Free L4M2 Exam Braindumps (page: 7)

Page 7 of 37

Which of the following are typically reasons why an organisation implements value analysis? Select 2 that apply:

  1. To determine the value of each component used
  2. To decide whether there will be sufficient surplus funds to reinvest in the business
  3. To shape and manage supply market
  4. To provide an outline business case for the specification
  5. To find cost reduction opportunities by optimising the components used

Answer(s): A

Explanation:

Value analysis is a systematic review of the production, purchasing and product design processes to reduce overall product costs. This can be accomplished through a variety of activities, including the following:
- Designing products to use lower-tolerance parts that are less expensive
- Switching to lower-cost components
- Standardizing parts across product platforms in order to achieve volume discounts
- Altering production processes to minimize the amount of production cycle time, thereby reducing labor costs
- Introducing automation to strip labor costs out of the production process
- Altering product packaging to lower its cost while still protecting the product The process is not a wholesale attack on costs. Costs are only reduced when the result will not im- pact the perceived level of quality experienced by customers, or the level of customer satisfaction.


Reference:

CIPS study guide page 160-163
LO 3, AC 3.4



Which type of specification is less time-consuming to develop?

  1. Outcome-based specification
  2. Design specification
  3. Conformance specification
  4. Technical drawings

Answer(s): A

Explanation:

There are two major types of specification: conformance and performance specifications. They have the following characteristics:



Since performance specification is often a list of outputs or outcomes, it usually takes less time to develop than conformance specification.


Reference:

CIPS study guide page 116-124



Due to the growth of consumer electronics market, semiconductor industry develops exponentially. However, the industry is dominated by a dozens of manufacturer. Chipset need to be built in factories with highly controlled environments. New chip factories cost billions of dollars and can take two years to build. Right now, factories are running at full capacity, which produce almost perfect yields, meaning basic chipset can be made for less than a dollar and more advanced versions for not much more.
What are the barriers to new entrants in the semiconductor industry?
1. Poor industry growth
2. High set-up costs
3. Economies of scale
4. Low switching costs

  1. 2 and 4 only
  2. 3 and 4 only
  3. 2 and 3 only
  4. 1 and 4 only

Answer(s): C

Explanation:

Barriers to entry is an economics and business term describing factors that can prevent or impede newcomers into a market or industry sector, and so limit competition. The most obvious barriers to entry are high start-up costs and regulatory hurdles which include the need for new companies to obtain licenses or regulatory clearance before operation. Also, industries heavily regulated by the government are usually the most difficult to penetrate. Other forms of barrier to entry that prevent new competitors from easily entering a business sector include special tax benefits to existing firms, patent protections, strong brand identity, customer loyalty, and high customer switching costs. In the scenario, the new factory for chipset manufacturing costs billions of dollars, which indicates high set-up costs. Also, the incumbent manufacturers have reached economies of scale, allowing them to produce the components at optimal price.
The above descriptions are compiled from recent reports on current chip shortage (2021).


Reference:

- Barriers to Entry Definition (investopedia.com)
- CIPS study guide page 96-97

LO 2, AC 2.2



A procurement manager consolidates the company expense on printing and office supplies into broader range of spend category. Other senior managers are concerned that it may increase company's spend. Is that concern justified?

  1. No, because the broader range of spend category can increase the value of the contract and the buyer may get volume discount
  2. Yes, because the consolidation may create a large contract that costs more than placing each purchase order
  3. No, because the consolidation will help the supplier to shorten deliver time.
  4. Yes, because the suppliers can't provide a broader range of products and they will fail to deliver

Answer(s): A

Explanation:

Printing and office supplies are often considered as low risk, low value items. Consolidation low value, low risk items into a broader range will dramatically increases the value of the contract and leverage of buying organisation in the negotiation.


Reference:

CIPS study guide page 8-9
LO 1, AC 1.1



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Tshepang 8/18/2023 4:41:00 AM
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Tshepang 8/18/2023 4:41:56 AM
Kindly share this dump. Thank you
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