Prepare for the Actual CIPS Certifications L4M6 Exam Practice Materials Collection
CIPS Certifications Certified Official Practice Test L4M6 - Aug-2022
CIPS L4M6 Exam Syllabus Topics:
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NEW QUESTION 16
Red Ltd and Blue Ltd have had a disagreement over a high value project they have been partnering on. They have been unable to resolve the issues inhouse and Red Ltd has suggested Mediation as an option. Is this a good option?
- A. No- mediation could have a negative impact on the companies' reputation
- B. Yes- mediation means the buyer and supplier agree to accept a third party's decision which will solve the disagreement issues
- C. No- it would be better to solve the disagreement in-house
- D. Yes- mediation involves a neutral third party and gets both parties to attempt to reach a compromise
Answer: D
Explanation:
The correct answer is 'Yes- mediation involves a neutral third party and gets both parties to attempt to reach a compromise'. Be careful not to confuse mediation with arbitration - arbitration is when the buyer and supplier agree to accept a third party's decision which will solve the disagreement issues. See p.112 for more information on solving disputes
NEW QUESTION 17
Which of the following is characteristic of an adversarial relationship?
- A. The communication is always poor
- B. The outcome of the deal is more important than the long term relationship
- C. The price is more important than the quality of the product
- D. They are only used for one-off purchases
Answer: B
Explanation:
In an adversarial relationship "the outcome of the deal... is more important than maintaining the relationship over a long-term period" p.7. They can be characterised by poor communication and can be used for one-off purchases but be careful for words in answers such as 'only' and 'always', as these can be misleading; adversarial relationships aren't always for one-off purchases, and communication isn't always poor. The other answer is incorrect (price is more important) because it doesn't describe the relationship, which is what the question asked.
NEW QUESTION 18
Why is it more difficult for buyers in the public sector to build relationships with suppliers?
- A. Buyer power is weak in the public sector
- B. There are regulations prohibiting public sector buyers from developing relationships
- C. There are regulations that state competitive tender processes must be undertaken regularly
- D. Buyer power is strong in the public sector
Answer: C
Explanation:
It can be difficult for buyers in the private sector to build relationships with suppliers because of rules that state competitive tenders must be undertaken every few years (within the EU this is usually every 4). This means that both parties aren't as invested in developing the relationship as it's possible the contact will end shortly. Competitive tendering is a requirement in the public sector to ensure value for money for taxpayers. See p.79 for further details. There are no rules stating Public Sector organisations can't have good relationships with suppliers, and in fact most will have good relationships with their current suppliers- the issue is that neither party can get too invested in the relationship as everyone knows it may end shortly. There are rules, however, against entering into Partnership relationships (which is discussed in chapter 3).
NEW QUESTION 19
The Kraljic Model is most useful for which aspect of procurement?
- A. risk management
- B. category management
- C. cost reduction
- D. cost analysis
Answer: B
Explanation:
The Kraljic model "plays a key part in category management" p.19 of the textbook. Category Management = the spend in an organisation, broken down into categories of related products (e.g. IT, facilities management, marketing). Each of these categories could be plotted on the Kraljic Matrix.
NEW QUESTION 20
Which of the following behaviours are you likely to see in a Partnership relationship?
- A. Opportunistic behaviour and strong levels of trust
- B. Secrecy and honest communication
- C. Honest communication and opportunistic behaviour
- D. Strong levels of trust and honest communication
Answer: D
Explanation:
The correct answer is 'Strong levels of trust and honest communication'. The questions on Partnership in the exam tend to be quite straightforward, but if you're struggling with this see p. 148 for further details of behaviour in Partnerships.
NEW QUESTION 21
Red Manufacturing work with around 40 different suppliers. One of these suppliers is Blue Business. Red Manufacturing order regularly from Blue Business, and have never had any issues with their performance. The materials Blue Business supply are of low value and there are several other suppliers of these materials in the market. What type of relationship should Red Manufacturing seek to have with Blue Manufacturing?
