CIPS L4m3 Commercial Contracting · Free Practice Question Medium
Question 2
How does the performance specification benefit Sharaton Foods Holding in sourcing a vegetable harvesting and packaging system?
1. Provide opportunities for innovation
2. Potentially limit the competition among the suppliers
3. Require less effort to produce a specification
4. Allow the end user to provide details on technical aspects
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A
1 and 2 only
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B
1 and 3 only
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C
1 and 4 only
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D
2 and 3 only
Reveal correct answer
Correct answer: B
Explanation
A performance specification describes the desired outcome or intended use of a commodity and how the commodity will perform (e.g., number of items, distance to travel, time required). Performance metrics 1 are essential to define acceptance testing and successful achievement of outcomes. The metrics may be linked to incentives or disincentives.
Using performance specification has the following advantages: suppliers can use their expertise; less effort to produce a specification; risk borne by the supplier; potentially larger number of suppliers.
It also has disadvantages: the buyer may have difficulties with assessing a supplier’s quote; comparison of quotes may take a long time.
Reference: CIPS study guide page 9-11
LO 1, AC 1.1
Discussion
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