The CIPS Commercial Negotiation (L4M5) exam is a good choice and if the candidate manages to pass CIPS Commercial Negotiation exam, he/she will earn CIPS Level 4 Diploma in Procurement and Supply Certification. Below are some essential facts for CIPS L4M5 exam candidates:
Which of the following best describes Leverage quadrant in Kraljic matrix?
Correct : A
In 1983, Peter Kraljic devised a means to segment the supplier base in the article in HBR. In this, he argued that supply items should be mapped against two key dimensions: risk and profitability.
Risk relates to the likelihood for an unexpected event in the supply chains to disrupt operations. For instance, in important areas of spend, such as tire suppliers for an automotive are business critical, and should a disruption occur, the auto company is likely itself to face substantial problems.
Profitability describes the impact of a supply item upon the bottom line. For certain areas of spend, such as stationery, supplies have only a negligible effect on profits. In other categories, a single source of supply can make or break a business.
Putting these two dimensions together yields a classic two-by-two matrix.
Source: Peter Kraljic, HBR
- CIPS study guide page 63-73
- What Is The Kraljic Matrix? (forbes.com)
LO 1, AC 1.4
Which of the following should be done by the procurement team at the closing stage of a negotiation? Select TWO that apply.
Correct : B, E
The agreement and closing phase is the phase when it is either clear through explicit language, or strongly suggested through non-verbal signals, that TOP is ready to move to agreement. Judging when to close can be difficult and as with phases of the negotiation, experience, observation, practice and reflection will be the best ways to learn here.
In the closing phase, procurement should:
- Watch for closing/buying signals
- Check to ensure all issues have been resolved
- Consider using visual aids to summarise
- Use 'summary close'
- Make a decision to conclude/close
- Seek agreement in principle if TOP does not have the final authority
- Make your own private notes on the final agreement
- Shake hands on the agreement
- Leave the meeting as soon as possible thereafter.
LO 3, AC 3.1
