CIPS LEVEL 4 DIPLOMA IN
PROCUREMENT AND SUPPLY
Exam
L4M6 Questions V9.02
CIPS Level 4 Diploma in
Procurement and Supply
Topics - Supplier Relationships
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1.Which of the following is a stage in the relationship lifecycle?
A. Decline
B. Graduation
C. Measuring
D. Testing
Answer: A
Explanation:
The relationship lifecycle typically involves phases such as initiation, development,
maturity, and decline. Decline is the final stage where the relationship's effectiveness
diminishes, necessitating review or termination. This aligns with CIPS guidelines,
which emphasize monitoring and evaluating relationships over time to identify when
changes or termination are required.
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2.Which of the following are typical drivers for a partnership between the buyer and
the supplier? Select the THREE that apply.
A. The buyer has a high spend with the supplier
B. There are many suppliers in the market
C. The product is critical for the buyer
D. The product is a commodity
E. The product is technically complex
F. The supplier provides the product to a buyer’s competitor
Answer: A, C, E
Explanation:
Drivers for partnership include a high spend with the supplier, criticality of the product,
and technical complexity. These factors encourage collaboration for cost efficiency,
quality improvement, and risk management. Partnerships are less likely when there
are many suppliers or the product is a commodity, as competition and standardization
reduce the need for close collaboration.
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3.Which of the following options are legitimate reasons for terminating a contract?
Select TWO that apply.
A. You ordered 10,000 items instead of 1,000
B. One of the contracted parties has clearly failed to perform its duties
C. There has been a serious breach of contract terms
D. Your internal stakeholder requested the wrong items
E. Your MRP system placed a replenishment order that you do not need
Answer: B, C
Explanation:
Legitimate reasons for contract termination under CIPS guidelines include failure to
perform duties and serious breaches of contract terms. Ordering errors or changes in
stakeholder needs are not valid termination grounds unless explicitly stated in the
contract. This protects both parties from unjustified termination risks.
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4.Products or services that are more suitable for partnership sourcing match which of
the following criteria?
A. 1 and 2 only
B. 2 and 3 only
C. 1 and 3 only
D. 2 and 4 only
Answer: A
Explanation:
Partnership sourcing is suitable for products that contribute to the buying
organization's unique selling point (USP) and for critical products on which key
customers depend. This approach ensures strategic alignment and mutual benefits
for both parties, focusing on collaboration rather than cost alone.
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5.A partnership relationship in portfolio analysis is appropriate for which category of
procurement?
A. Strategic security
B. Tactical profit
C. Tactical acquisition
D. Strategic critical
Answer: D
Explanation:
Partnership relationships are typically used for strategic critical items where the
product is essential to operations, and the supplier’s input significantly impacts
success. These relationships are nurtured through mutual trust and collaboration to
mitigate supply risk and ensure long-term value.
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6.Stephen Jones is assessing the relationships he has with his supplier base.
Which of the following would be drivers for Stephen to adopt a partnership
relationship with a supplier?
A. 1 and 2 only
B. 2 and 3 only
C. 1 and 4 only
D. 2 and 4 only
Answer: D
Explanation:
High expenditure levels and the complexity of requirements justify partnership
sourcing, as it allows for collaborative problem-solving, innovation, and costefficiency. CIPS emphasizes that partnerships are ideal when requirements are
complex and require expertise from the supplier.
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7.Sugar Doughnut Ltd has a jam supplier that they have used successfully for over
ten years. They have made investments in the supplier’s factory to support them with
capital equipment upgrades in return for cost reduction on jam. The two companies
also collaborate on bids for large supermarkets when looking to supply doughnuts
and work together on quality improvements. No contracts exist between the two
companies.
Could this relationship be said to be a partnership relationship?
A. No, because contracts do not exist between the two companies
B. No, because they have only worked together for ten years
C. Yes, because they have demonstrated close collaboration on various projects
D. Yes, because they both operate in the food sector
Answer: C
Explanation:
The relationship qualifies as a partnership due to their collaboration, shared
investments, and mutual efforts toward improvement, regardless of the absence of
formal contracts. Partnerships focus on shared goals, trust, and strategic alignment
rather than mere documentation.
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8.A company supplies IT equipment and buys most of its components from first-tier
suppliers in the UK. It wants to analyze its supply market to develop the supply chain
and is going to review the main factors that have an influence. The company wants to
use the STEEPLED external environmental analysis framework to achieve the best
result.
