Free L4M2 Practice Test Questions and Answers (2026) | Cert Empire Practice Questions

When the buyer does not align with the supplier’s strategic interests, the supplier may take

advantage by charging higher prices to compensate for the perceived lack of value. This approach

maximizes the supplier’s benefit from a transactional relationship. Reference: CIPS Level 4, Supplier

Engagement and Negotiation Strategies.

The bargaining power of supplier is a major determinant of the structure of an industry and also how

much profit is available to organisation operating in that industry. Supplier is weak if:

- Substitutes are available and easy to access

- Suppliers are small and fragmented

- The industry is important to the seller

- The sellers' product or service is not an important of the industry's value chain

- The sellers' product or service is undifferentiated

- There are no significant switching costs

- There is no threat of forward integration.

Suppliers may have more power:

- If they are in concentrated numbers compared to buyers.

- If there are high switching costs associated with a move to another supplier.

- If they are able to integrate forward or begin producing the product themselves.

- If they have specific expertise or technology needed to manufacture goods.

- If their product is highly differentiated.

- If there are many buyers and none make up significant portions of sales.

- If there are no substitutes available.

- If there are strong end users who can exert power over the organization in favor of a supplier (This

can be the case in labor situations).

In all of these cases, the bargaining power of suppliers is high to demand premium prices and set

their own timelines.

LO 2, AC 2.2

Writing a high-quality specification is very crucial in every purchase. In through-life management, it

is even more important since the assets often have very high value. Defining user requirement is the

first step to write a specification. Without doing this right, many problems may arise in later stages.

Reference: CIPS study guide page 132

LO 3, AC 3.2

Risk control is the process by which an organization reduces the likelihood of a risk event occurring or

mitigates the effects that risk should it occur. Our preferred way to determine your risk control

strategy is to use the four T’s Process:

Transferring Risk can be achieved through the use of various forms of insurance, or the payment to

third parties who are prepared to take the risk on behalf of the organization

Tolerating Risk is where no action is taken to mitigate or reduce a risk. This may be because the cost

of instituting risk reduction or mitigation activity is not cost-effective or the risks of impact are at so

low that they are deemed acceptable to the business (such as some trivial annoyance). Even when

these risks are tolerated they should be monitored because future changes may make it no longer

tolerable.

Treating Risk is a method of controlling risk through actions that reduce the likelihood of the risk

occurring or minimize its impact prior to its occurrence. Also, there are contingent measures that can

be developed to reduce the impact of an event once it has occurred.

Terminating Risk is the simplest and most often ignored method of dealing with risk. It is the ap-

proach that should be most favored where possible and simply involves risk elimination. This can be

done by altering an inherently risky process or practice to remove the risk. The same can be used

when reviewing practices and processes in all areas of the business.

If an item presents a risk and can be changed or removed without it materially affecting the busi-

ness, then removing the risk should be the first option considered; rather than attempting the treat,

tolerate or transfer it.

Reference: CIPS study guide page 144-145

LO 3, AC 3.3

:

There are 6 main components of the through-life requirements of an asset: Design, Manufacture,

Installation, In-service support, Decommission and disposal and Customer support.

Rectification of operational defects and planning and delivery of Fleet Time Support Periods are

maintenance activities which belong to in-service support. You may have chosen Customer support.

However, in through-life asset management context, customer support does not include

maintenance services. Instead, it is the services that go along the stages of asset life. It may include

consulting, communication and information exchange.

https://kxbjsyuhceggsyvxdkof.supabase.co/storage/v1/object/public/file-images/CIPS_L4M2/page_102_img_1.jpg

Source: Andrew Graves

Reference: CIPS page 130-131

LO 3, AC 3.2

Value analysis is often defined as a systematic process for improving the value of a product, service

or project. It is typically used in the following ways:

- To determine the value of each component used

- To find cost reduction opportunities by optimising the components used

Segment analysis helps procurement and supply to shape and manage the supply markets.

There is no concept known as Variety reduction.

Standardisation is the process which is used to reduce varieties of products or parts.

In this scenario, the company's objective is cost reduction, then value analysis or value engineering is

more likely to be applied. Also the company aims at reducing variety, standardisation can be

combined with value analysis to produce the best results.

LO 3, AC 3.4

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

Robots in manufacturing help to create jobs by reshoring more manufacturing work. Robots protect

workers from repetitive, mundane and dangerous tasks, while also creating more desirable jobs,

such as engineering, programming, management and equipment maintenance.

