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

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Viewing questions 31-40 out of questions

Questions # 31:

Robbie is a procurement manager at a public sector organisation. He is running a tender which is worth £2m and so will advertise this on OJEU. His manager has reminded Robbie to include CPV codes on the tender. What purpose would this serve?

Options:

To ensure suppliers know the deadline for tender submission

To ensure suppliers can find the opportunity

To ensure more suppliers bid for the tender

To ensure only qualified suppliers bid for the tender

Answer

Explanation

CPV codes help suppliers find opportunities they can bid for. CPV codes are a numerical classification for products e.g. Strawberry Jam is 15332296 and when they are included on a Tender, any supplier who is registered with that same CPV code will get a notification that the tender is live. CPV codes arediscussed on p.72 but not in much detail- so don’t worry if you don’t know much about them. So long as you know the above, you’ll be fine.

Questions # 32:

Which of the following are examples of internal stakeholders of a manufacturing repair organisation? Select TWO that apply.

Options:

Bank manager

Finance director

Trade union managers

Maintenance engineers

Shareholders

Answer

B, D

Explanation

Internal stakeholders are individuals or groups within an organization who are directly involved in its operations and decision-making processes. The finance director plays a crucial role in budgeting and financial planning, while maintenance engineers are essential for ensuring equipment functionality and efficiency. Both are integral to the organization's internal operations, as outlined in the CIPS L4M6 study materials.

Questions # 33:

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?

Options:

To understand the supplier's competitive threats

To understand the supplier's financial status

To understand the supplier's pricing strategy

To understand the supplier's investment plans

Answer

Explanation

Cost modeling helps in understanding supplier pricing strategies, identifying cost drivers, and opportunities for negotiation or cost reduction, which supports profitability improvements.

Questions # 34:

Supplier development should be undertaken with all suppliers that a buyer uses. Is this statement TRUE?

Options:

yes- it is important to develop all relationships

yes- this will improve efficiencies for the buyer

no- supplier development should only be done with strategic suppliers

no- supplier development should only be done with tactical suppliers

Answer

Explanation

Supplier development is time-consuming and resource-intensive so should only be done with strategic suppliers. P.14

Questions # 35:

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

Options:

Getting the best price possible

Shareholder profit and business benefit

Ensuring taxpayers’ money is spent wisely

Getting the best quality possible

Answer

Explanation

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.

Questions # 36:

A university based in Europe has an objective to increase the number of students coming from the United States of America (USA). The university appoints a consultant with specialist knowledge of the USA market and has issued them with a performance-based specification. Which of the following is a characteristic of a performance specification?

Options:

It provides details of how the services must be carried out

It encourages innovation from the supplier

It enables the buyer to detail technical information

It ensures the supplier must conform with the specification

Answer

Explanation

Comprehensive and Detailed Explanation:

A performance specification outlines the desired outcomes or results without prescribing the exact methods to achieve them. This approach allows suppliers the flexibility to use their expertise and creativity to meet the buyer's requirements, thereby encouraging innovation.

[Reference:, CIPS Procurement Specifications Guide, , ]

Questions # 37:

A low-cost fashion retailer based in Europe is looking at adding value in their procurement activities. The retailer buys clothing for re-sale with a very small profit margin applied, relying on volume salesto make 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?

Options:

Quality enhancement

Price management

Improving timescales

Reduction of inventory

Answer

Explanation

For low-cost, high-volume business models, maintaining profitability depends on tightly controlled procurement costs. Price management is critical for ensuring competitive pricing while safeguarding slim margins. CIPS L4M6 highlights that effective cost management and price negotiation are essential in such scenarios.

Questions # 38:

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?

Options:

Request for quotation

Competitive tendering

Statement of source requirements

Direct negotiation

Answer

Explanation

Comprehensive and Detailed Explanation:

For high-value and high-risk contracts, such as facilities management services for multiple schools,competitive tenderingis the most appropriate sourcing approach. This process involves inviting multiple suppliers to submit bids, ensuring transparency, fairness, and the opportunity to assess various proposals to select the most suitable supplier. It helps in mitigating risks and achieving value for money.

[Reference:, CIPS L4M6 Study Guide, , ]

Questions # 39:

The ABC Analysis, also known as the Pareto Analysis, is a technique that can be used by procurement to which purpose?

Options:

supplier positioning

cost analysis

relationship spectrum

cost engineering

Answer

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

Questions # 40:

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?

Options:

Define the standards both parties are expected to meet

Look at costing models

Promote the new partnership

Complete audits on the performance of both parties

Answer

Explanation

Defining standards ensures clear expectations and provides a foundation for accountability and alignment, which are critical for the success of any partnership.

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