Which of the following STEEPLED factors is most likely to have the greatest effect?
A. Sociocultural
B. Technological
C. Economic
D. Ethical
Answer: B
Explanation:
Technological factors play a pivotal role in IT equipment supply chains.
Advancements, obsolescence, and innovation significantly affect production, cost,
and competitiveness, making it a primary focus in supply chain development.
9.Which of the following are typical examples of partnering between companies?
Select the TWO that apply.
A. Sole trader
B. Limited company
C. Joint venture
D. Strategic alliance
E. Public limited company
Answer: C, D
Explanation:
Joint ventures and strategic alliances are examples of partnerships as they involve
collaboration between entities to achieve shared objectives. Sole traders and public
limited companies describe organizational structures, not partnership types.
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10.A local council requires facilities management services for ten schools based in
their region. This service is a high-spend, high-risk, critical contract.
Which sourcing approach would be the most appropriate?
A. Request for quotation
B. Competitive tendering
C. Statement of source requirements
D. Direct negotiation
Answer: B
Explanation:
Competitive tendering is the most suitable approach for high-risk, high-value contracts
as it ensures transparency, fairness, and the selection of the most capable supplier
based on predefined criteria.
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11.An amicable style approach to ending a buyer-supplier relationship would be most
appropriate in
which of the following circumstances?
A. 1 and 2
B. 1 and 3
C. 3 and 4
D. 1 and 4
Answer: A
Explanation:
An amicable approach is critical when alternative suppliers are limited or when
ongoing collaboration is required during the termination period. Maintaining positive
relations ensures smooth operations and protects reputations in the marketplace.
12.When a large organization partners with a small supplier to develop new
technology, it is necessary for regular communication. Is this statement true?
A. No, because partnerships do not require regular communication during
development of new technology
B. Yes, because partnerships require regular communication to succeed in meeting
mutual objectives
C. Yes, because a small supplier must be told what to do and when, because they
have fewer employees
D. No, because regular communication will stop a small supplier from doing their work
Answer: B
Explanation:
Effective communication is essential in partnerships to ensure alignment on
objectives, progress updates, and issue resolution. Regular communication builds
trust and fosters collaboration, leading to successful outcomes.
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13.In the STEEPLED framework, which of the following is an economic factor?
A. Unemployment rates
B. Demographics
C. Supply chain labor standards
D. Election results
Answer: A
Explanation:
Economic factors such as unemployment rates affect labor availability, wages, and
consumer purchasing power, directly impacting business operations and supply
chains.
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14.Which one of the following would constitute a succession issue when terminating a
relationship?
A. Processing penalties
B. Deletion of old specifications
C. Continuity of supplies
D. Payment of old invoices
Answer: C
Explanation:
Ensuring continuity of supplies is critical during termination to avoid disruptions.
Succession issues focus on maintaining essential operations while transitioning to
new suppliers or arrangements.
15.Price fluctuations can affect profitability. Is this statement correct?
A. Yes, if the product's costs increase and the price does not
B. No, only decisions made by the chief executive affect the price
C. No, price is not related to profitability
D. Yes, as sales may drop if the product is price inelastic
Answer: A
Explanation:
Profitability is impacted when product costs rise without corresponding price
adjustments.
Understanding cost-price relationships is key to managing profitability in procurement.
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16.Joseph works as a category manager for a large electricity supply company. His
company is one of six electricity companies in the country. All have a high annual
spend on the same specifications of cable. There are only five cable manufacturers
capable of supplying the cables. Joseph has established all the suppliers use the
same raw materials using the same types of manufacturing lines. Prices tendered by
all suppliers are very similar. After paying for the cable, Joseph’s company spends an
additional 25% on moving and installing the cable.
In order to enable Joseph to gain advantage over the other electricity companies,
which type of supplier relationship should he adopt?
A. Single-sourced
B. Closer tactical
C. Transactional
D. Partnership
Answer: D
Explanation:
A partnership relationship allows Joseph to collaborate with suppliers on cost savings
in manufacturing, logistics, and installation, providing a competitive edge over rival
companies.
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17.A buyer has a requirement to purchase 1,000 widgets for a manufacturing
company. The widgets are critical for the next stage of the manufacturing process.
What would be the key selection criterion for this buyer?
A. Ability to deliver by the deadline
B. Ability to produce low-cost widgets
C. Ability to meet ISO standards
D. Ability to add value to the order
Answer: A
Explanation:
Timely delivery is essential to prevent disruptions in critical manufacturing processes.
