Verified & Correct L4M6 Practice Test Reliable Source Nov 02, 2022 Updated [Q26-Q42]

Verified & Correct L4M6 Practice Test Reliable Source Nov 02, 2022 Updated [Q26-Q42]

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Verified & Correct L4M6 Practice Test Reliable Source Nov 02, 2022 Updated

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QUESTION 26
Sandra is a buyer for a large supermarket and has been increasing unhappy with the performance of a long-term supplier of bananas. Over time the deliveries have become unreliable and this has had impacts on the supermarket’s profitability. What should Sandra do first?

Obtain business approval to terminate the contract

Develop an exit strategy

Review the market and look for an alternative supplier

Give written notice to the supplier of plans to terminate

The first step is to obtain business approval to terminate. If Senior Management don’t give approval, then the rest of the stages can’t happen and Sandra will be stuck with her current banana supplier. There’s a good diagram on p.109 detailing the steps to supplier termination.

QUESTION 27
ABC is a company which sources a vital component from a supplier. There are only a few suppliers in the industry and without this component, ABC would not be able to produce their final product. What type of relationship should ABC seek to develop with their supplier?

outsource

strategic alliance

transactional

arms length

As the component is vital to their business, ABC should seek a collaborative relationship with the supplier. There are three types of collaborative relationship (co-destiny, partnership and strategic alliance). Of these only strategic-alliance is given as an option. Remember – strategic purchase = collaborative relationship with supplier. There are many questions on the Relationship Spectrum on the exam. See p.5 for more details

QUESTION 28
Kirsty is designing a specification for a new contract and wants to include some qualitive KPIs for the new supplier, as well as quantitative. Which of the following could she include? Select TWO.

Deliveries in full and on time

Information sharing

Trust

Cost savings

Early supplier involvement

The correct answers are information sharing and trust. Further qualitative KPIs are listed on p.102. Deliveries in full and on time would be a quantitative KPI and early supplier involvement is not a KPI at all.

QUESTION 29
Barry is a procurement manager at Sea Biscuits, a company which manufactures biscuits in the shape of dolphins and starfish. He works in an office that orders stationary regularly for its 100 person workforce. Stationary is a low-spend category item and Barry often orders stationary from different suppliers based on which supplier can provide the item the cheapest at that point in time. According to the Kraljic matrix, what type of suppliers provides stationary to Barry?

leverage

strategic

routine

Bottleneck

Stationary is a routine item; it is ordered often (as Barry uses different suppliers), it is a low category spend, and low risk to the business’ operations (a late delivery of pens isn’t going to stop the company making its biscuits). There are lots of questions on Kraljic in the exam – do revise this topic and ensure you understand each of the four quadrants of the matrix (see p.20)

QUESTION 30
Value for money in the private sector is concerned with what?

Getting the best price possible

Shareholder profit and business benefit

Ensuring taxpayers’ money is spent wisely

Getting the best quality possible

Value for money in the private sector is about achieving shareholder profit and busines benefit (p.66). In the public sector it is about ensuring taxpayers’ money is spent wisely. Value for money is a mixture of price and quality.

QUESTION 31
Which of the following would you use to qualify new suppliers? Select THREE.

competency

cash

culture

cooperation

coordination

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)

QUESTION 32
Which of the following are not a valid reasons to terminate a relationship with a supplier? Select TWO.

The supplier suddenly increases prices

The supplier made one late delivery

Supply base rationalisation

The supplier becomes insolvent

The supplier has a change in senior management

Two invalid reasons are; one late delivery and a change in senior management. Valid reasons to terminate a relationship are listed on p.107 and include the three listed here, as well as a material breach, damage to reputation and the supplier merges or is acquired by another company.

QUESTION 33
The Kraljic Model is most useful for which aspect of procurement?

category management

cost analysis

risk management

cost reduction

The Kraljic model “plays a key part in category management” p.19 of the textbook. Category Management = the spend in an organisation, broken down into categories of related products (e.g. IT, facilities management, marketing). Each of these categories could be plotted on the Kraljic Matrix.

QUESTION 34
In an oliogopy market, what would a regulator do?

prevent price fixing and collusion

stop the market becoming a monopoly

ensure value for money for buyers

ensure health and safety standards

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.

QUESTION 35
Varying levels of commitment is one reason why many partnerships fail. Why is this?

It can lead to a lack of trust

One party doesn’t fulfil their KPIs

Sufficient time and resources are put in

Less profit is made.

