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CIPS
CIPS Level 4 Diploma in Procurement and Supply
L4M6
Supplier Relationships Questions and Answers

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Questions # 1:

The Public Sector in the UK is unable to enter into formal partnership relationships with any supplier. Is this statement TRUE?

Options:

Yes- the Public Sector is regulated by EU procurement regulations which prohibits this

Yes- the Public Sector is unable to enter partnerships because they operate in a monopoly market

No- the Public Sector can enter into partnership relationships with suppliers providing they have tendered the opportunity

No- the Public Sector can enter into partnership relationships when contracts are over the threshold value.

Answer

Explanation

The correct answer is ‘Yes- the Public Sector is regulated by EU procurement regulations which prohibits this’. This is stated on p.122. Please note that this study guide and exam were written before Brexit. Once Brexit happens, nobody knows what will happen with this.

Questions # 2:

At what stage of the relationship cycle could you use Carter's 10 Cs?

Options:

on-boarding

qualification

segmentation and risk management

development and innovation

Answer

Explanation

Carter's 10 Cs are a way to qualify (aka shortlist) a supplier. See p.11 for more details on this and p.10 for the stages of the relationship cycle.

Questions # 3:

George is running a competition to find a supplier to install solar panels on the roof of his factory. The energy this produces will power some of the machines. Cost is an important factor, but there are also other considerations that are important such as how long the solar panels will last, and the maintenance costs if they ever break. What should George do?

Options:

Use a weighted award criteria

Only invite suppliers he knows will be able to provide good quality products which won’t break

Run a separate tender for a company who can provide reactive maintenance to the solar panels

Evaluate the bids on price only as this is an important factor

Answer

Explanation

George should use a weighted award criteria – this will allow him to judge suppliers not only on cost, but also on the quality of their products and whether or not they can provide maintenance. For example George could weight the bids in this way; 40% cost, 30% durability of the panels and 30% maintenance costs. For more information on how weighted award criteria works see p.78

Questions # 4:

‘tail spend’ is a common category used in procurement and describes a category of items. What characteristics do theses items have?

Options:

High value, low volume

High value, high volume

Low value, high volume

Low value, low volume

Answer

Explanation

Tail spend items are low value, high volume. P. 132

Questions # 5:

Which one of the following is an advantage of early supplier involvement?

Options:

Supplier is responsible for all intellectual property risks

Large investment in supplier communications

Understanding of supplier capabilities

No need for supplier non-disclosure agreements

Answer

Explanation

Early supplier involvement highlights supplier strengths and capabilities, enabling collaborative development. This supports innovation and optimizes the procurement process.

Questions # 6:

Which of the following are elements of a business that can develop a company's competitive advantage? Select THREE.

Options:

cost focus

cost leadership

human resource management

organisation culture

natural resources

Answer

C, D, E

Explanation

This is one of those questions you have to read carefully- it asks for 'elements of a business'. Cost focus and cost leadership are ways a company can improve their competitive advantage, but they're not elements of a business. The other three options are. Porter created a list of elements of a business that can help a company's competitive advantage- these can be found on p.33-34

Questions # 7:

A partnership approach to a buyer-supplier relationship, as opposed to a traditional adversarial approach, would have which of the following characteristics?

Options:

Greater levels of transparency

Increased supplier contractual terms

Specifications designed by the buyer

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.

Questions # 8:

Harry has just entered into a partnership with a key supplier. Although he is excited about the prospect, he thinks it’s a good idea to set some goals and KPIs. Which of the following criteria should Harry use to decide if a KPI is appropriate?

Options:

Measurable, achievable and relevant

Relatable, precise, and measurable

Time bound, difficult and relevant

Significant, measurable and achievable

Answer

Explanation

The correct answer is Measurable, achievable and relevant. 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.

Questions # 9:

A 'restricted market' is likely to arise when the entry costs for new suppliers are prohibitively high, and levels of market profitability amongst existing suppliers may be relatively low. Is this a true statement?

Options:

No, entry costs are low in all markets due to technology, and this is increasing profitability significantly

Yes, these markets usually have only a small number of competent and capable suppliers

No, usually these markets have a regular flow of new suppliers entering them

Yes, new entrants are low; however, due to high competition, profit levels are always very high

Answer

Explanation

Comprehensive and Detailed Explanation:

Arestricted marketis characterized by:

High entry barriers: Significant capital investment, stringent regulatory requirements, or specialized knowledge needed to enter the market.

Limited profitability: Existing suppliers may operate on thin margins, deterring new entrants.

These factors result in a market with few competent and capable suppliers, limiting competition and options for buyers.

[Reference:, CIPS L4M6 Study Guide, , , ]

Questions # 10:

Matt Blanche is the manager of a procurement team. Two high-performing individuals in the team have regular conflicts between them. Which of the following resolutions would be appropriate to resolve the conflict? Select all that apply.

Options:

Set up individual meetings with the staff members to see if the issues are personal or work-related

Set up a meeting with the individuals and set mutual targets for both of them

Move one of the staff members to another team

Avoid the issues and let the staff members resolve their differences themselves

Answer

A, B

Explanation

Comprehensive and Detailed Explanation:

Effective conflict resolution involves:

Individual Meetings:Understanding the root cause of the conflict by discussing with each individual separately to determine if issues are personal or work-related.

Joint Meetings with Mutual Targets:Bringing the individuals together to set mutual goals can foster collaboration and reduce friction.

Avoiding the issue (Option D) or moving a team member (Option C) are not proactive solutions and may not address the underlying problem.

[Reference:, "5 Conflict Resolution Tips to Restore Team Harmony"—Procurious: Conflict Resolution Tips, , ]

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