While cost and standards are important, they are secondary when urgency and
dependency are high.
18.Under which circumstances would a partnership sourcing approach be used?
A. 1 and 2 only
B. 1 and 3 only
C. 1 and 4 only
D. 2 and 4 only
Answer: B
Explanation:
Partnership sourcing is ideal for high-spend, high-risk situations where collaboration
mitigates risks and maximizes value through innovation, efficiency, and trust.
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19.Which of the following are features of a partnership sourcing relationship
compared with a traditional adversarial relationship? Select TWO that apply.
A. Emphasis on quality with zero defects
B. Emphasis on the lowest price
C. Emphasis on inspection of incoming supplies
D. Emphasis on short-term relationship
E. Emphasis on long-term relationship
Answer: A, E
Explanation:
Partnerships emphasize mutual goals such as quality improvement and long-term
collaboration, contrasting with adversarial relationships that focus on cost and shortterm gains.
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20.A competitor develops an alternative type of vacuum cleaner to one produced by
your organization.
Is this an example of the threat of substitutes, one of the five forces of competition
described by competitive forces theory?
A. Yes, customers may switch to alternative products
B. Yes, there are no barriers to entry; it is an oligopoly
C. No, it does not serve the same purpose
D. No, it is a threat from a new entrant to the market
Answer: A
Explanation:
Substitute products pose a competitive threat by offering alternative solutions to
customers, potentially eroding market share. Effective differentiation and customer
retention strategies are essential.
21.A local government procurement team is undertaking a full review of their current
internal working processes. The team of buyers currently have a partnership-style
relationship with their routine suppliers.
Is this the best relationship style to use?
A. No, as there are many suppliers available
B. No, as these are critical items to the buying organization
C. Yes, as they present a great deal of risk to the organization
D. Yes, as these are low-value items
Answer: A
Explanation:
Routine suppliers typically supply low-value, low-risk items. Maintaining partnerships
in such cases is inefficient since alternative suppliers are readily available. Adopting a
transactional or adversarial relationship would be more appropriate.
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22.A software developer is seeking to develop a new fitness trends app. They are
looking to create a contract with a fitness expert to give advice on the type of
changing fitness trends.
What agreement should the app developer aim to achieve?
A. Quality-based relationship
B. Traditional contracting relationship
C. Partnering relationship
D. Cost-based relationship
Answer: C
Explanation:
A partnering relationship fosters collaboration and ensures the fitness expert is
actively involved in developing insights, which is crucial for innovation and mutual
success in a knowledge-sharing environment.
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23.When overcoming stakeholder resistance in a procurement-led project, which of
the following groups would have the highest level of influence on other stakeholders?
A. 2 and 3 only
B. 1 and 4 only
C. 1 and 2 only
D. 3 and 4 only
Answer: B
Explanation:
Negative leaders and promoters hold the most influence. Negative leaders can sway
opposition, while promoters can actively advocate for project success. Managing
these stakeholders effectively is crucial in procurement projects.
24.A company is relocating its manufacturing base to a low-cost country and is
considering a partnership with a local supplier for its key components rather than a
tender process. Although there are some concerns regarding confidentiality and
component competitiveness, the procurement director is recommending a partnership
strategy to the board of directors. The recommendation is based on a range of
advantages including, but not limited to, gaining local market knowledge.
Is this a valid recommendation?
A. No, because confidentiality risk will be higher in a partnership
B. Yes, as intellectual property costs will be lower in a partnership
C. No, local market knowledge is guaranteed in a tender process
D. Yes, as investment costs can be shared in a partnership
Answer: D
Explanation:
Partnerships provide access to local market knowledge, enable shared investments,
and mitigate risks associated with relocation. These advantages outweigh concerns
that can be managed through strong contracts and confidentiality agreements.
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25.An automotive company has hired Tom as the procurement manager. Tom is to
manage a team of two people who have worked in the department for a number of
years. Conflict exists between the two members of staff due to an overlap of
responsibilities.
Which of the following processes would be most appropriate for Tom to use to reduce
this conflict?
A. Tom could avoid mentioning the conflict and hope that it is resolved without action
B. Tom could hire an additional member of staff to take on some of the duties
C. Tom could restructure the team so both members do not have to work together
D. Tom could arrange a meeting and set performance targets for each member
Answer: D
Explanation:
Arranging a meeting to clarify roles and setting performance targets provides clear
expectations and encourages accountability. This aligns with CIPS guidelines on
managing conflicts through constructive engagement.
