L4M2 CIPS Defining Business Needs Free Practice Exam Questions (2025 Updated)

Explanation

Quality function deployment (QFD) is a method to transform qualitative user demands into quantitative parameters, to deploy the functions forming quality, and to deploy methods for achieving the design quality into subsystems and component parts, and ultimately to specific elements of the manufacturing process.

Kano model of excitement and basic quality (Kano et al, 1984; Berger et al, 1993; Matzler et al, 1996) brings a different perspective for the analysis of improvement opportunities in products and services because it takes in consideration the asymmetrical and non-linear relationship between performance and satisfaction. The Kano model classifies customers requirements in five categories: basic requirements, performance requirements, attractive requirements, indifferent requirements and reverse requirements.

Mendelow’s Matrix is a tool that may be used by an organisation to consider the attitude of their stakeholders at the start of a project or when they are setting out strategic objectives.

The Thomas Kilmann model identifies two dimensions when choosing a course of action in a con-flict situation, these are assertiveness and cooperativeness. Assertiveness is the degree to which you try to satisfy your own needs. Cooperativeness is the degree to which you try to satisfy the other person’s concerns.

Explanation

Value Engineering (VE) is concerned with new products. It is applied during product development. The focus is on reducing costs, improving function or both, by way of teamwork-based product evaluation and analysis. This takes place before any capital is invested in tooling, plant or equipment.

This is very significant, because according to many reports, up to 80% of a product’s costs (throughout the rest of its life-cycle), are locked in at the design development stage. This is under-standable when you consider the design of any product determines many factors, such as tooling, plant and equipment, labour and skills, training costs, materials, shipping, installation, maintenance, as well as decommissioning and recycle costs.

Comprehensive and Detailed Explanation (paraphrased from CIPS L4M2 content)

CIPS L4M2 explains that specifications in procurement serve several fundamental purposes, including:

Defining the requirement clearly – so that all stakeholders (user, buyer, supplier) have a shared understanding of what is needed.

Forming the technical basis for contracts and orders – what is being purchased.

Providing measurable criteria to assess quality and conformance – what will be inspected and tested.

Therefore:

A. To define the requirements – correct. This is one of the primary roles of a specification.

D. To provide a means of evaluating the quality or conformance – correct. Specifications set the criteria against which delivered goods/services are checked.

The other options do not reflect the core role of specifications:

B. Supplier appraisal and selection – this uses specifications indirectly but supplier appraisal is a separate process (using financial, capability, and performance criteria).

C. Define the bargaining strength of the buyer – bargaining strength is shaped by market structure and spend, not by the specification itself.

E. Minimise the bargaining strength of the supplier – not an explicit purpose of specification, and could actually backfire (e.g. over-specification reducing competition).

Relevant CIPS L4M2 areas:

Purpose and role of specifications in the procurement cycle

Specification as a basis for quality assurance and contract management

Links between specification and supplier evaluation

Explanation

Specifications for through-life contracts must be clear. They should use precise technical language and avoid any ambiguity as much as possible. In most cases, 'good quality' is ambiguous. The con-tractor doesn't know exactly which product the buying organisation needs and how to supply that product.

Other notices for description of requirement are:

- Short and simply description

- Clear definitions at the beginning of the documents

- Clarify abbreviations (if any), but abbreviations should be avoided as much as possible

- Avoid any 'slang'

- Use imperative forms of language whenever possible.

LO 3, AC 3.2

Explanation

Specification is the most important document in procurement because it sets out the quality which supplier must provide. If there is no spec or the spec lacks clarity and details, supplier's perfor-mance may vary and possibly lower than actual requirements. This puts the buyer at risks. On the other hand, if the spec is clear and detailed, the supplier is liable to provide 'fit for purpose' products or perform the service at required level of quality. This will ensure that the buyer achieve 'Right Quality'.

Explanation

In this question, you have to calculate price variance and quantity variance.

Last month, 1 tonne of steel costed $216. This month, the price decreases to $181.1. Price variance = (P1 - P2)*Q2 = ($216-$181.1)*11 = $383.9

Quantity variance = (Q1-Q2)*P1 = -$216

Price variance is greater than quantity variance, therefore, price variance is the main cost driver.

LO 1, AC 1.4

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.

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.

Explanation

Acceptance testing, in the context of the engineering and software industries, is a functional trial performed on a product or prototype before it is put on the market or delivered, to decide whether the specifications or contract have been met. It also makes sure the quality and design of the product meet both contractual and regulatory obligations in terms of functionality, usability, durability, and safety.

If a product is found to be unacceptable at this stage, it can be sent back for modification, debug-ging, repair, or re-design before it can become a costly undertaking for the producer, as would be the case in a product recall.

Comprehensive and Detailed Explanation (from CIPS L4M2: Cost Management)

CIPS teaches that effective buyers conduct cost breakdowns that include both direct and indirect costs, using data from:

Supplier financial reports,

Benchmarking,

Industry cost models.

Thus, buyers can analyse indirect costs (e.g. overheads, utilities, admin) to strengthen negotiation positions.

Relevant CIPS L4M2 Sections:

Cost analysis and supplier price build-up

Using cost data to negotiate value

Explanation

Barriers to Entry to Agriculture: If stakeholders are going to address the need for new, conserva-tion-minded farmers, they must understand the barriers these farmers encounter when transitioning into the profession. A review of the literature revealed a number of barriers—most of them structural—to entry to agriculture. While each barrier is distinct, they are all interconnected. Though not an exhaustive list, the following barriers are ones that were most frequently mentioned in the literature:

- Access to Affordable Land

- Startup Capital

- Lack of Agricultural Knowledge and Experience

- Lack of Knowledge about Farm Business Planning

- Discrimination

- Student Loans

- Limited Access to Markets

- Affordable Housing and Affordable Healthcare

Source: Exploring the Barriers to Entry to Agriculture: Challenges Facing Beginning Farmers in North Carolina - Kelley Robbins-Thompson

Comprehensive and Detailed Explanation (paraphrased from CIPS L4M2 content)

CIPS L4M2 warns against over-specification – defining requirements in more detail, higher quality, or tighter tolerances than are actually needed. Key consequences include:

Increased costs – suppliers incur higher production and quality costs, which are passed on to the buyer.

Fewer potential suppliers – only a small number can meet the demanding specification.

More complex supplier relationships – closer collaboration and management may be needed to meet the demanding spec.

Assessing each statement:

Ineffective SLA – if the specification is unnecessarily detailed or unrealistic, SLAs can become difficult to meet, overly complex, or focused on the wrong priorities. Likely outcome.

Higher supplier costs – very clearly a result of over-specification (tight tolerances, special materials, complex processes).

Increased SRM – when the requirement is demanding and fewer suppliers can comply, buyers often need more intensive SRM to manage performance and risk.

Reduced inventory costs – this is not a typical outcome of over-specification; if anything, higher unit costs and longer lead times can increase inventory risks and carrying costs.

Thus 1, 2 and 3 are in line with CIPS treatment of over-specification; 4 is not, so:

Correct option: C (1, 2 and 3 only)

Relevant CIPS L4M2 areas:

Dangers of over-specification (cost, risk, supplier base)

Service Level Agreements and realistic performance measures

The role of SRM in managing complex or high-dependency suppliers