CIPS L4M3 sample questions on KPIs

As part of understanding assessment criteria one on CIPS L4M3, that is, Analyse the documentation that can comprise a commercial agreement for the supply of goods or services, here are some CIPS L4M3 sample questions on KPIs (key performance indicators)

Access more questions and the end of these questions as wells are the answers and explanations.

QUESTIONS (answers and more questions are provided at the end)

QUESTION 1

Which of the following options present TWO key performance indicators that could be used in a contract with a supplier?

1. Pricing stability and on-time delivery rate
2. Employee satisfaction and market share growth
3. Brand awareness and customer retention
4. Product quality and social media engagement

QUESTION 2

Which of the following is not a potential benefit of using Key Performance Indicators (KPIs) as performance measures?

1. Enhanced decision-making based on objective data
2. Improved accountability and performance tracking
3. Increased employee motivation and engagement
4. Decreased organizational efficiency and productivity

QUESTION 3

Which KPI is commonly used to measure the cost-effectiveness of procurement processes?

1. Return on investment (ROI)
2. Inventory turnover
3. Purchase order cycle time
4. Website traffic

QUESTION 4

Which of the following is a common Key Performance Indicator (KPI) used to measure customer satisfaction?

1. Revenue growth
2. Employee turnover rate
3. Net Promoter Score (NPS)
4. Inventory turnover

QUESTION 5

Which KPI is commonly used to measure the efficiency of a manufacturing process?

1. Customer retention rate
2. Return on investment (ROI)
3. Cycle time
4. Website traffic

 

ANSWERS & EXPLANATIONS

QUESTION 1

Answer A

Explanation

Specification in procurement will set out what is expected or what is to be delivered.

Price stability and on-time delivery rate will be some of the things you look out for or expect when contracting with suppliers

 

QUESTION 2

Answer D

Explanation

KPIs are clear qualitative or quantitative statements which define adequate or desired performance in key areas.

Which is why decreasing organizational efficiency and productivity is not a KPI function

 

QUESTION 3

Answer C

Explanation  

Purchase Order cycle time refers to the average time taken to ship out an order from the time it was placed, excluding the actual shipping time.

This makes it one of the most important KPIs to track in your order fulfillment process as it helps you measure the efficiency of your operations.

 

QUESTION 4

Answer C

Explanation

NPS stands for Net Promoter Score which is a metric used in customer experience programs.

NPS measures the loyalty of customers to a company.

NPS scores are measured with a single-question survey and reported with a number from the range -100 to +100, a higher score is desirable.

 

QUESTION 5

Answer C

Explanation

Cycle Time is the amount of time a team spends actually working on producing an item, up until the product is ready for shipment. It is the time it takes to complete one task.

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