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26.A common reason attributed to many partnerships failing is ...
A. A bad advertising campaign
B. Not winning every contract they bid for
C. No contract being in place
D. Poor communication
Answer: D
Explanation:
Poor communication leads to misunderstandings, unmet expectations, and conflict,
undermining partnerships. CIPS stresses the importance of transparent and regular
communication to ensure alignment and success.
27.Which of the following are advantages for the buyer of early supplier involvement
with the buyer's product development team?
A. 1 and 2 only
B. 1 and 3 only
C. 2 and 3 only
D. 2 and 4 only
Answer: D
Explanation:
Early supplier involvement ensures the supplier understands process timelines and
allows the buyer to leverage supplier capabilities. This improves product development
efficiency and enhances outcomes.
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28.Philip is working with a supplier where the annual spend is low but the market risk
is high.
What portfolio analysis category would be appropriate?
A. Strategic
B. Leverage
C. Non-critical
D. Bottleneck
Answer: D
Explanation:
Bottleneck items pose high risk despite low spend. Effective management of these
suppliers minimizes supply chain disruptions, aligning with portfolio analysis
strategies.
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29.A buyer is intending to purchase a new product for their business; however, the
market has a large number of suppliers.
What would be the most beneficial way for them to initially narrow down the supply
options?
A. Look at lowest-cost suppliers only
B. Predefine minimum standards suppliers must meet
C. Go only to companies they have bought other products from
D. Preselect companies who have the largest market share
Answer: B
Explanation:
Setting minimum standards helps filter suppliers efficiently, ensuring that only capable
and reliable suppliers are considered. This approach supports both cost and quality
objectives.
30.Which one of the following is an advantage of early supplier involvement?
A. Supplier is responsible for all intellectual property risks
B. Large investment in supplier communications
C. Understanding of supplier capabilities
D. No need for supplier non-disclosure agreements
Answer: C
Explanation:
Early supplier involvement highlights supplier strengths and capabilities, enabling
collaborative development. This supports innovation and optimizes the procurement
process.
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31.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?
A. Employee rights
B. Confidentiality
C. Finance
D. Security
Answer: B
Explanation:
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.
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32.When using competitive forces theory, suppliers are powerful in which of the
following situations? Select THREE that apply.
A. There are few substitute products
B. The product is highly differentiated
C. There is potential for backward integration
D. The switching costs are high
E. The volume purchased is not important
F. The product is undifferentiated
Answer: A, B, D
Explanation:
Suppliers gain power when their products have limited substitutes, are highly
differentiated, or when switching costs are high. These factors reduce buyer leverage
and increase supplier influence, as described in Porter’s Five Forces model.
33.Which of the following are advantages of partnering?
A. Supply chain consolidation
B. Continual improvement
C. Hard to displace
D. Prioritization of transactions
Answer: A, B
Explanation:
Partnering supports supply chain consolidation and continual improvement by
fostering collaboration and shared objectives. These benefits align with the strategic
goals of building resilient and efficient supply chains.
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34.Which of the following are the stages of team development?
A. Starting, forming, benchmarking, performing
B. Forming, storming, norming, performing
C. Beginning, working, reviewing, performing
D. Introducing, forming, managing, performing
Answer: B
Explanation:
The stages of team development as defined by Tuckman include forming, storming,
norming, and performing. These stages reflect how teams evolve and mature through
collaboration and problem-solving.
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35.A textile company is purchasing a new item which is low value. This item is likely
never to be required again by the company and is widely available from many
different suppliers.
Which commercial relationship type would be most effective for the buyer to choose?
A. Adversarial
B. Closer tactical
C. Outsourcing
D. Partnership
Answer: A
Explanation:
For low-value, non-recurring items with many suppliers, an adversarial relationship
focusing on competitive pricing and minimal engagement is most appropriate.
Partnerships are unnecessary for such transactions.
36.In the 1990s, a manufacturer of portable music players partnered with a mini-disk
producer. The aim of the partnership was to reduce the size and cost of the devices
and enhance flexibility. Sales of the product after launch were low due to a
competitive launch of small digital players, which offered better flexibility to customers
at a comparable price. The partners suffered substantial loss and never recovered the
investment.
