L4M6 Practice Exams and Training Solutions for Certifications
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CIPS L4M6 Exam Syllabus Topics:
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NEW QUESTION 17
Which of the following are characteristics that differentiate between a partnership relationship and traditional contracting relationships? Select THREE.
- A. No defined end period
- B. Early supplier involvement
- C. Lower costs
- D. No tender process
- E. Supplier KPIs
Answer: A,B,D
Explanation:
The correct answers are; no tender process, early supplier involvement and no defined end-period. A partnership wouldn't automatically mean lower costs, and in a partnership the KPIs are usually a joint performance measurement rather than set to the supplier. For more information on the difference between partnerships and contractual relationships see p.124-5
NEW QUESTION 18
Jenny is a procurement manager who works in the public sector. She has been charged with organising a tender to source new Xray machines for a hospital and to ensure that they receive 'value for money'. Which of the following should Jenny consider when drafting her ITT?
- A. Price only
- B. Availability
- C. Whole life costs
- D. Equity
Answer: C
Explanation:
Jenny should consider whole life costing. Ensuring value for money means considering a combination of price and quality throughout the lifetime of the product. See p.65 for more on 'Achieving Value for Money'
NEW QUESTION 19
Which of the following are recognised organisational culture types? Select THREE
- A. Team
- B. Role
- C. Person
- D. Knowledge
- E. Power
Answer: B,C,E
Explanation:
The correct answer is power, role and person. This is part of Hardyman's Cultural Types on p.169 (there are four- the other one is task). There's quite a few questions on this in the exam, so it's worth doing some additional research on this prior to the exam as the study guide doesn't provide much detail on this.
NEW QUESTION 20
In a monopoly market, which of the following statements is true?
- A. There is a threat of new entrants
- B. There is strong rivalry
- C. bargaining power of suppliers is strong
- D. bargaining power of buyers is strong
Answer: C
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
NEW QUESTION 21
Pablo has run an open- competition to secure a new contract for a supplier of paper for his Birthday Card making company. He has received 10 submissions from various suppliers and needs to put a team together to evaluate the bids. What type of team should Pablo consider?
- A. A team of procurement experts
- B. A team composed of internal and external stakeholders
- C. A cross-functional team
- D. A team composed of internal stakeholders
Answer: C
Explanation:
Pablo should use a 'cross-functional team'. CIPS love 'cross-functional teams' and refer to them frequently throughout the study guide. A cross-functional team is people from different departments who come together for a purpose, such as to evaluate a tender. The benefit of using a cross-functional team is that you get people with different experiences and knowledge. So in this example a Cross-Functional team could compose of people from various departments such as procurement, logistics, manufacturing and legal. P.76
NEW QUESTION 22
David is sourcing a new cleaning contract as he is not impressed with his current cleaning company's performance. He believes that his current supplier has been overcharging him, and due to budget cuts, he is keen to secure a lower price than what he is paying now. His Manager has suggested using an e-auction as the procurement method. Is this the correct way forward?
- A. No- a reverse e-auction will ensure only high quality suppliers bid for the opportunity
- B. Yes- an e-auction is an electronic system so it will be easy for David to compare bids
- C. No- a reverse e-auction would be more suitable as it will secure the lowest price
- D. Yes- an e-auction will allow David to secure the lowest possible price
Answer: C
Explanation:
The correct answer is 'No- a reverse e-auction would be more suitable as it will secure the lowest price'. An E-auction is something like eBay- where bids go up in price. If David wants to secure a lower price, he should use a Reverse E-Auction- where suppliers bid lower than the previous bid in order to win. For example, Supplier 1 offers to fulfil the contract at £50k per year, Supplier 2 can offer to beat this price by bidding £48k per year. Although Reverse E-Auctions may ensure cheaper prices, there are a lot of disadvantages to using this method. See p.21 and p.76 for more information
NEW QUESTION 23
What is a disadvantage of including qualitative KPIs into a contract?
- A. They are hard to measure
- B. They make the buyer seem weak
- C. They can lead to poor supplier performance
- D. They pull focus from the more important quantitative KPIs
Answer: A
Explanation:
The correct answer is 'They are hard to measure' p.103
NEW QUESTION 24
When developing a supplier partnership, a buyer can take either a strategic or reactive approach. What would be a reason for a reactive approach?
