QUESTION: 73

What is the purpose of using key performance indicators in procurement and supply?

To validate the supplier's bid or tender
To monitor supplier's performance
To ease the termination process
To qualify which supplier is suitable

Answer(s): B

Explanation:

Procurement teams use key performance indicators (KPIs) to ensure vendors comply with (and hopefully exceed) the obligations outlined in a contract. They help us better understand suppliers' performance, measure their output over a long period of time, and identify areas where improvement is needed.
Put simply, it's good business sense to make sure you're actually getting what you've paid for. This might be as straightforward as confirming a product or service is delivered on time, which means the KPIs you need to use will be minimal and basic.

Reference:

- Supplier KPIs | 7 Performance Indicators You Should Be Measuring - Una
- CIPS study guide page 101-102 LO 2, AC 2.2

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QUESTION: 74

Infra Constructions receive a contract for construction of a building, and following terms were agreed upon. "The entire cost of the project will be reimbursed to Infra Constructions (estimated cost of the project being $ 25 million). The profits will be 20% of the entire cost of a project subject to a max of $ 5 million." This arrangement is an example of...?

Incentive pricing arrangement
Gain-share/pain-share arrangment
Cost-plus pricing arrangement
Fixed-pricing arrangement

Answer(s): C

Explanation:

In the contract term, the buyer agrees to pay the contractor the cost of doing project plus a profit.
This is an example of cost-plus pricing arrangement.
On the other hand, "Fixed-pricing arrangement" often refers to lump-sum contract or supply/service contract with fixed price. "Incentive pricing arrangement" and "Gain-share/pain-share arrangement" have the same meaning. In this type of arrangement, both supplier and buyer agree on a target (it can be cost, or lead time, or quality, etc). Once the supplier reaches that target, it will be rewarded with a portion of the gain that the buyer gets, and will pay the price if it fails.

Reference:

CIPS study guide page 176-178 LO 3, AC 3.3

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QUESTION: 75

Which of the following are most likely to be liabilities of suppliers under a guarantee clause? Select

TWO that apply
Repair
Decommissioning
Upgrading
Replacement
Installation

Answer(s): B,E

Explanation:

A guarantee is an agreement given by a trader to a consumer, without any extra charge, to repair, replace or refund goods that do not meet the specifications set out in the guarantee. A guarantee is usually issued by the manufacturer of goods or by a trader that provides goods as part of a service - replacement windows, for instance. Generally, a guarantee provider undertakes to carry out free repairs, for a set period of time, for problems that can be attributed to manufacturing defects.

Reference:

- Guarantees and warranties

- CIPS study guide page 157-159 LO 3, AC 3.2

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QUESTION: 76

In the UK, Unfair Contract Terms Act 1977 regulates which of the following?

Validity of a contract when it is formed on the basis of misrepresentation
Rules regarding battle of the forms
Effectiveness of contract terms in the standard terms and conditions
Rule of offer and acceptance

Answer(s): C

Explanation:

The Unfair Contract Terms Act 1977 (c 50) is an Act of Parliament of the United Kingdom which regulates contracts by restricting the operation and legality of some contract terms. It extends to nearly all forms of contract and one of its most important functions is limiting the applicability of disclaimers of liability. The terms extend to both actual contract terms and notices that are seen to constitute a contractual obligation.
Under this regulation, if a clause within the standard terms in use is considered as 'unfair', the clause will be ineffective (or the other party will be entitled to avoid the clause). At court, the clause that is deemed to be unfair will undergo a 'reasonableness' test or an 'unfairness' test.

Reference:

- Maybe your standard terms are ineffective. Here's why
- CIPS study guide page 135 LO 3, AC 3.1

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Free L4M3 Exam Braindumps (page: 19)

QUESTION: 73

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QUESTION: 74

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QUESTION: 75

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QUESTION: 76

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