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NEW QUESTION # 129
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. No- as this was not the lollypop sticks intended purpose
- B. Yes- the lollypop sticks have gone mouldy- this is unacceptable
- C. No- the manager cannot prove that the product is faulty
- D. Yes- so long as the manager kept the receipt
Answer: A
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 Question: like this in the real exam - it's just not lollypop sticks ; )
NEW QUESTION # 130
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. Ethics
- B. Environment
- C. Equity
- D. Equality
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
NEW QUESTION # 131
Cigarettes and alcohol are often described as having an 'inelastic price'. What does this mean?
- A. Changes in price will greatly affect how much of the item is bought
- B. Changes in price will not affect how much of the item is bought
- C. The product is subject to age restrictions
- D. The product is subject to high rates of tax
Answer: B
Explanation:
A product with an 'inelastic price' means that consumption doesn't really depend on how much it costs. So you could increase the price of alcohol and cigarettes and people would tend to still buy them. A product with an elastic price means that a change in price would have a large affect on the number of people who bought the item. See p.95 for more details on price elasticity.
NEW QUESTION # 132
Significant differences in corporate cultures can lead to the failure of a partnership relationship between two organisations. Is this statement correct?
- A. No, it is easy to change corporate culture so the two organisations will align quickly
- B. Yes, the compatibility of cultures should be considered at the outset
- C. Yes, in a partnership the organisations merge, so the cultures must be the same
- D. No, the organisations can continue to operate separately so this is not an issue
Answer: B
Explanation:
Comprehensive and Detailed Explanation:
Cultural compatibility is crucial in partnership relationships. Differences in corporate culture can lead to misunderstandings, misaligned objectives, and conflicts, ultimately jeopardizing the partnership's success.
Therefore, assessing cultural compatibility at the outset is essential.
Reference:
CIPS L4M6 Study Guide
NEW QUESTION # 133
Which of the following are characteristics that differentiate between a partnership relationship and traditional contracting relationships? Select THREE.
- A. Lower costs
- B. No defined end period
- C. Early supplier involvement
- D. No tender process
- E. Supplier KPIs
Answer: B,C,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 # 134
Lion Manufacturing is about to enter into a partnership with Penguin Logistics, who will provide delivery to and from Lion Manufacturing's factories and warehouses. In this relationship, what type of negotiation strategy should Lion manufacturing use?
- A. win: win
- B. win: lose with the buyer winning
- C. lose: lose
- D. win: lose with the supplier winning
Answer: A
Explanation:
partnerships are always win: win p.7
NEW QUESTION # 135
Under what circumstances should a competitive tender not be completed? Select TWO.
- A. When there is a clear specifications
- B. When there is not a clear specification
- C. When the items are of high value
- D. When the items are of low value
Answer: B,D
Explanation:
Note the word 'NOT' in the question. In order for a competitive tender to be successful, there should be a clear specification in place (i.e. you need to know what you want, in order for suppliers to bid for it).
Competitive tendering should also only be used for high value purchases; it's time consuming to do, so you wouldn't do it for low value items such as pens for the office. Therefore the correct answer to this question is
'items are of low value' and 'there isn't a clear specification'. There's a useful table on p.73 of when you would and wouldn't use a competitive tender.
NEW QUESTION # 136
Which of the following are correct statements with regards to a joint venture and with regards to a strategic alliance? Select TWO that apply.
- A. A strategic alliance is managed by both partners
- B. A strategic alliance creates a new company formed between the partners
- C. A joint venture is also known as vertical integration
- D. In a joint venture, a new company is formed between the partners
- E. A strategic alliance is a permanent arrangement
Answer: A,D
Explanation:
Comprehensive and Detailed Explanation:
* Statement B:A strategic alliance is an agreement between two or more parties to pursue a set of agreed- upon objectives while remaining independent organizations. It is typically managed jointly by the partners to achieve mutual benefits without forming a new legal entity.Wikipedia
* Statement C:In a joint venture, two or more parties create a new, separate legal entity by contributing equity, and they share in the revenues, expenses, and control of the enterprise. This new company is formed to undertake specific business activities.
Reference:
CIPS L4M6 Study Guide
NEW QUESTION # 137
Under which circumstances would a partnership sourcing approach be used?
- A. 1 and 3 only
- B. 2 and 4 only
- C. 1 and 2 only
- D. 1 and 4 only
Answer: A
Explanation:
Partnership sourcing is ideal for high-spend, high-risk situations where collaboration mitigates risks and maximizes value through innovation, efficiency, and trust.
NEW QUESTION # 138
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. No- as this was not the lollypop sticks intended purpose
- B. Yes- the lollypop sticks have gone mouldy- this is unacceptable
- C. No- the manager cannot prove that the product is faulty
- D. Yes- so long as the manager kept the receipt
Answer: A
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 question like this in the real exam - it's just not lollypop sticks ; )
NEW QUESTION # 139
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 add value to the order
- B. Ability to produce low-cost widgets
- C. Ability to deliver by the deadline
- D. Ability to meet ISO standards
Answer: C
Explanation:
When procuring critical components essential for the continuity of manufacturing processes, timely delivery becomes paramount. Delays can halt production lines, leading to significant financial losses.Therefore, the supplier's ability to meet delivery deadlines is the key selection criterion, as emphasized in the CIPS L4M6 study guide.
NEW QUESTION # 140
In an oliogopy market, what would a regulator do?
- A. stop the market becoming a monopoly
- B. prevent price fixing and collusion
- C. ensure value for money for buyers
- D. ensure health and safety standards
Answer: B
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 # 141
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 a RFQ
- B. Issue an ITT
- C. Issue a RFI
- D. Issue an OJEU
Answer: C
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 # 142
When using portfolio analysis, in which segment would you place a product with high expenditure, potentially provided by a large number of suppliers?
