CIPS Updated L4M8 Exam Questions and Answers by julius

A contract is written or verbal agreement, made between two or more parties that is legally enforceable. For a contract to be legally binding it must include intention of parties entering into the contracts. All parties must have the capacity to contract or be contracted. They must be of a sound mind, there should be a promise (offer) for per-formance from the other party and an exchange (consideration) of one thing for another within an agreement for contract to be binding, and there must be an acceptance of the offeror’s offer by the offeree.

Key performance Indicators (KPIs) and service level Agreement (SLA) are measures that demon-strate the effectiveness of a supplier. By using KPIs and SLAs as part of suppliers management, procurement professionals can monitor and evaluate performance and identify areas that need attention or improvement. KPIs and SLAs are used for product and service contract respectively.

Two KPI

1) Number of defects: Not more than two defects is allowed on the generator and its accessories

2) Supplier Lead Time: Delivery after placing order should not be anytime longer than 14 days.

Two SLAs

1) The toilet should be washed with soap, and deodorant should be sprayed twice a day

2) Bathroom and toilet should not be allowed to smell out to the passage. Bathroom smelling out to the passage twice a month is a violation of the contract.

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Refer to the question column for response

If a supplier is accredited or is a member of an association that promotes good ethical conduct, a statement to this effect is likely to be featured on its company documentation. This could be in a form of letters after the organization name or the authorized use of logo.

Accreditation information should be verified by procurement professionals either asking organiza-tion for certification to prove membership or accreditation or checking on a professional register.

Below are associated bodies that form some industries.

1. ISO 14001 – for quality management

2. CIPS – for procurement and Supply

3. Red Tractor – NGO Registered in the UK, promoting human right

4. Amnesty International – human right

5. Carbon Trust – For Carbon neutral status.

Hidden costs are costs that do not always present themselves at the onset of the project.

Logistics can provide a hidden cost within global sourcing. The movement of goods can generate risk within a localized supply chain, but the risk is greater within global sourcing. Within global sourcing there are usually many more aspects to the logistics operation, hidden cost associated with the logistics process includes,;1) delays that can be experienced after placing orders, 2) unclear and poor/incorrect communication that might affect the successes of the transaction, also 3) goods could be confiscated by customs for unseen reasons.