:
1. The capital investment is enormous.
2. Most of company's working capital is in form of inventories, which include raw materials, work-in-progress and finished goods.
3. Competitors are increasingly deploying robotics and automation to boost productivity.
Which of the below business sectors does EV Inc belong to?

Construction
Manufacturing
Financial services
Retails

Answer(s): B

Explanation:

Every sector among the options requires intensive capital investment. However, only manufacturing and retails bury much of their working capital in form of inventory. Raw materials and WIP only present in manufacturing sector.
The manufacturing industry is undergoing massive change, rivaling the Industrial Revolution that began in England and continued on Detroit's assembly lines. But today's revolution is "smart," thanks to factories using artificial intelligence and robots. A new trend is the "cobot" -- a collaborative robot designed to work with humans. One company called Moduform uses them to make furniture in the U.S. The company credits using cobots for reducing their staffing turnover, since the robots do mundane repetitive tasks that bore humans, while people can now do cognitive tasks requiring judgment and diversified responsibilities. Other innovations include 3D printing, Artificial Intelligence and automation. Today's artificial intelligence manufacturing revolution improves performance in two key areas of manufacturing: productivity and quality control.

Reference:

- The Key Characteristics of Manufacturing (bizfluent.com)
- CIPS study guide page 74-76
LO 2, AC 2.1

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QUESTION: 43

Lider Ltd is a leading bathroom furniture manufacturer in Indi

The company has more than 30 years experience in the market with extended knowledge of engineering and customers' taste. Lider is planning to launch a new type of bath fitting next year which offers Bluetooth connectivity and thermostat display. The company gathers a team of multi- disciplines, including engineering, procurement, sales and marketing. At the first team meeting, the project leader tells the team to discuss which functions will be valued by the customers, and how to deliver those functions with the lowest costs possible.
Which of the following describes the process that the project team is undertaking?
Cost analysis
Standardisation
Value engineering
Just in time

Answer(s): C

Explanation:

From the scenario, you can see that the project team is developing a new product. They start with analysing the functions, and the costs of delivering those functions. This is a typical process of value engineering. You may read more on value engineering from the reference paper.

Reference:

- CIPS study guide page 171-173
- Value Analysis - Norwood Whittle (cimaglobal.com)
- A CASE STUDY ANALYSIS THROUGH THE IMPLEMENTATION OF VALUE ENGI-NEERING (researchgate.net)
LO 3, AC 3.4

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QUESTION: 44

Dana is an automobile manufacturer. It has a new electrification strategy that aims at making eco-friendly electric pick-up trucks. To implement this strategy, the procurement department must source new categories of parts that make motors, sensors, solenoids and stators. He starts to analyse the market by identifying specific supply market segments for those parts and finding suppliers who have the best capabilities in those segment. He intends to segment the market based on specific features of the products.
Which variable is used by Dana procurement manager to shape and manage supply market?

Buyer segments
Channel segments
Geographical segments
Product segments

Answer(s): D

Explanation:

In sales and marketing, market segmentation is the process of trying to understand clusters of cus- tomers in terms of their buying behavior and their buying characteristics. There are some traditional segmentation approaches: geography, demography, types of industry and the benefits. Then there are newer segmentation approaches: behavioral, situational, and psychographic. Procurement professionals can learn market segmentation from sales and marketing. Segmenting the market can help them to shape and manage the supply market effectively. According to Michael Porter, a market can be segment with array of products and buyers.

Source: Porter, Michael E.. Competitive Advantage: Creating and Sustaining Superior Performance (p. 234). Free Press. Kindle Edition.
In the scenario, the products that Dana needs to source is distinct in their features. The best way is to segment the market by product varieties.

Reference:

CIPS study guide page 65
LO 2, AC 2.1

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QUESTION: 41

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QUESTION: 42

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QUESTION: 43

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QUESTION: 44

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