- A. Leverage
- B. Acquisitive
- C. Strategic
- D. Critical
Answer: A
Explanation:
Comprehensive and Detailed Explanation:
In the Kraljic Matrix, products are categorized based on supply risk and profit impact:
* Leverage items:These have a high profit impact but low supply risk. They are often high-expenditure items available from multiple suppliers, allowing the buyer to leverage purchasing power to negotiate better terms.
Given the product has high expenditure and is available from many suppliers, it fits into the 'Leverage' category.
Reference:
CIPS L4M6 Study Guide
NEW QUESTION # 143
Which of the following are the stages of team development?
- A. Beginning, working, reviewing, performing
- B. Starting, forming, benchmarking, performing
- C. Introducing, forming, managing, performing
- D. Forming, storming, norming, performing
Answer: D
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.
NEW QUESTION # 144
Marcus is an account manager for a company that sells maintenance spares for air conditioning units. He has a customer who persistently pays late, is very demanding in terms of constant requests, and the profit margin on the account is minimal. If Marcus were to use a supplier preferencing model to map this customer, what category would he place them into?
- A. Development
- B. Nuisance
- C. Exploitable
- D. Core
Answer: B
Explanation:
Comprehensive and Detailed Explanation:
In the Supplier Preferencing Model, customers are categorized based on their attractiveness and value to the supplier. A "Nuisance" customer is characterized by low profitability and high maintenance, often requiring disproportionate resources relative to the benefits they provide. Such customers may be deprioritized or even considered for discontinuation by the supplier.
Reference:
CIPS L4M6 Study Guide
NEW QUESTION # 145
One of the fist stages of designing a Partnership is to come up with joint KPIs. These should be:
- A. Significant, measurable and achievable
- B. Time bound, difficult and relevant
- C. Relatable, specific and measurable
- D. Measurable, achievable and time-bound
Answer: D
Explanation:
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.
NEW QUESTION # 146
A company has just hired a new cleaning firm to clean their offices. The specification for the clean was detailed in an appendix in the contract and included a list of pre-approved products that the cleaning firm should use. The cleaners that were sent to site had not read the contract and therefore did not use the appropriate products. What is the reason for the failure of this?
- A. Communication overload
- B. Poor communication
- C. Miscommunication
- D. Distortion of the facts
Answer: B
Explanation:
This is an example of poor-communication. The information was not passed from the person who signed the contract to the staff on site who were to do the cleaning. See p.158 on communication issues.
NEW QUESTION # 147
In public sector procurement, according to EU legislation, certain items must be procured via open- competition. What type of items are these?
- A. Items of high value
- B. Items that are produced by lots of suppliers
- C. Items that are imported from outside the EU
- D. Items of strategic importance
Answer: A
Explanation:
The correct answer is 'items of high value'. This links into the EU procurement principle of 'Proportionality' meaning that the procurement process must be proportionate to the value of the contract. Therefore, high value contracts must be procured via competition. What is considered 'high value' is decided by 'thresholds'.
These are amended every 2 years to account for inflation etc, but you don't need to know what the thresholds are for this exam. P.75
NEW QUESTION # 148
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. It will allow for consolidation in the supply chain
- B. Sudden changes in the marketplace
- C. The buyer wishes to create a new product and requires input from a supplier
- 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 # 149
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. Yes, as they present a great deal of risk to the organization
- B. Yes, as these are low-value items
- C. No, as there are many suppliers available
- D. No, as these are critical items to the buying organization
Answer: C
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.
NEW QUESTION # 150
Which of the following factors are considered when using the Kraljic Model to determine the kind of supply relationships and sourcing approaches for a category of items? Select TWO that apply.
- A. Supplier pre-qualification
- B. The level of spend
- C. Key performance indicators
- D. The type of tendering
- E. The market structure
Answer: B,E
Explanation:
Comprehensive and Detailed Explanation:
The Kraljic Matrix is a strategic tool used to segment the supply base and develop differentiated purchasing strategies based on two key dimensions:
* Profit Impact (Level of Spend):This refers to the financial significance of the item or service to the organization. High expenditure items have a greater impact on profitability and thus require more strategic sourcing approaches.
* Supply Risk (Market Structure):This pertains to the complexity and dynamics of the supply market, including factors like the number of suppliers, market competitiveness, and potential for supply disruptions. Understanding the market structure helps in assessing the risk associated with sourcing particular items.
By analyzing these two factors, organizations can categorize their purchases into four quadrants-non-critical, leverage, bottleneck, and strategic items-and tailor their sourcing strategies accordingly.
Reference:
CIPS L4M6 Study Guide
NEW QUESTION # 151
What is a disadvantage of including qualitative KPIs into a contract?
- A. They are hard to measure
- B. They can lead to poor supplier performance
- C. They pull focus from the more important quantitative KPIs
- D. They make the buyer seem weak
Answer: A
Explanation:
The correct answer is 'They are hard to measure' p.103
NEW QUESTION # 152
Which of the following are advantages for the buyer of early supplier involvement with the buyer's product development team?
- A. 2 and 4 only
- B. 1 and 3 only
- C. 2 and 3 only
- D. 1 and 2 only
Answer: A
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.
NEW QUESTION # 153
Which of the following are Intellectual Property Rights that you would you encounter in procurement and supply contracts? Select THREE.
- A. Method Statements
- B. Risk Assessments
- C. Copywrite
- D. Trademark
- E. Patents
Answer: C,D,E
Explanation:
Intellectual Property Rights include; Patents, Copywrite, Trademarks and Trade Secrets. P.114
NEW QUESTION # 154
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