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NEW QUESTION # 128
What is a risk of pre-warning a supplier that you will conduct an audit of their facilities?
- A. they will not perform regular duties that day
- B. they will not achieve KPIs
- C. they will not be able to make that time and date
- D. they may coach staff in what to say
Answer: D
Explanation:
A risk of pre-planning an audit is the supplier has time to prepare for it. It's a good thing in that they can get their paperwork in order but the downside is they can overprepare so you don't get a realis-tic representation of what they're doing. One way they can do this is coaching staff in what to say to the auditors.
NEW QUESTION # 129
Daniel is evaluating bids from new suppliers who are looking to supply his company XYZ Indus-tries with components for manufacturing. Although price is important, Daniel wishes to consider 'added value'. Which of the following is considered an 'added-value solution'? Select THREE
- A. innovation
- B. sustainability
- C. on time in full deliveries
- D. cost plus pricing
- E. bulk discount
Answer: A,B,C
Explanation:
The correct answers are innovation, on time in full deliveries and sustainability.
The other options are pricing mechanisms rather than 'added value'. Added Value is giving the buyer something extra that's not necessarily financial. It can be as simple as delivering orders quicker than expected, or having a dedicated customer service phone line. Something that makes their lives a little easier.
NEW QUESTION # 130
Chantelle is a procurement apprentice working in the public sector for an education organisation. As a result of studying towards the CIPS qualification, Chantelle has become aware of the importance of incorporating sustainability and environmental award criteria into tender exercises and has informed her manager of this.
For the purchase of IT supplies, which requirement could be evaluated within the sustainability and environmental award criterion?
- A. Consolidated delivery
- B. Competitive pricing
- C. Delivery lead time
- D. After-sales support
Answer: A
Explanation:
Incorporating sustainability and environmental criteria into procurement decisions is essential for promoting responsible sourcing practices.Consolidated deliveryrefers to combining multiple shipments into a single delivery, which can significantly reduce the carbon footprint associated with transportation. By minimizing the number of deliveries, organizations can decrease fuel consumption and emissions, aligning with environmental sustainability goals.
This practice is particularly relevant in the procurement of IT supplies, where frequent, small deliveries can be consolidated to improve efficiency and environmental performance. Evaluating suppliers based on their ability to provide consolidated deliveries demonstrates a commitment to sustainable procurement practices.
References:
CIPS Study Guide: Ethical and Responsible Sourcing - Study Guides - CIPS Quizlet: CIPS L4M4 Ethical and Responsible Sourcing Flashcards
NEW QUESTION # 131
A buyer has been working with managers on a tender and is now assessing supplier proposals. Is it good practice for the procurement buyer to make sourcing recommendations?
- A. No, the buyer's recommendations are not relevant; only managers decide
- B. Yes, the procurement buyer can advise on the proposals, but decisions should involve business managers
- C. Yes, the procurement buyer should decide independently to avoid conflict of interest
- D. No, it is a lengthy and unnecessary step for the procurement buyer
Answer: B
Explanation:
Good governance in procurement requires collaboration. The buyer provides expertise in sourcing methods, evaluation, and compliance with procurement rules, but decisions should also involve business managers who understand operational needs. Acting independently could cause conflict and undermine accountability.
Conversely, leaving all decisions to managers risks bypassing procurement expertise. The best practice is for procurement to advise and recommend, while engaging stakeholders in final award decisions, ensuring transparency, fairness, and shared accountability. This balances compliance with ethical sourcing requirements and operational business needs.
Reference: CIPS L4M4 Study Guide (v2), LO: "Implementation" - roles and responsibilities in procurement governance.
NEW QUESTION # 132
Tariffs and import duties imposed on a buying organisation for goods purchased from an international supplier provide benefit to ...
- A. Local competitors through lower prices
- B. The domestic industry through reduced competition
- C. The supplying organisation as they receive additional payment
- D. Consumers by having access to lower-priced goods
Answer: B
Explanation:
Tariffs/import duties increase the landed cost of imports, which shields domestic producers by making foreign alternatives relatively more expensive. They do not go to the foreign supplier and typically do not lower consumer prices.
Reference: CIPS L4M4 Study Guide (v2): LO "Implications of global sourcing" - trade barriers (tariffs/non- tariffs) and their market effects.
NEW QUESTION # 133
Amnesty International, Oxfam and CIPS are examples of what type of organisation?
- A. public limited companies
- B. not-for-profit
- C. limited liability
- D. partnerships
Answer: B
Explanation:
These are 'not-for-profit' organisations. You don't need to know much on not-for-profit procurement for this exam. Just that procurement can be regulated in this sector by bodies such as Charities Commission.
NEW QUESTION # 134
Which of the following should be considered when calculating ratios relating to a supplier's liquidity?
- A. reserves
- B. receivables
- C. inventory
- D. profit
Answer: C
NEW QUESTION # 135
Incoterms are designed to be understood and interpreted on a worldwide basis. What is the interpretation for FOB (Free on Board)?