- A. adversarial
- B. partnership
- C. arms-length
- D. single-source
Answer: C
Explanation:
The correct answer is 'arms length'. This is a tactical purchase (as it is low value) and keeping the supplier at arms-length means that Red Manufacturing could possibly exploit them to reduce their prices (think back to the Kraljic matrix and where Blue Business would likely fall). A Partnership or Single- Source relationship requires investment into the relationship, and as the products are low value and Red Manufacturing have a lot of other suppliers, they should not be investing time in developing that relationship with Blue Business. An adversarial relationship wouldn't be advantageous as it may lower the performance of the supplier. See the relationship spectrum on p.5 - this is a hot topic for the exam
NEW QUESTION 22
A manufacturing company which produces showers struggles to get hold of a certain part called a mixer valve. It is impossible to make the showers without the mixer-valve and there is only one supplier in the market that produces them. The good news is they aren't very expensive to buy. What type of supplier is the supplier of mixer valves?
- A. bottleneck
- B. routine
- C. leverage
- D. strategic
Answer: A
Explanation:
This is a bottleneck supplier- refer to the Kraljic matrix on p.20; these types of supplier hold a monopoly in the marketplace and provide low-value items. There are lots of questions on Kraljic in the exam - do revise this topic and ensure you understand each of the four quadrants of the matrix
NEW QUESTION 23
Beyond Say is a manufacturer of diamond rings. It sources a lot of different parts to create its products including diamonds, gold, cardboard boxes for the rings to go in, as well as stationary and copier paper for the offices. Although it doesn't buy many diamonds, these represent a large part of Beyond Say's spend. Which category of spend would diamonds represent?
- A. Option
- B. It isn't possible to tell
- C. Option
- D. Option
Answer: C
Explanation:
This is category 'A' spend in the ABC model - they represent a large value and a small number of purchases / suppliers. See p.17 for more information on the ABC Analysis
NEW QUESTION 24
In which procurement process is a PQQ not issued?
- A. Competitive Procedure with Negotiation
- B. Restricted
- C. Open
- D. Competitive Dialogue
Answer: C
Explanation:
Open Tender processes are a one-stage process which issues and ITT. It has no PQQ (selection) stage. P. 77
NEW QUESTION 25
According to Michael Porter, what is procurement?
- A. a secondary activity which provides value for money
- B. a primary activity which provides value for money
- C. a support activity which provides a source of competitive advantage
- D. a primary activity which provides a source of competitive activity
Answer: C
Explanation:
This question refers to Porter's Value Chain (p.35). There's a couple of questions on this in the exam so try to learn it. Procurement is a 'support activity' on this matrix along with firm infrastructure, HR and technology development
NEW QUESTION 26
Polly Manufacturing is a company which manufactures bicycle parts. It has several factories around the country and is one of the leading suppliers of wheels, bells and pedals. Which of the following is Polly Manufacturing likely to outsource? Select TWO options.
- A. Manufacturing of all bicycle parts
- B. Cleaning
- C. Manufacturing of bells only
- D. Facilities Management
Answer: B,D
Explanation:
They could outsource cleaning and facilities management. These are auxiliary services. The manufacturing of bike parts is their 'core' business so they should retain this in-house
NEW QUESTION 27
Which of the following are considered 'wastes' which can be removed from a business? Select THREE.
- A. Transportation
- B. Equity
- C. Over-processing
- D. Inventory
- E. Stockout
Answer: A,C,D
Explanation:
The seven wastes (as defined by Taiichi Ohno) can be remembered as Tim Wood; transportation, inventory, motion, waiting, over-processing, over-production, defects. Some people add an S onto the end of Tim Wood to make Tim Woods (the s is for skills). In some modules of CIPS, they refer to 8 wastes and include skills, but in M6 they've only put the 7 on p.70.
NEW QUESTION 28
Achieving value for money can often be described as the three Es? What are these?
- A. Economy, Efficiency, Environment
- B. Ethics, Environment, Economy
- C. Effectiveness, Efficiency, Economy
- D. Efficiency, Economy, Ethics
Answer: C
Explanation:
The three Es are; Effectiveness, Efficiency and Economy. Sometimes a 4th E is added which is Equity (but this is mainly for the public sector).
NEW QUESTION 29
Tim manages the procurement department at a large retailer. He wants to ensure that his team are achieving value for money in their procurement activities. Which of the following should Tim set up?
- A. Contract
- B. Audit
- C. ITT
- D. Framework
Answer: B
Explanation:
Tim should do an audit. P.71 of the textbook says "to ensure that a procurement department is achieving value for money, an audit should be undertaken"
NEW QUESTION 30
Which of the following macro-environmental factors can affect supply chains?
- A. environmental, ergonomic and social
- B. social, economic and cost
- C. environmental, ethical and cost
- D. political, economic and social
Answer: D
Explanation:
STEEPLE is what is used to analyse the macro-environment; the factors are; social, technological, economic, environmental, political, legislative and ethical. Details of this can be found on p.43-44. Note in the exam they won't necessarily be given in this order.
