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L5M4 - Sample - Questions - FV - Nov 2024

The document presents sample questions for the CIPS Level 5 Advanced Diploma in Procurement and Supply, focusing on case studies of ABC Limited and Billway PLC. It highlights issues in ABC Limited's procurement operations, including outdated supply chain practices and poor communication, while also providing financial data for Billway PLC to assess its viability as a supplier. The questions require evaluation of procurement strategies, financial assessments, funding approaches, and performance measurement methodologies.

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128 views4 pages

L5M4 - Sample - Questions - FV - Nov 2024

The document presents sample questions for the CIPS Level 5 Advanced Diploma in Procurement and Supply, focusing on case studies of ABC Limited and Billway PLC. It highlights issues in ABC Limited's procurement operations, including outdated supply chain practices and poor communication, while also providing financial data for Billway PLC to assess its viability as a supplier. The questions require evaluation of procurement strategies, financial assessments, funding approaches, and performance measurement methodologies.

Uploaded by

manaf.ajmn
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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CIPS Level 5 – Advanced Diploma in Procurement and

Supply

Advanced Contract and


Financial Management
[L5M4]

Sample Questions

L5M4 Sample Questions Nov 2024 Leading global excellence in procurement and supply
(Q1) – ABC Limited

ABC Limited (ABCL) is a large manufacturer of farming equipment and its range includes (mainly) heavy goods
and machinery such as tractors, diggers and farm vehicles. Their turnover is US$2.5bn with an operating profit
of US$4m.

ABCL currently have an extended supply chain of about 5000 suppliers across the world. They have two key
suppliers DEF Limited and GHJ Limited who account for 55% of procurement spend. There are 30 staff in the
central procurement team.

The procurement team and systems at ABCL have recently undergone a purchasing audit which looked at
strategic and operating operations of the procurement team, including the use of electronic purchasing. The
findings were not good with the auditors pointing out that the supply chain operation of ABCL is outdated,
lacks innovation and is not fit for purpose.

In addition, the auditors felt that there were poor communications between ABCL procurement department
and key functions such as marketing, finance and design. Evidence was also provided by the auditors of poor
market and supplier involvement especially in the early part of the procurement cycle (identification of need
and specification development were singled out for being particularly poor).

The report concluded with a review of how the procurement unit in ABCL interacts strategically with the
supply base when monitoring areas such as quality, price, delivery and sustainability and there was little
evidence of any sort of effective “non-contractual” relationships within the supply chain. Within the report, it
was highlighted that the assessment of key suppliers was particularly poor with no evidence of modern
techniques or financial reporting being utilised. With regard to costs, the auditors were unable to find any
evidence of clear financial data on suppliers or any evidence of long term demand planning, especially
between sales and procurement.

Question One

Assess a range of measures that the new Procurement Director could utilise to improve the supply chain.

[25 marks]
LO: 1
AC: 1.4

2
(Q2) – Billway PLC
The data below is taken from the year-end financial accounts of Billway PLC a company who has expressed an
interest in becoming a key supplier to your organisation.

2017 2016
Return on sales 9.1% 13.8%

Return on capital employed 9.4% 12.51%

Gross profit margin 23.9% 28.1%

Return on assets 7.0% 9.4%

Stock turn 151 days 202 days


Debtor days 131 days 148 days
Creditor days 107 days 111 days
Current ratio 1.9:1 2.22:1
Quick/acid test ratio 0.85:1 1.12:1
Gearing 49% 58%

Question Two

From the financial data given, assess, by commenting on all of the ratios, Billway PLCs financial position as a
potential supplier.

[25 marks]
LO: 2
AC: 2.1

(Q3)

Question Three

Evaluate a range of approaches that a procurement department could use to assist in the effective funding of
working capital.
[25 marks]
LO: 3
AC: 3.1

3
(Q4)

Question 4

Discuss how a balanced scorecard methodology can be applied to the measurement of performance in supply
chains.
[25marks]

LO: 4
AC: 4.1

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