- A. The buyer takes responsibility for transferring the goods from the seller's premises to the ship, plus all subsequent costs
- B. The buyer takes responsibility for taking the goods from the departure quayside to the ship, plus all subsequent costs
- C. The buyer takes responsibility for the goods after they are loaded on the ship, plus subsequent costs excluding freight charges
- D. The buyer takes responsibility for the goods after they are loaded on the ship, plus all subsequent costs including freight charges
Answer: D
Explanation:
Under theFOB (Free on Board)Incoterm, the seller is responsible for delivering the goods onto the vessel at the named port of shipment. Once the goods are on board, the risk and responsibility transfer to the buyer.
From that point onward, the buyer assumes all costs and risks associated with the transportation of the goods, including freight charges, insurance, unloading, and delivery to the final destination.
This interpretation aligns with the Incoterms 2020 rules set by the International Chamber of Commerce (ICC). It's crucial to note that FOB is applicable only for sea or inland waterway transport and is not suitable for containerized cargo, where theFCA (Free Carrier)term is more appropriate.
References:
Trade Finance Global: FOB (Free on Board) - Incoterms 2020 Rule
Maersk: FOB Incoterms meaning | Free on Board shipping
NEW QUESTION # 136
What is the best way to prevent potential issues of conflicts of interest?
- A. do not work with suppliers who have relationships with the procurement team
- B. do not hire family members
- C. create a risk register
- D. openly declare potential conflicts
Answer: D
Explanation:
The best way to deal with potential Conflicts of Interest is to openly declare these. Just because you have a relationship with someone doesn't mean this is going to be an issue or lead to fraud, but it is a good idea to keep a written record of these.
It wouldn't be a risk register, because how can you rate someone's risk of doing something dodgy? Risk registers are for objective risks such as Health and Safety.
NEW QUESTION # 137
Which of the following are reasons to outsource part of a business to an external supplier? Select TWO.
- A. overheads can be kept as effective as possible
- B. there are more resources in-house
- C. the product or service is core to the organisation
- D. the reduction in the need to continually invest in new machinery
Answer: A,D
Explanation:
Reasons to outsource include; 'overheads can be kept as effective as possible' and 'the reduction in the need to continually invest in new machinery'.
When you outsource, you transfer the costs of overheads to the supplier and it is their responsibility to buy new machinery as and when is required. For example if you outsource cleaning, the cleaning company is responsible for replacing the hoovers and floor cleaner The other two options would be reasons to keep something 'in-house'.
NEW QUESTION # 138
Faisal is a medical equipment maintenance services procurement specialist within a local hospital. Faisal is responsible for ensuring contracts are in place that will ensure operational continuity of high-value pieces such as radiology equipment. When carrying out tender opportunities for these services, Faisal will specify, as an essential requirement, that certain standards are adhered to. Which of the following is a benefit of incorporating standards as a requirement within a specification?
- A. Standards will ensure suppliers meet all the buyer's requirements
- B. Standards will ensure low pricing is submitted in the tender response
- C. Standards will mirror the buyer's requirements in its entirety
- D. Standards provide clear guidelines and remove the risk of ambiguity
Answer: D
Explanation:
Incorporating recognized standards into procurement specifications provides clear guidelines for suppliers, reducing ambiguity and ensuring that products or services meet predefined quality and safety criteria. This is particularly important in sectors like healthcare, where equipment must adhere to strict standards to ensure patient safety and operational efficiency.
Reference:
CIPS Level 4 Diploma in Procurement and Supply, L4M4 Study Guide, Section 1.3: Specifications and Standards
NEW QUESTION # 139
What are the risks of outsourcing?
* Loss of control of project
* Loss of assets
* Loss of future business opportunities
* Loss of private information
- A. 1 and 4 only
- B. 2 and 3 only
- C. 3 and 4 only
- D. 1 and 2 only
Answer: A
Explanation:
Loss of control and loss of private information are significant risks in outsourcing. Responsible sourcing involves mitigating these risks by setting clear agreements, monitoring, and safeguarding sensitive information to maintain control over outsourced activities.
NEW QUESTION # 140
What is the best way to demonstrate that your organisation does not tolerate bribery and corruption?
- A. Requesting suppliers' ethical policies annually
- B. Having full anti-bribery training, policies, and procedures in place
- C. Asking all suppliers to read your organisation's anti-bribery policy
- D. Not working with suppliers who have a reputation for bribery
Answer: B
Explanation:
The most effective way to demonstrate zero tolerance is by embedding a comprehensive anti-bribery framework: clear policies, mandatory staff and supplier training, reporting channels, and monitoring. Simply requesting suppliers' policies or avoiding known offenders is reactive, not proactive. Requiring suppliers to read policies without internal enforcement lacks substance. CIPS highlights that robust governance structures, supported by recognised frameworks such as the UK Bribery Act or FCPA, reinforce organisational credibility, protect reputation, and ensure compliance. This builds trust across supply chains and ensures ethical standards are maintained.
Reference: CIPS L4M4 Study Guide (v2), LO: "Concepts" - ethics, anti-bribery and corruption frameworks.
NEW QUESTION # 141
Incoterms describe several aspects and responsibilities of transporting goods when sourcing internationally.
Which of the following is described by Incoterms? Select THREE.