- A. The buyer wishes to create a new product and requires input from a supplier
- B. Sudden changes in the marketplace
- C. It will allow for consolidation in the supply chain
- D. You discover that the supplier has a high profit margin
Answer: B
Explanation:
The correct answer is 'Sudden changes in the marketplace' - this is a reason a buyer would be reactive. Reactive is when something happens to you and it forces you to act in a certain way. The other options would be strategic rather than reactive. P. 163
NEW QUESTION 25
In an oliogopy market, what would a regulator do?
- A. prevent price fixing and collusion
- B. ensure value for money for buyers
- C. ensure health and safety standards
- D. stop the market becoming a monopoly
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.
NEW QUESTION 26
The ABC Analysis, also known as the Pareto Analysis, is a technique that can be used by procurement to which purpose?
- A. supplier positioning
- B. relationship spectrum
- C. cost engineering
- D. cost analysis
Answer: A
Explanation:
ABC / Pareto is a "Portfolio Analysis Technique to assess the relationships in a supply chain". This, along with the Kraljic Matrix are two examples of "Supplier Positioning Models". See chapter 2.1 p.17 for more details on this
NEW QUESTION 27
Francisco has entered a partnership with Pedro, who is a key supplier, and wants to ensure that the partnership achieves all of Francisco's goals. As well as qualitative and quantitative KPIs, what other measures could Francisco take to ensure the partnership is a success?
- A. Do frequent appraisals on the supplier
- B. Threaten the supplier with termination if he underperforms
- C. Conduct regular audits
- D. Ensure there is a damages clause in the contract
Answer: C
Explanation:
The correct answer is 'Conduct regular audits'. This is explained on p.153. You wouldn't do an appraisal on a supplier in a partnership relationship as both parties are equal. Threatening a partner isn't good for the relationship and a damages clause would be used in a contractual relationship rather than a partnership.
NEW QUESTION 28
Danny is procuring a new IT software, which he doesn't know much about. He has done a bit of research on the internet but is still unsure how much he can expect to pay. What should be Danny's next step?
- A. Issue an ITT
- B. Issue a RFI
- C. Issue an OJEU
- D. Issue a RFQ
Answer: B
Explanation:
Danny should issue a RFI (Request for Information). His next step would be to find out more about the products available by asking suppliers for information- this will help him put a spec together before he goes out to tender. The other options mean; RFQ - request for quotation- when you ask suppliers to submit a price. ITT- Invitation to tender - a document you send out to suppliers which details all the information about the tender (this usually involves both price and quality components of assessment). OJEU- Official Journal of the European Union- where tenders for the Public Sector are published. For more info on RFI see p.74
NEW QUESTION 29
The Pareto Principle is sometimes also known as what?
- A. Cost Engineering
- B. Five Forces
- C. JIT
- D. ABC Analysis
Answer: D
Explanation:
Pareto is the 80:20 rule- this can be adapted to talk about supplier relationships, where instead of having 2 categories there are now 3 (A B and C). CIPS use the terms Pareto and ABC interchangeably. See p.16 for further information
NEW QUESTION 30
Early Supplier Involvement can be described as a collaborative relationship between a buyer and a supplier to develop a new project. Handfield's model describes four different levels of supplier involvement ranging from none to 'black box' (which is when the design is primarily driven by the supplier. What other level features on this model?
- A. Grey Box - when the involvement is buyer driven
- B. White Box - when there is informal integration and the buyer consults with a supplier on a design
- C. Red Box- when the supplier provides legal advice to the buyer on areas such as copywrite
- D. Blue Box - when the buyer creates the product without input from the supplier
Answer: B
Explanation:
The Handfield ESI model is on p.98 and comprises of Black Box, Grey Box, White Box and None. Therefore Red and Blue can be automatically discounted. The correct answer is White Box as the definition given is correct. Grey Box is a formalised supplier integration; joint development activity between buyer and supplier. I have no idea why Handfield calls his system after coloured boxes- but it's only briefly mentioned in the study guide and is not likely to be a big topic in the exam.
NEW QUESTION 31
Kinky Boots Ltd provides high heeled shoes in large sizes. Their target market are Drag Queens. There are a couple of rival shoe manufacturers in this market and Kinky Boots Ltd offer the cheapest high heels. What strategy is Kinky Boots Ltd employing in terms of competitive advantage?
- A. differentiation
- B. cost leadership
- C. differentiation focus
- D. cost focus
Answer: D
Explanation:
This is 'cost focus' - Kinky Boots is both focusing on being a cost leaser (by providing the cheapest products) and focusing on a niche market (drag queens). When these two strategies are combined it is called 'cost focus'. There's a couple of questions on Porter's Generic Strategies in the exam- there's a useful diagram of this on P.13
NEW QUESTION 32
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