In order to mitigate the risk described, what should both partners have considered
before investing in the product? Select the TWO that apply.
A. Fast charging markers
B. Customer price expectation
C. New substitute technology
D. Cost of investment
E. Legal implication of partnering
Answer: B, C
Explanation:
Understanding customer price expectations and the potential for substitute technology
are critical in product development to anticipate market trends and competitive
threats, aligning with risk management principles.
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37.A low-cost fashion retailer based in Europe is looking at adding value in their
procurement activities. The retailer buys clothing for resale with a very small profit
margin applied, relying on volume sales to make a profit.
Which of the following added-value approaches will be the most critical for the
procurement team of the retailer to focus on with their supply chain?
A. Improving timescales
B. Quality enhancement
C. Reduction of inventory
D. Price management
Answer: D
Explanation:
Price management is crucial for low-cost retailers to maintain profitability. This
includes negotiating better pricing, managing costs effectively, and ensuring
competitive pricing for volume sales.
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38.Construct Builders Ltd works very closely with a supplier called Solid Timber Co on
house-building projects. They have a very close working relationship, sharing
investment, setting pricing levels, and looking at sharing resources. The two
companies also work closely together to set strategic directions and explore new
markets for long-term growth. There is no formal contract in place between the two
companies.
Using the relationship spectrum, what relationship does this scenario best describe?
A. Constructive
B. Transactional
C. Co-operative
D. Partnership
Answer: D
Explanation:
The relationship reflects a partnership due to the strategic alignment, resource
sharing, and focus on long-term growth, even without a formal contract. CIPS
highlights that partnerships are based on trust and collaboration.
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39.How would a buyer measure value for money from a relationship with a new
supplier for goods?
A. Audit of how suppliers promise
B. Lowest possible cost
C. Balance of quality and cost
D. Quality and volume of goods
Answer: C
Explanation:
Value for money is achieved through a balance of quality and cost, ensuring that the
goods meet performance requirements while being cost-effective, as per procurement
best practices.
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40.The executive board of a manufacturing company is requesting support from the
procurement team because the company needs to improve its levels of profitability.
After segmenting the overall spend by value and risk of supply, the senior buyer for
the company is planning to undertake a cost modeling activity. This will be undertaken
with a cross-organizational team of internal stakeholders and key strategic suppliers.
What would be the buyer's initial objective from the cost modeling activity?
A. To understand the supplier's competitive threats
B. To understand the supplier's financial status
C. To understand the supplier's pricing strategy
D. To understand the supplier's investment plans
Answer: C
Explanation:
Cost modeling helps in understanding supplier pricing strategies, identifying cost
drivers, and opportunities for negotiation or cost reduction, which supports profitability
improvements.
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41.Which of the following are examples of ways in which businesses can add value?
Select THREE that apply.
A. Through delivering excellent service
B. Creating a win-win price
C. Product features and benefits
D. Reducing customer service levels
E. Investing in customers
F. Offering convenience
Answer: A, C, F
Explanation:
Adding value involves enhancing customer experience through excellent service,
providing differentiated product features, and offering convenience. These align with
procurement strategies aimed at driving customer satisfaction and loyalty.
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42.The director of procurement for a global telecommunications firm has segmented
their expenditure and has decided to focus on developing relationships with their
bottleneck suppliers.
Is this the correct process?
A. No, as there is lots of variety of goods available
B. No, as there is vast competition
C. Yes, as there are low costs to switching suppliers
D. Yes, as there are little or no other options available
Answer: D
Explanation:
Bottleneck suppliers often control critical or scarce resources. Developing
relationships with these suppliers is crucial to mitigate risks and ensure continuity of
supply, per procurement best practices.
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43.A large office orders weekly from a stationery supplier. The items are low-cost, and
if the delivery is a day late, it does not affect the running of the office.
Where would this supplier be positioned in a supplier matrix?
A. Routine
B. Leverage
C. Critical
D. Bottleneck
Answer: A
Explanation:
Routine suppliers provide low-value, low-risk items with minimal operational impact.
These suppliers are managed with minimal engagement or oversight in a costeffective manner.
44.In the Purchasing Portfolio Matrix, a leverage product is a product in a market
where it is easy to switch suppliers and the quality is standardized. Is this TRUE or
FALSE?
