CIPS L4M4 Exam Questions Instant Access - No Installation Required

Question 1

A buyer is responsible for the procurement of metals within the raw materials department. The buyer is preparing for next year's purchase orders and has been asked to confirm the month of order placement. The buyer has found three trends:

In January and April, the supplier's local currency is stronger

November typically has the lowest demand

May typically has the highest demand

Which month should the buyer plan to place the purchase order?

ANovember

BMay

CJanuary

DApril

Answer : A

Ordering in November, when demand is lowest, may allow the buyer to secure better pricing and availability, aligning with responsible sourcing by optimizing purchase timing to achieve cost savings and reliable supply.

Question 2

Which award criteria can be applied when sourcing requirements from external suppliers?

AUnderstanding of supplier operations

BPrice and total life-cycle costs

CPlans and manpower numbers

DDelivery promises of goods

Answer : B

Responsible award decisions should consider price and total life-cycle cost (TCO) to capture acquisition, operation, maintenance, and end-of-life costs, aligning with sustainability. Other items may inform due diligence but are not, by themselves, robust award criteria without being translated into measurable value and risk outcomes.

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Question 3

A company has a low gearing of 20%. This shows that the company relies on equity capital and should therefore have less difficulty coping during tough economic times. Is this statement TRUE?

AYes- a low gearing ratio means the company's finances are made up of equity rather than debt

BYes- a low gearing ratio shows that the business is solvent and can deal with supply chain disruptions easily

CNo- a low gearing suggests that the company is financed by long-term debt rather than equity

DNo- a low gearing shows you that a company isn't likely to be profitable

Answer : A

the correct answer is 'Yes- a low gearing ratio means the company's finances are made up of equity rather than debt'.

Remember low gearing = good (based on equity), high gearing = bad (based on debt). Anything over 50% is considered high.

The two no answers are therefore incorrect and you can discount these straight away. The other yes answer is one of those answers which COULD be true, but isn't always true, and we'd need more information to know for sure. When you get options like this there will be one that is always right and one which is sometimes right - so always pick the always right one.

Dealing with supply chain disruptions is complex, and depending what the disruption is, how big it is, what the industry is etc determines whether a supplier can handle it or not. Because there's more factors to consider than just gearing, this isn't the right answer.

Question 4

Which of the following should form part of the initial evaluation process for non-domestic vendor proposals?

AContract management

BIncoterm classifications

CInternal benchmarking

DSupplier development

Answer : B

When sourcing internationally, one of the first evaluation considerations is the use of Incoterms (B), which define the allocation of transport costs, risks, and responsibilities between buyer and supplier. They are essential for evaluating total cost and risk implications of international offers. Contract management and supplier development are post-award activities, while benchmarking is an internal tool. Responsible sourcing stresses the importance of clear Incoterm agreements to avoid disputes, ensure compliance, and fairly allocate responsibilities in global supply chains.

Question 5

Faisal is a medical equipment maintenance services procurement specialist within a local hospital. Faisal is responsible for ensuring contracts are in place that will ensure operational continuity of high-value pieces such as radiology equipment. When carrying out tender opportunities for these services, Faisal will specify, as an essential requirement, that certain standards are adhered to. Which of the following is a benefit of incorporating standards as a requirement within a specification?

AStandards provide clear guidelines and remove the risk of ambiguity

BStandards will mirror the buyer's requirements in its entirety

CStandards will ensure suppliers meet all the buyer's requirements

DStandards will ensure low pricing is submitted in the tender response

Answer : A

Incorporating standards within specifications provides clear guidelines for suppliers, reducing ambiguity and helping ensure consistency in quality and performance. This aligns with ethical and responsible sourcing practices by promoting transparency and setting consistent expectations for suppliers.

Question 6

Which remedial actions may be undertaken by a purchasing organisation following a supplier audit? (Select TWO)

ARunning supplier development programmes

BEmploying the supplier's staff for job training

CDaily brainstorming meetings with the supplier

DViolating the terms of the supplier contract

EDefining corrective actions for the supplier

Answer : A, E

When supplier audits reveal issues, buyers should implement constructive measures. Supplier development programmes (A) help improve performance through training, mentoring, and joint improvement initiatives. Corrective action plans (E) outline specific steps and timelines to address identified gaps. Options like hiring supplier staff or informal brainstorming do not provide structured improvements, while violating contracts would undermine governance. Responsible sourcing emphasises supplier engagement and continuous improvement, ensuring suppliers meet ethical, quality, and sustainability expectations rather than simply penalising them.

Question 7

Which of the following should be considered when calculating ratios relating to a supplier's liquidity?

Ainventory

Breserves

Creceivables

Dprofit

Answer : A

CIPS Ethical and Responsible Sourcing L4M4 Exam Questions