The correct answer is ‘It can lead to a lack of trust’ – this is a quote from p.162. The other answers are all incorrect; in a partnership KPIs are joint between the parties- so there wouldn’t be a situation where one party doesn’t fulfil their KPIs. Commitment doesn’t necessarily have a direct correlation with profit so that answer is incorrect. ‘Sufficient time and resources are put in’ is a positive thing, so can’t be a reason who a partnership fails.

QUESTION 36
Grey Stone Memorial Hospital is a private medical facility which has an idea for a vaccine to a deadly disease, but does not have the capacity to make the vaccine itself. It is considering partnering with a well-known pharmaceutical company in order to bring the vaccine to market. What is the biggest risk to Grey Stone?

Intellectual Property Rights

Increased Costs

Low quality product

Uninformed stakeholders

The correct answer is ‘Intellectual Property Rights’. Grey Stone will need to share its idea for the vaccine with the pharmaceutical company and this is risky if there is no trust between the parties. See p.134 for more information on Risks of Partnerships.

QUESTION 37
A competitive advantage can be gained by doing what?

Increasing your prices

Engaging in market research

Building better relationships with primary stakeholders

Completing formal tenders for all buying requirements

The correct answer is ‘Building better relationships with primary stakeholders’. This is a direct quote from the start of chapter 2.2: ‘building better relationships with primary stakeholders such as employees, customers, suppliers and communities could lead to increased shareholder wealth by developing a competitive advantage’. The other three options wouldn’t give you a competitive advantage; increasing prices would do the opposite, engaging in market research won’t give you a competitive advantage unless you do something with that research such as implement a change to your business, and completing formal tenders for everything would be a waste of time and resources- there’s no need to tender for low value, low risk items. See p.80

QUESTION 38
One of the fist stages of designing a Partnership is to come up with joint KPIs. These should be:

Measurable, achievable and time-bound

Relatable, specific and measurable

Time bound, difficult and relevant

Significant, measurable and achievable

The correct answer is Measurable, achievable and time-bound. This is from SMART KPIs on p. 151. Smart stands for specific, measurable, achievable, relevant, time-bound. In the exam they come up in different orders so be careful.

QUESTION 39
Which of the following are Intellectual Property Rights that you would you encounter in procurement and supply contracts? Select THREE.

Method Statements

Risk Assessments

Patents

Copywrite

Trademark

Intellectual Property Rights include; Patents, Copywrite, Trademarks and Trade Secrets. P.114

QUESTION 40
Which of the following documents can be used at the selection stage of a tender process to ensure that short listed bidders meet the requirements of the buying organisation? Select TWO.

Request for Information

Request for Quotation

Pre-Qualification Questionnaire

Invitation to Tender

Request for Information and Pre-Qualification Questionnaire can be used for short-listing suppliers. Request for Quotation is used when the only variable is price and you would like suppliers to submit a price for you. Invitation to Tender would be the next stage after RFI / PPQ- this is sent out to those suppliers who have passed selection, and details the second stage of the competition. See p.75 for more details.

QUESTION 41
Which of the following is an advantage for the suppler of entering into a partnership with a buyer?

They may gain an increased volume of business

There is more flexibility when selling the product

The Intellectual Property Rights of the buyer become yours

They no longer have to try as hard to win business.

The correct answer is ‘They may gain an increased volume of business’. The other options are just not true. See p.130 for advantages and disadvantages of partnerships from both the buyer and supplier’s perspective. This is a hot topic for the exam.

QUESTION 42
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 team composed of internal stakeholders

A cross-functional team

A team of procurement experts

A team composed of internal and external stakeholders

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

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CIPS L4M6 Exam Syllabus Topics:

Topic	Details
Topic 1	The link between relationships as a process and the achievement of added value outcomes Understand the dynamics of relationships in supply chains
Topic 2	Positive relationships through positive contributions Differentiate between different types of commercial relationships in supply chains
Topic 3	Compare team management techniques to ensure positive stakeholder relationships Identify the processes for terminating stakeholder relationships
Topic 4	Understand processes and procedures for successful working with stakeholders Identify items potentially suitable for partnership sourcing
Topic 5	Matrices to identify supply, supplier and purchaser positioning Supplier identification, assessment and selection
Topic 6	Define the standards that potential partners will be expected to meet Identify the competitive forces that impact on relationships in supply chains
Topic 7	Appraise portfolio analysis techniques to assess relationships in supply chains Analyse the concept of partnering and where it is a suitable approach
Topic 8	Compare the practical considerations of stakeholder management Compare the sources of added value that can be achieved through supply chain relationships

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