A. False, the product is in a supply market which is highly complex and the product is
of low importance
B. False, the product is in a supply market which is highly complex and the product is
of high importance
C. True, the product is in a supply market which is of low complexity and the product
is of high importance
D. True, the product is in a supply market which is of low complexity and the product
is of low importance
Answer: C
Explanation:
Leverage products are characterized by high spend and low complexity, giving buyers
the ability to negotiate favorable terms due to supplier competition and
standardization.
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45.A partnership approach to a buyer-supplier relationship, as opposed to a traditional
adversarial approach, would have which of the following characteristics?
A. Greater levels of transparency
B. Increased supplier contractual terms
C. Specifications designed by the buyer
D. Shared cost benefits
Answer: A, D
Explanation:
Partnerships are built on trust and transparency, with shared benefits such as cost
reductions and improved processes. Adversarial relationships, in contrast, focus on
price and contractual obligations.
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46.Hungry Sandwich Co. produces over 5,000 freshly made sandwiches on-site every
day. The main ingredient that Hungry Sandwich Co. buys is bread. It is the item they
spend the most money on, and they have a long-term partnership agreement with a
local bakery to manufacture and supply fresh bread every morning. Using a supplier
positioning matrix, which is the appropriate category for bread for Hungry Sandwich
Co.?
A. Non-critical
B. Bottleneck
C. Abundant
D. Strategic
Answer: D
Explanation:
Bread is a strategic item due to its high spend and critical role in daily operations. A
partnership approach ensures consistent quality and reliability, aligning with strategic
supplier management principles.
47.Kyle Grant is a procurement director at ATSS Ltd and has introduced a new policy
within the procurement function. The policy requires the procurement function to
obtain quotations from multiple suppliers if a contract is worth over £10,000.
What is the primary aim of this policy?
A. To deliver an agile process
B. To ensure value for money is achieved
C. To allow procurement to select the lowest price
D. To enable a reduction in competition
Answer: B
Explanation:
Obtaining multiple quotations ensures value for money by comparing suppliers based
on cost, quality, and other criteria. It promotes competitive pricing and informed
decision-making.
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48.Rivalry between suppliers is more likely to be intense in which of the following
situations?
A. 1 and 2 only
B. 2 and 4 only
C. 1 and 3 only
D. 1 and 4 only
Answer: B
Explanation:
Intense rivalry occurs when suppliers are equally balanced and face high barriers to
exit, leading to aggressive competition to retain market share, as described in
Porter’s Five Forces model.
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49.A partnership between a software development company and a software supplier
has recently been created.
In order for the partnership to be successful, what is a critical action to take in the
early stages of their relationship?
A. Define the standards both parties are expected to meet
B. Look at costing models
C. Promote the new partnership
D. Complete audits on the performance of both parties
Answer: A
Explanation:
Defining standards ensures clear expectations and provides a foundation for
accountability and alignment, which are critical for the success of any partnership.
50.A comprehensive approach to managing the termination of a contractual
relationship would include ...
A. Attacking the personalities, not the problem
B. Setting aside the value of existing work done by both parties
C. Giving qualitative feedback only
D. Setting remedies and compensation for contractual breaches
Answer: D
Explanation:
Effective termination includes remedies and compensation to address any contractual
breaches, ensuring fairness and compliance with legal and ethical obligations.
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51.A company is about to invite tenders for a contract to clean external windows at
several premises, all at least three storeys high. It is going to do this in two stages.
For the first stage, it will issue a pre-qualification questionnaire (PQQ) and, from the
replies, select at least five potential suppliers to invite to tender.
Which of the following is a selection criterion rather than an award criterion?
A. Risk assessments at the premises
B. Method statements for previous contracts
C. Price that will be charged
D. Environmental impact assessment
Answer: B
Explanation:
Selection criteria focus on the supplier’s capability and experience (e.g., method
statements). Award criteria are used to evaluate and compare proposals during the
tender process, such as price or environmental considerations.
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52.Which of the following would be benefits of partnership sourcing? Select TWO that
apply.
A. Reduction in inflation
B. Reduction in costs
C. No need for contracts
D. Reduction in stakeholder numbers
E. Continuity of supply
Answer: B, E
Explanation:
Partnership sourcing improves efficiency through cost reduction and ensures
continuity of supply by fostering long-term, collaborative relationships with key
suppliers, as highlighted in CIPS guidelines.
53.National Hospital Trust (NHT) has entered into a partnership relationship with a
major facilities management provider. The two organizations have agreed on the
approach to undertake regular reviews and audits. The audit approach will include
which of the following?
