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Teddy Ltd has created a virtual cross-functional procurement team across divisions. What could become a barrier to success?
The key barrier is language and the use of acronyms. In cross-functional, international, or virtual teams, communication challenges can hinder collaboration. Procurement often uses specialised terminology and acronyms that other functions or non-native speakers may not fully understand. This can create confusion, misalignment, and inefficiency.
Geography is less of an issue in virtual teams, as digital platforms enable collaboration across locations. Time and cost can be challenges, but the study guide specifically identifies language and acronyms as barriers.
Effective category managers overcome this by using clear, simple communication and ensuring shared understanding of procurement terms. This reduces misunderstandings and ensures that all team members---finance, engineering, operations---can contribute effectively.
Cross-functional teamwork is central to category management success, but only if barriers to collaboration are proactively addressed.
[Ref: CIPS L5M6 Study Guide, p.64 -- Cross-functional teams and barriers]
Which of the following are legal aspects of a contract a Procurement Manager should know? [Select THREE]
The three correct legal aspects are:
Liabilities [C]: Define responsibility for damages, breaches, or non-performance.
Intellectual Property [D]: Protects innovations, designs, and brand assets in supplier agreements.
TUPE [E]: Transfer of Undertakings [Protection of Employment], a UK law ensuring employees retain rights when transferred between companies.
While sustainability and relationship management are important procurement considerations, they are not specifically legal aspects of contracts. Legal knowledge ensures procurement professionals protect their organisations from financial, reputational, and operational risks.
TUPE is particularly relevant in outsourcing agreements, where staff may move from one employer to another. Procurement managers must ensure compliance with local employment laws to avoid legal disputes.
CIPS stresses that category managers should not act as lawyers but must have sufficient legal awareness to identify risks and escalate issues to legal specialists.
[Ref: CIPS L5M6 Study Guide, p.57 -- Legal aspects in procurement contracts]
Ted is a potato farmer from Devon. He sells his potatoes to many local customers including restaurants, wholesalers and manufacturers. For one customer, Ted is keen to drive a premium price for his potatoes as he is confident the customer can afford to pay more. What type of customer is this to Ted?
This is an exploitable customer, according to the Supplier Preferencing Model. Suppliers may attempt to increase profit margins with customers they perceive as less important but who have fewer alternatives and can afford to pay more.
Which of the following forms of historical data can be used to inform Category Management expenditure? Select THREE.
In category management, reliable decision-making depends heavily on the analysis of historical spend data. According to CIPS, the key forms of usable historical data include:
Spend analytics: consolidated information showing how much has been spent, on what items, and with which suppliers.
Line item details: transaction-level data that provides specific insight into products or services purchased.
Ledger codes: financial classifications that group expenditure for reporting and control purposes.
These data sets allow category managers to identify trends, supplier dependency, opportunities for consolidation, and potential cost savings. In contrast, inflation rates and spend forecasts are forward-looking metrics, not historical data. Using accurate historical information is critical for preparing budgets, supporting negotiations, and identifying anomalies in expenditure. Organisations that fail to utilise this data often struggle to align their category strategies with financial realities, leading to overspending or missed opportunities.
According to Porter's Five Forces, supplier power is strong in industries where which of the following is true? [Select THREE]
Supplier power is strong when buyers have fewer choices and suppliers have leverage. This occurs where:
No substitutes are available [A]: Buyers are locked into what suppliers provide, increasing supplier power.
Supplier's customers are fragmented [B]: When customers are fragmented [many small buyers], they cannot collectively negotiate, so suppliers hold more power.
Forward integration is possible [D]: Suppliers can bypass buyers and sell directly to the end customer, which gives them negotiating strength.
Options C and E relate more to buyer power:
Switching costs are low [C]: This reduces supplier power as buyers can easily move.
Undifferentiated products [E]: This strengthens buyer power since products are interchangeable.
[Ref: CIPS L5M6 Study Guide, p.116 -- Porter's Five Forces model]
