CIPS L5M7 Exam Practice Test Instant Access

Question 1

Joe is a Supply Chain Manager at a car manufacturer in the UK. He plans rationalisation to streamline processes and save money. Which tactics are forms of rationalisation? Select TWO.

ACustomisation

BSupplier innovation

CCollaborative inventory management

DTier-skipping

EReducing the number of suppliers

Answer : D, E

Rationalisation includes reducing supplier numbers and practices such as tier-skipping to simplify the network and reduce cost/complexity. Short extract: ''rationalisation---reduce supplier base; consider tier-skipping.'' (L5M7 Study Guide, p.11)

Question 2

Jerry works in product development at a clothing manufacturer. The company is discussing ways of adding value for customers. Jerry suggests reducing prices could be a form of added value. Is he correct?

AYes -- this is a form of added value but requires the ability of the supply chain to reduce costs.

BYes -- this will increase the company's profit margin.

CNo -- added value is only a form of innovation.

DNo -- as the customer is not offered anything additional to their purchase.

Answer : A

Added Value arises whenever the customer perceives extra benefit. Lowering prices can add value if the supply chain reduces costs to support it sustainably.

Short cited term: ''price reduction is a form of added value if supported by cost efficiencies.'' (L5M7 Study Guide, p. 35)

Question 3

Long runs, stable product design, and inventory buffers are objectives of which business function?

ASourcing

BManufacturing

CLogistics

DSales

Answer : B

Manufacturing objectives emphasise efficiency through long production runs, stable design, and inventory buffering to ensure continuity of output.

Short cited term: ''manufacturing -- long runs and inventory buffer.'' (L5M7 Study Guide, p. 36)

Question 4

To analyse the value of inventory held, which data points must be collected? Select TWO.

ANumber of items sold

BNumber of items held in storage

CPurchase price

DExpiry date

Answer : B, C

Inventory valuation requires data on quantity in stock and unit purchase cost. These determine the total inventory value at any given time.

Short cited extract: ''Inventory value = number of items purchase cost.'' (L5M7 Study Guide, p.147)

Question 5

An organisation can leverage effective Supply Chain Management to deliver Competitive Advantage. What is meant by Competitive Advantage?

AOutperforming competitors financially

BBecoming the leader in the marketplace through working closely with the supply chain

CA benefit that an organisation can use to outperform competitors in the marketplace

DCost savings by narrowing the supply chain

Answer : C

Competitive advantage is a distinct capability that allows an organisation to outperform its rivals, whether through cost efficiency, quality, innovation, or service.

Short cited term: ''advantage that enables outperforming competitors'' (L5M7 Study Guide, p. 2).

Question 6

What are some disadvantages to a multi-sourcing strategy in a supply chain? Select TWO.

APossibility of having surplus stock

BInconsistency in quality

CLess dependency on one supplier

DRelationships are more transactional

Answer : A, B

Multi-sourcing can increase inventory/duplication and create quality inconsistency between sources. Reduced dependency (C) is an advantage, and (D) is a neutral characteristic rather than a disadvantage. Short extract: ''multiple sources may lead to duplication/stock and variable quality.'' (L5M7 Study Guide, p.6)

Question 7

Which is the correct order that ensures quality is achieved in a business process?

APlan, Check, Do, Act

BCheck, Act, Plan, Do

CCheck, Do, Act, Plan

DPlan, Do, Check, Act

Answer : D

The PDCA Cycle---Plan, Do, Check, Act---provides a structured approach to continuous quality improvement. It begins with planning, implementing, monitoring, and then acting to refine the process.

Short cited extract: ''The PDCA cycle -- Plan, Do, Check, Act -- underpins continuous improvement.'' (L5M7 Study Guide, p.129)

CIPS Achieving Competitive Advantage Through the Supply Chain L5M7 Exam Practice Test