CIPS L4M6 Exam Questions Instant Access - No Installation Required

Question 1

Fashion buyer Kamal Sumai is working closely with a key overseas supplier and is monitoring and forecasting cost volatility within the fabric market. Kamal has decided it is the right time to raise a purchase order with his supplier for a greater quantity of fabric than he currently needs. Kamal is attempting to avoid an imminent price increase. What is this tactic known as?

ASpot buying

BForward buying

CDerivative buying

DHedging buying

Answer : B

Forward buying involves purchasing in advance to lock in current prices and avoid future increases. This strategy is effective in volatile markets where price hikes are anticipated.

Question 2

According to Michael Porter, what is procurement?

Aa support activity which provides a source of competitive advantage

Ba primary activity which provides a source of competitive activity

Ca primary activity which provides value for money

Da secondary activity which provides value for money

Answer : A

This question refers to Porter's Value Chain (p.35). There's a couple of questions on this in the exam so try to learn it. Procurement is a 'support activity' on this matrix along with firm infrastructure, HR and technology development

Question 3

Within a supplier's terms and conditions, they have a 'mutual termination for convenience' clause, which requires either party to provide 30 days' notice. Before the buyer signed the agreement, a procurement colleague recommended that the buyer should request this be amended to 90 days' notice. Was this amendment the correct thing to do?

AYes, as this will allow the buyer enough time to mobilize a new contract

BYes, as the buyer will then be responsible for providing additional business to the supplier

CNo, as this will be in breach of statutory contract law requirements

DNo, as this will guarantee a hostile end to the buyer-supplier relationship

Answer : A

Comprehensive and Detailed

Extending the notice period in a mutual termination for convenience clause provides the buyer with additional time to:

Identify and engage alternative suppliers

Ensure continuity of supply

Mitigate risks associated with abrupt contract termination

This proactive approach aligns with best practices in contract management, allowing for smoother transitions and minimizing potential disruptions.

CIPS L4M6 Study Guide

Question 4

A law firm is ending an agreement with a client they have represented for many years. What is the most important legal consideration to be taken before terminating?

AEmployee rights

BConfidentiality

CFinance

DSecurity

Answer : B

Confidentiality is critical in professional relationships, especially for law firms, as they handle sensitive client information. Ensuring that all legal obligations to protect this information are met aligns with ethical and legal best practices.

Question 5

In Public Sector procurement a PIN is sent out to inform suppliers of an upcoming tender opportunity. What does PIN stand for?

APrior Information Notice

BProcurement Information Number

CProcurement Identification Number

DPossibilities Identified Notice

Answer : A

A PIN is a 'prior information notice' -- it is sent out before the ITT to let suppliers know that an opportunity is coming up and they should look out for it. See p 72 ''supplier identification- public sector'' for more details.

Question 6

Richie has come up with a new idea for sourcing items for the business but feels that it will have mixed reviews within the team. He thinks that some people will be in favour of the idea, and some will beagainst it. He doesn't think the CEO will have a strong opinion either way. In order to decide whether to put a business case together and present his idea to the CEO- what should Richie do?

ACost Analysis

BMake vs Buy Analysis

CForce Field Analysis

DValue Engineering Analysis

Answer : C

Richie should do a Force Field Analysis -- this is explained on p.86 and is an idea of Kurt Lewin -- it identifies the driving forces for a project and the restraining forces (basically who will be for it and who will be against it). The textbook doesn't go into much detail on this but there are questions on it in the exam- so have a quick google to familiarise yourself with Kurt Lewin's Force Field Analysis.

Question 7

Which of the following would you use to qualify new suppliers? Select THREE.

Acommitment

Bclean

Ccollection

Dcost

Ecall

Answer : A, B, D

This is based on a real exam question- it's looking to see if you can remember Carter's 10 Cs. These are; cash, cost, consistency, culture, clean, communication, competency, capacity, commitment and control. (p.12 in the text book)

CIPS Supplier Relationships L4M6 Exam Questions