A. Category management and supplier rationalization
B. Specification development and management
C. Lessons learned and continuous improvement
D. Macro and micro environmental analysis
Answer: C
Explanation:
Regular reviews focusing on lessons learned and continuous improvement ensure the
partnership remains effective and aligned with objectives. This supports ongoing
collaboration and operational excellence.
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54.Which of the following tender processes available to a buyer involves a PreQualification Questionnaire (PQQ) to identify, assess, and create a shortlist of
suppliers being invited to the Invitation to Tender (ITT) stage? Select TWO that apply.
A. Open Procedure
B. Mini-Competition Procedure
C. Restricted Procedure
D. Two-stage Procedure
E. Competitive Bidding Procedure
Answer: C, D
Explanation:
The Restricted and Two-stage procedures involve a PQQ stage to shortlist suppliers
before issuing an ITT. This approach is common for contracts requiring stringent
supplier qualifications.
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55.A medical consumables buyer has adopted a close relationship approach with
their suppliers that are considered to be complicated, technical suppliers. Is this the
right approach?
A. Yes, as the items are of high financial risk
B. No, as there is often a supply risk with items offered
C. Yes, as all the items supplied are off the shelf
D. No, as there are only a small number of suppliers in the marketplace
Answer: A
Explanation:
Complex and technical suppliers often involve high financial risks due to the critical
nature of their products. A close relationship ensures better collaboration, risk
management, and value generation.
56.A large construction group has a critical contract with a brick supplier. This
represents high-value spend, and the contract has a five-year duration.
What type of commercial relationship would be the most appropriate?
A. Partnership
B. Transactional
C. Closer Tactical
D. Outsourcing
Answer: A
Explanation:
Given the criticality and high value of the contract, a partnership is most suitable. This
allows for long-term collaboration, mutual investment, and risk sharing to achieve
strategic goals.
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57.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?
A. Spot buying
B. Forward buying
C. Derivative buying
D. Hedging buying
Answer: B
Explanation:
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.
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58.What are the relationship characteristics of a Partnership?
A. Short-term focus and one-off transactions
B. An adversarial relationship
C. Sharing ideas and risk
D. Focus on price competitiveness
Answer: C
Explanation:
Partnerships emphasize collaboration, shared risks, and mutual benefits. Unlike
adversarial or transactional relationships, they focus on long-term goals and joint
value creation.
59.A partnership was created between a company and one of its local suppliers when
the managing directors of each company met and thought partnering could be a good
idea. No other departments were included in the discussions. The partnership has
been in place for over a year, but neither of the companies has achieved any
additional benefits. The company has been unable to offer any increased business to
the supplier, and the supplier has been unable to improve on the quality of its
products. The partnership is going to be terminated.
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What is a possible main reason for the failure of
the partnership?
A. Poor planning
B. Market changes
C. Distance barrier
D. Cultural differences
Answer: A
Explanation:
Partnerships require careful planning, including alignment of goals, stakeholder
involvement, and clear expectations. Poor planning leads to unmet objectives and
lack of value generation, as highlighted by CIPS.
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60.Which circumstances make a buyer more attractive to the supplier?
A. Where the brand profile is high
B. When the buyer negotiates longer credit terms
C. Where the buyer exercises a stringent code of conduct
D. When the buyer is very procedural in its systems
Answer: A, C
Explanation:
Buyers with a strong brand profile and adherence to ethical standards attract
suppliers, as they provide market prestige and assurance of fair practices. This aligns
with CIPS's emphasis on ethical procurement.
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61.According to Michael Porter, what is procurement?
A. a support activity which provides a source of competitive advantage
B. a primary activity which provides a source of competitive activity
C. a primary activity which provides value for money
D. a secondary activity which provides value for money
Answer: A
Explanation:
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
62.Which of the following are considered part of the '5 Rights of Procurement'? Select
THREE.
A. place
B. quality
C. cost
D. focus
E. time
Answer: A, B, E
Explanation:
The 5 Rights of procurement are; place, quality, quantity, time, price. (Price and Cost
are not the same thing). See p.38
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63.In a monopoly market, which of the following statements is true?
A. bargaining power of suppliers is strong
B. bargaining power of buyers is strong
C. There is strong rivalry
D. There is a threat of new entrants
Answer: A
Explanation:
In a monopoly there is only one supplier- therefore their power is strong. Buyers in
this market are price takers and their power is weak. There is generally a strong
barrier to entry into a monopoly market so the threat of new entrants is low. There is
no rivalry. There are many questions in the exam on Porter's 5 Forces - see p. 39
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64.In an oliogopy market, what would a regulator do?
