CIPS L4M4 Exam Practice Test Instant Access

Question 1

Khalid is a procurement manager in the UK who is looking to source exotic fruit for a retailer. As this type of fruit doesn't grow naturally in the UK Khalid is looking at international suppliers, but is worried about variations in exchange rates. He is considering asking the suppliers to provide quotes in their local currencies. Will this reduce the risk posed to Khalid?

Ayes- suppliers should quote in their own currencies so there is no risk to the importing company

Byes- when suppliers quote in local currencies you are more likely to get better prices

Cno- quoting the prices in GBP / will provide Khalid with better security against cur-rency fluctuations

Dno- prices should be quoted in GBP / as this will reduce the cost of imports

Answer : C

So you can immediately discount the options starting with yes.

Quoting in GBP / rather than the supplier's currency reduces the risk to the buyer. It will not re-duce the cost of the import, and will probably increase it as the supplier is then taking on the risk of currency fluctuations.

Question 2

In a negotiation, a supplier does not want to upset or offend the buyer, so concedes their own requirement in order to ensure harmony. Which negotiation tactic is the supplier using?

Acompetitive

Bcollaborative

Ccompromising

Daccommodating

Answer : D

This is accommodating: the supplier puts the buyer's interest above his own.

This is from the Thomas Killman model of conflict resolution. There are 5 strategies; competitive, collaborative, avoiding, accommodating and compromising. In the study guide it doesn't mention the name of the model but you do need to know the 5 strategies. The model comes up a lot in other modules so is a good one to learn. Particularly L5M1 which is about management theory.

Question 3

What course of action should be taken when an audit of a supplier identifies evidence of human rights malpractice?

AImmediately raise the issue with the supplier and jointly develop a timely action plan to be implemented before a repeat audit

BImmediately halt all orders with the supplier, make a record of the violation in the supplier database, and switch to an alternative source of supply

CRemove all business and inform press organisations, who will in turn bring the issue to the attention of formal governmental organisations who can take action

DAllow the supplier to complete current orders placed, while pursuing an alternative source to change to as soon as approved

Answer : A

Addressing human rights issues collaboratively by developing an action plan allows for improvement and correction. This approach is consistent with ethical sourcing principles, which encourage responsible intervention to correct and improve supply chain practices rather than punitive measures that may not lead to long-term change.

Question 4

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 5

The sourcing process is considered to include the initial stages of the generic procurement cycle, up to the stage where the contract is awarded to the successful bidder. The stages in the sourcing process may include ...

AComparing the supplier's delivery note with the purchase order to confirm the specification

BReminding the design manager to approve the drawings which will accompany the invitation to tender documents

CProcessing the requisitions to facilitate call-offs against a newly created framework contract

DEngaging with suppliers to ensure that they are achieving the KPIs set in the contract

Answer : B

In the sourcing process, obtaining necessary approvals (such as drawings for the invitation to tender) is critical to ensure clarity and readiness before engaging with suppliers. Responsible sourcing emphasizes structured preparation, ensuring compliance and accuracy in supplier expectations.

Question 6

Curly Cake Incorporated makes lots of different types of confectionary items. Although they are most famous for their cakes, they also have a smaller line of cereal bars and biscuits. Which of the following would be the most appropriate items for Curly Cake Incorporated to outsource? Select TWO

Acakes

Bcereal bars and biscuits

Ccleaning

Dfacilities management

Answer : C, D

Cleaning and Facilities Management are the most appropriate items to outsource. They would not outsource the making of confectionary products as this is the 'core' business.

See p.4 for 'what is outsourcing?'

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 Practice Test