LO 2, AC 2.1

:

Through-life management is a approach applied to capital asset. According to Ward and 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. According to CIPS study guide, through-life management comprises of 6 parts:

1. Design

2. Manufacture

3. Installation

4. In-service support

5. Decommission and disposal

6. Customer support

In this scenario, the company is planning to procure a ship, which is a capital asset. Through life

management is a good approach. Sealines can start with developing through-life specification. This

approach may have several benefits:

- It lowers the costs over the whole life of the asset

- It lowers the risks as there is a single company accountable for costs and service over the life of the

asset

- A closer match between the asset delivered and the users' needs

- Development of capability over the life of the asset as the supplier continues to get experience of

the users' needs and can adapt services to meet them.

Reference:

- CIPS study guide page 130-131;

- Through-life management: The provision of total customer solutions in the aerospace industry, by

Yvonne Ward and Andrew Graves

LO 3, AC 3.2

:

Traditional financial systems operate with a centralised database, usually with a single point of

authority. Blockchain technology, on the other hand, allows for a distributed database that holds a

growing number of records. Instead of existing in one place, the ledger is continually updated and

synchronised across multiple computers in a network. Therefore, any participant in the network with

the proper authorisation can view the entire ledger – without relying on an intermediary or any one

authority.

Another key feature of blockchain technology is a “smart contract,” which is a self-executing protocol

that enforces a previously agreed arrangement. For example, a smart contract could trigger an

automatic refund under certain conditions or the automatic payment of an agreed commission after

a sale. These smart contracts can eliminate delays in traditional Finance processes, while increasing

transparency and reducing reliance on middlemen to follow through on their commitments.

Moreover, like other parts of a blockchain, smart contracts are immutable, so they can enhance

accuracy in the financial statements.

LO 2, AC 2.1

As you can see from the scenario, ABC Group is developing the new product. It might be using value

engineering. The latter sentences confirm this: the cross-functional team in ABC is mapping the

functions and surveying the customers. Their method is known as Kano model.

Reference: CIPS study guide page 171-172

LO 3, AC 3.4

A technical specification details the standards that a product or service must meet. Drawings (often

called engineering drawings or technical drawings) are complementary to technical specifications

Reference: CIPS study guide page 116-117

LO 3, AC 3.1

:

3D-printed parts can replace traditional metal parts. They are also more easily customised to fit

customer's needs. This technology is an example of threat of substitute in Porter's Five Forces model.

Substitute goods or services that can be used in place of a company's products or services pose a

threat. Companies that produce goods or services for which there are no close substitutes will have

more power to increase prices and lock in favorable terms. When close substitutes are available,

customers will have the option to forgo buying a company's product, and a company's power can be

weakened.

Reference:

- CIPS study guide page 85-96

- Porter's 5 Forces Definition: Analyzing Businesses (investopedia.com)

LO 2, AC 2.2

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 three categories (figure 3):

a) Basic Requirements (or Must-be requirement). The basic requirements fulfill the basic func-tions

of a product. If they are not present or their performance is insufficient, customers will be extremely

dissatisfied. On the other hand, if they are present or have sufficient performance, they don't bring

satisfaction. Customers see them as prerequisites. For instance, for luxury automobiles, "air bags"

are considered basic. A customer won't feel satisfied if the automobile has "air bag", however he/she

will not buy it if “air bag” is not present.

b) Performance Requirements (or One-dimensional requirements). As for these requirements,

satisfaction is proportional to the performance level – the higher the performance, the higher the

customer's satisfaction will be and vice-versa. Gas consumption in automobiles is an example of

these requirements. Usually customers explicitly demand performance requirements.

c) Excitement Requirements (or Attractive requirements). These requirements are key to cus-tomer

satisfaction. If they are present or have sufficient performance, they will bring superior satisfaction.

On the other hand, if they are not present or their performance is insufficient, customers will not get

dissatisfied. For instance, a surprise gift at the end of a dinner in a restaurant will certainly bring

satisfaction, but it will not cause dissatisfaction if not offered. These requirements are not demanded

nor expected by customers.

Two other types of requirements may be identified in the Kano model: neutral and reverse ones.

Neutral requirements do not bring either satisfaction or dissatisfaction. Reverse require-ments bring

more satisfaction if absent than if present.

https://kxbjsyuhceggsyvxdkof.supabase.co/storage/v1/object/public/file-images/CIPS_L4M2/page_95_img_1.jpg

Reference:

- Integrating Kano model and QFD for Designing New Products

- CIPS study guide page 171-172

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

The following are typical social criteria in procurement:

• Reducing unemployment

• Preventing the use of child labour

• Preventing discrimination on the grounds of race, religion, disability, sex or sexual orientation

• Encouraging good employment practice

• Reducing local unemployment

• Reducing social exclusion

• Promoting training opportunities for the young or disadvantaged

• Encouraging access to work for people with disabilities

Reference: CIPS study guide page 137

LO 3, AC 3.2