A. prevent price fixing and collusion
B. stop the market becoming a monopoly
C. ensure value for money for buyers
D. ensure health and safety standards
Answer: A
Explanation:
In an oliogopy, supplier power is strong. Sometimes regulators are required in the
market to prevent the group of suppliers conspiring together to artificially increase
prices. See p.40 for more information on Oligopy markets.
65.Which of the following would not affect rivalry in a marketplace? Select TWO.
A. industry growth or decline
B. exit barriers
C. switching costs
D. supply chain disruption
E. legislative changes
Answer: D, E
Explanation:
Legislative changes wouldn't affect rivalry in a market as all suppliers would be
equally as affected, the same with supply chain disruptions. Factors which do affect
rivalry include; industry growth and decline, product differences, brand identity,
switching costs, diversity of competitors and exit barriers. These are listed on p.41
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66.Which of the following factors would you use to analyse the macro-environment?
Select THREE.
A. social
B. cultural
C. political
D. philosophical
E. legislative
Answer: A, C, E
Explanation:
STEEPLE is what is used to analyse the macro-environment; the factors are; social,
technological, economic, environmental, political, legislative and ethical. Details of this
can be found on p.43-44
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67.Gabriel is a procurement manager who wishes to explore a new avenue to procure
products for his company. His manager has told him that he should invite internal
stakeholders to a meeting to get their feedback. Who should Gabriel invite? Select
THREE.
A. end-users
B. legal department
C. customers
D. suppliers
E. employees
Answer: A, B, E
Explanation:
Internal stakeholders are those who work within the business so include the legal
department, employees and end-users. End-users mean those people and
departments who will be using the product or service. For example if Gabriel is
procuring new software- an end-user would be anyone who would be using that
software (whether they're employees, volunteers or agencies). CIPS outlines types of
stakeholders on p.64
68.Value for money is often described at the ‘three Es’; economy, efficiency and
effectiveness. However some people consider a 4th E which refers to the public
sector.
What is the fourth E?
A. Equality
B. Environment
C. Equity
D. Ethics
Answer: C
Explanation:
Equity is the fourth E- this means the extent to which the service is available. See
p.65 for details on the 4 Es
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69.A garden centre has recently purchased some lollypop sticks to use as plant
labels. The staff have written the name of the plant on the lollypop stick and put it next
to the plant. This helps them identify which plant is which. However, after a couple of
weeks, the lollypop sticks have become mouldy and the writing has faded. Staff are
now struggling to identity their plants. The Manager of the garden centre is
considering returning the lollypop sticks and asking for a full refund as they were not
fit for purpose.
Can the Manager do this?
A. Yes- the lollypop sticks have gone mouldy- this is unacceptable
B. Yes- so long as the manager kept the receipt
C. No- as this was not the lollypop sticks intended purpose
D. No- the manager cannot prove that the product is faulty
Answer: C
Explanation:
The correct answer is ‘no- as this was not the lollypop sticks intended purpose’.
When deciding if something is fit for purpose, you must consider its intended and
common purpose. In this case it would be for making lollypops. As the garden centre
is using them for something other than their intended purpose, they can’t complain if
it doesn’t work. Fit for purpose is discussed on p.65 p.s. there’s a QUESTIO N N O :
like this in the real exam C it’s just not lollypop sticks ; )
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70.Fred is a new procurement manager at a large engineering firm. They procure
100s of components and use these to make kitchen appliances such as kettles and
toasters. He has been asked by his manager to look into procuring a new component
which will go into a new environmentally friendly kettle and has been asked to ensure
that the firm receives value for money.
What should Fred do?
A. Hold an open competition
B. Contact current suppliers to try and get a good deal
C. Invite known suppliers to bid for the contract
D. Put together a business case to make the product in-house
Answer: A
Explanation:
Fred should hold a competition as this is a ‘key way of achieving value for money’
p.67. Fred shouldn’t put a business case together to make the product in-house
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without doing a make vs buy analysis, and that analysis showing make is the way to
go. As the firm buy in 100s of components, it’s very unlikely that making the
component in-house would bring ‘value for money’. He should also be careful of only
looking at current suppliers or known suppliers- the best supplier of this new
component might be unknown to the engineering firm at present.
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