NEW QUESTION 31
The Queen Victoria is a traditional British pub which serves a range of alcoholic beverages. It has a partnership relationship with a local brewery which supplies several types of beer and cider. Logistics is a key concern for the Queen Victoria as deliveries must be made when there is room in the cellar to store the barrels of beer and cider. In what ways could the logistics risk be reduced?
- A. Sharing up-to-date information
- B. Batch ordering
- C. Issuing POs electronically.
- D. Using several suppliers instead of one
Answer: A
Explanation:
The logistics risk can be reduced by 'Sharing up-to-date information'. If the Pub tells the supplier when it's running low, they can then time the deliveries more accurately.
P. 136. A lot of the questions on the 'Partnerships' chapters of the book are common-sense questions like this. It involves reading the question and using logic, rather than relying on your knowledge of procurement. If you found this question easy - that's a good sign for the exam.
NEW QUESTION 32
Under what circumstances should a competitive tender not be completed? Select TWO.
- A. When there is not a clear specification
- B. When the items are of low value
- C. When the items are of high value
- D. When there is a clear specifications
Answer: A,B
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 33
The CEO of a business has asked his procurement manager to source new machinery for the factory. This machinery will help create a new line of products which will give the company a competitive edge. The CEO is heavily invested in this procurement activity as profits have been lower than expected this year and this new line of products could help increase profitability. How should the procurement manager include the CEO in the procurement activity?
- A. It is important to keep the CEO satisfied as he runs the business
- B. The CEO is a key player- so it is important he is involved early in the process
- C. The CEO is a key player- so should be given regular updates on progress
- D. It is important to keep the CEO informed of all decisions that are made
Answer: B
Explanation:
The correct answer is 'The CEO is a key player- so it is important he is involved early in the process'. The CEO has high power and high interest which puts him in the top right-hand corner of Mendelow's Stakeholder Matrix (p.81). CIPS says Key Players should be involved early in the procurement process (p.82).
NEW QUESTION 34
Harry runs a hotel and has recently decided to contract an external supplier to provide the cleaning of the rooms. What is a disadvantage of doing this?
- A. This will be more expensive than providing the service in house
- B. The supplier will not perform as well as an internal team
- C. This allows staff to focus on other areas
- D. There is dependency on the supplier, which increases risk
Answer: D
Explanation:
Using an external supplier always comes with increased risk, as you become dependant upon them, and have less control over their performance (compared to an in-house team). In this example Harry will have the increased risk that the contract cleaners turn up late to their shifts, or don't do a good job. However, there is no reason to believe that the supplier will not perform as well as an internal team- we don't have enough information from the Question: for this to be true. What is true is the RISK is greater. The other answers are incorrect; the Question: doesn't indicate whether outsourcing the cleaning will be more or less expensive for Harry. Allowing staff to focus on other areas is an advantage not a disadvantage. See p.4 for more information on 'External Suppliers'
NEW QUESTION 35
Which of the following are possible drivers for partnership sourcing? Select THREE.
- A. The need to improve performance to satisfy the end customer
- B. The protection of intellectual property rights
- C. The marketplace has become more volatile
- D. Working together will create synergies
Answer: A,C,D
Explanation:
To increase production costs and lead-times
Explanation:
The correct answers are; The marketplace has become more volatile, Working together will create synergies and The need to improve performance to satisfy the end customer. Further Drivers of Partnership Sourcing can be found on p.127. The other answers are incorrect as entering a partnership won't protect intellectual property rights- in fact that's one of the big risks of entering into a partnership. Partnerships won't increase costs and lead-times, they're likely to decrease them.
NEW QUESTION 36
According to Mendelow, there are four ways stakeholders can be managed, depending on the amount of power they have, and how interested they are in your project. What are these four categories?
- A. Keep informed, keep happy, keep satisfied, keep notified
- B. Minimal effort, manage closely, keep informed, keep satisfied
- C. Manage closely, manage loosely, keep satisfied, keep informed
- D. Keep satisfied, keep informed, minimal effort, no effort
Answer: B
Explanation:
The four categories are; Minimal effort, manage closely, keep informed, keep satisfied. You can see the Matrix on p.81. An easy way to remember this is there are 2 Ms and 2 Keeps. And these sit on opposite sides of the matrix.
NEW QUESTION 37
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