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CIPS
CIPS Level 5 Advanced Diploma in Procurement and Supply
L5M7
Achieving Competitive Advantage Through the Supply Chain (L5M7) Questions and Answers

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Viewing questions 21-30 out of questions

Questions # 21:

A strategy in which an organisation concentrates its resources on anarrow market or industry segmentis which ofPorter’s Generic Strategies?

Options:

Cost Leadership

Focus

Differentiation

Cost Certainty

Answer

Explanation

Porter’sFocus Strategyinvolvestargeting a niche marketto meet unique needs better than competitors.

Short cited term: “focus – targeting a narrow market segment” (L5M7 Study Guide, p. 52).

[Reference:CIPS L5M7 Study Guide, p. 52., ]

Questions # 22:

Freddie, a Procurement Professional, is reviewing supply chain risks. He believes all risks should be eliminated. Is this correct?

Options:

Yes – all supply chain risks must be removed

Yes – create risk assessments for each supplier

No – prevent risks where possible but tolerate low-level risks

No – awareness only is required

Answer

Explanation

Risk management seeks toprevent and mitigate major risks, whiletolerating low-impact riskswhen elimination isn’t feasible.

Short cited extract: “Low-level risks can be tolerated if likelihood and impact are minimal.” (L5M7 Study Guide, p.49)

[Reference:CIPS L5M7 Study Guide, p.49., ]

Questions # 23:

Which of the following relationship styles has theleast amount of trust?

Options:

Transactional

Outsourced

Partnership

Closer Tactical

Answer

Explanation

Therelationship spectrumshows thattransactional relationshipsare theleast trust-based, focusing on short-term exchanges with minimal collaboration.

Short cited extract: “Transactional – low trust, short-term, low collaboration.” (L5M7 Study Guide, p.80)

[Reference:CIPS L5M7 Study Guide, p.80., ]

Questions # 24:

InSix Sigma, aBlack Beltis the highest level that can be achieved. Is this correct?

Options:

Yes – a Black Belt implements Six Sigma full-time

Yes – a Black Belt trains project teams

No – there are higher levels such as Master Black Belt and Champion

No – Green Belt is the highest

Answer

Explanation

The hierarchy extendsbeyond Black Belt, includingMaster Black BeltsandChampions, who provide leadership and strategic direction.

Short cited term: “Master Black Belt and Champion above Black Belt.” (L5M7 Study Guide, p. 153)

[Reference:CIPS L5M7 Study Guide, p. 153., ]

Questions # 25:

What is the name of the phenomenon in which a small change in consumer demand can have an amplified effect throughout the supply chain?

Options:

Pareto Principle

Bullwhip Effect

Supply and Demand

Amplification Concept

Answer

Explanation

The study guide describes how demand variabilityamplifies upstreamin the chain—commonly termed the“bullwhip effect.”This is introduced when explaining basic supply-chain dynamics and flows. Short extract: “demand changes become amplified upstream (bullwhip effect).” (L5M7 Study Guide, p.4)

[Reference:L5M7 Study Guide, p.4., ]

Questions # 26:

Which of the following attributes doesnotimpact the type of buyer–supplier relationship?

Options:

Finance

Duration of relationship

Level of trust

Communication

Answer

Explanation

The main relationship drivers aretrust, communication, duration, and problem-solving. Finance alone does not define the relationship type.

Short cited extract: “Key relational attributes: trust, communication, duration, joint problem-solving.” (L5M7 Study Guide, p. 80)

[Reference:CIPS L5M7 Study Guide, p. 80., ]

Questions # 27:

An organisation can leverage effective Supply Chain Management to deliverCompetitive Advantage. What is meant byCompetitive Advantage?

Options:

Outperforming competitors financially

Becoming the leader in the marketplace through working closely with the supply chain

A benefit that an organisation can use to outperform competitors in the marketplace

Cost savings by narrowing the supply chain

Answer

Explanation

Competitive advantageis adistinct capabilitythat allows an organisation tooutperform its rivals, whether through cost efficiency, quality, innovation, or service.

Short cited term: “advantage that enables outperforming competitors” (L5M7 Study Guide, p. 2).

[Reference:CIPS L5M7 Study Guide, p. 2., ]

Questions # 28:

Jerry works in product development at a clothing manufacturer. The company is discussing ways of adding value for customers. Jerry suggestsreducing pricescould be a form of added value. Is he correct?

Options:

Yes – this is a form of added value but requires the ability of the supply chain to reduce costs.

Yes – this will increase the company’s profit margin.

No – added value is only a form of innovation.

No – as the customer is not offered anything additional to their purchase.

Answer

Explanation

Added Valuearises whenever the customer perceives extra benefit.Lowering pricescan add value if thesupply chain reduces coststo support it sustainably.

Short cited term: “price reduction is a form of added value if supported by cost efficiencies.” (L5M7 Study Guide, p. 35)

[Reference:CIPS L5M7 Study Guide, p. 35., ]

Questions # 29:

Normal distributionforms what shape on a graph?

Options:

Horizontal line

Vertical line

Bell curve

Circle

Answer

Explanation

ANormal Distributionforms asymmetrical bell-shaped curve, representing probability distribution around a mean.

Short cited term: “normal distribution = bell-shaped curve.” (L5M7 Study Guide, p. 150)

[Reference:CIPS L5M7 Study Guide, p. 150., ]

Questions # 30:

George, a property manager, agrees acost-pluspayment with a plumber. Which of the following will he need to know to calculate total price?

Select THREE.

Options:

Cost of materials

Cost of labour

Supplier’s overhead and profit

Supplier’s tax rate

Supplier’s pension contribution

Answer

A, B, C

Explanation

Cost-plus pricingis based onactual material and labour costs plus an agreed marginfor overheads and profit.

Short cited extract: “Cost-plus = actual cost + agreed mark-up for profit/overheads.” (L5M7 Study Guide, p.191)

[Reference:CIPS L5M7 Study Guide, p.191., ]

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