- A. how long the transportation will take
- B. what form of transportation will be used
- C. which party arranges insurance
- D. who is responsible for making duty and tariff arrangements
- E. how much the transportation will cost
Answer: B,C,D
Explanation:
Incoterms describe who out of the buer and seller; organises transport and what type of transport this is, who pays for insurance, and who organises duty / tariff arrangements when the goods go through customs. See p.
131. Note- some students report a lot of questions on Incoterms in the exam, some say they only had 1. If you can, I'd learn them just to be safe.
NEW QUESTION # 142
A buyer might opt to do an 'Invitation to Tender' (ITT) rather than a 'Request for Quotation' (RFQ) process because ...
- A. The nature of the goods or services being purchased are complex and high value
- B. Time is of the essence and decisions need to be made quickly without additional stakeholder involvement
- C. The supplier market is an oligopoly where a few large suppliers dominate the market
- D. The contract will be low value and there are many suppliers, therefore a simpler approach is required
Answer: A
Explanation:
An Invitation to Tender (ITT) is used when requirements are complex, high-value, or strategic, requiring detailed supplier submissions, robust evaluation, and structured governance. RFQs are better for low-value, straightforward purchases where price is the main factor. ITTs ensure fairness, transparency, and comprehensive evaluation when the stakes are high. It is not chosen simply because of oligopolies or time pressure. Responsible sourcing requires matching the sourcing process to the complexity and risk of the procurement, ensuring appropriate competition and governance.
Reference: CIPS L4M4 Study Guide (v2), LO: "Implementation" - sourcing procedures and their application.
NEW QUESTION # 143
FTSE100 and Sensex are examples of what?
- A. commodity indices
- B. stock markets
- C. public sector organisations
- D. financial reports
Answer: B
Explanation:
they are stock markets.
What is the FTSE 100 Index? Complete Beginner's Guide (moneycheck.com)
BSE SENSEX - Wikipedia
NEW QUESTION # 144
A buyer for a large manufacturing organisation is assessing a sole-supplier tender opportunity. The buyer is finding it challenging to differentiate the proposals on unit purchase price. Are there any added values that the procurement manager can use to leverage the sole-supplier proposal?
- A. No, because a buyer has no leverage over a sole supplier
- B. Yes, but only if the buyer decides to re-start the tender opportunity
- C. Yes. The buyer can negotiate on aspects such as after-sales service
- D. No. The buyer must make the decision based on the existing information
Answer: C
Explanation:
Where price leverage is limited, buyers should seek value-adds: extended warranties, service levels, training, spares, delivery schedules, sustainability commitments, or risk-sharing. This aligns with total value and ethical outcomes beyond headline price.
Reference: CIPS L4M4 Study Guide (v2): LO "Application" - value analysis/negotiation with limited competition; non-price value levers and responsible outcomes.
NEW QUESTION # 145
A business may be faced with the challenge of deciding whether to source some of its requirements from external suppliers or whether to make them internally. There are many factors that need to be considered before arriving at such a decision. Which of the following factors is likely to justify the decision to make the requirements internally?
- A. The other suppliers are using older technology
- B. External sourcing involves cumbersome tendering procedures
- C. The availability of in-house competencies and capacity to carry out the production
- D. External suppliers are likely to be overcharging
Answer: C
Explanation:
The decision to make a product internally rather than sourcing it externally is influenced by several factors.
One of the primary considerations is the availability of in-house competencies and capacity. If an organisation possesses the necessary skills, technology, and resources to produce the required goods or services efficiently, it may opt for internal production to maintain control over quality, reduce costs, and protect proprietary information.
Exact Extract from Study Guide:
"Make or buy decisions take into account: product/service is core, the organisation's capacity to make, current market (cost saving with economy of scales and/or logistics), amount of competition."
NEW QUESTION # 146
'Phishing' is an activity that can occur when an employee within an organisation receives an email that appears to be from a genuine supplier but is false. These types of emails expose the organisation to the activities of expert cyber criminals. Which type of crime category does this activity fall within?
- A. Human rights
- B. Fraud
- C. Bribery
- D. Corruption
Answer: B
Explanation:
Phishing is categorized as fraud because it involves deceptive practices to gain sensitive information or financial benefits. Responsible sourcing includes ensuring that cybersecurity measures are in place to prevent fraud and protect sensitive information within supply chains.
NEW QUESTION # 147
As a procurement officer for a large organisation, a supplier approaches you on social media offering to take you out for dinner to discuss a recent open opportunity and mentions a financial reward if you help them win the business. You accept the invite. Was this the right thing to do?
- A. Yes, you are keen to see what is on offer as you are only on minimum wage currently and need extra money
- B. Yes, you are free to do what you like outside of business hours
- C. No, it is not appropriate to discuss open opportunities with one provider and not another
- D. No, but you will go for the dinner and see what they offer, because it is up to you to decide if you should accept
Answer: C
Explanation:
Accepting an invitation under such circumstances would violate ethical standards, as it could create a conflict of interest. Ethical sourcing and procurement practices require impartiality, and any perceived favoritism or bias can harm the organisation's integrity.
NEW QUESTION # 148
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