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CIPS L4M6 Supplier Relationships Exam Practice Test

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Total 226 questions

Supplier Relationships Questions and Answers

Question 1

Which of the following documents can be used at the selection stage of a tender process to ensure that short listed bidders meet the requirements of the buying organisation? Select TWO.

Options:

A.

Request for Information

B.

Request for Quotation

C.

Pre-Qualification Questionnaire

D.

Invitation to Tender

Question 2

Mendelow’s Stakeholder Matrix categorises stakeholders into four groups and provides insight into how these stakeholders should be managed. What is a limitation to using this Matrix to categorise stakeholders?

Options:

A.

Nowadays, Stakeholders fall into more than four categories

B.

The Matrix doesn’t consider the power these stakeholders have

C.

The Matrix doesn’t consider whether the stakeholder is for or against the activity

D.

The categories are hard to remember

Question 3

Achieving value for money can often be described as the three Es? What are these?

Options:

A.

Ethics, Environment, Economy

B.

Economy, Efficiency, Environment

C.

Efficiency, Economy, Ethics

D.

Effectiveness, Efficiency, Economy

Question 4

Is it correct to suggest that the sole objective of partnership sourcing is to achieve the lowest acquisition cost?

Options:

A.

Yes, the concept of 'lowest acquisition cost' focuses on collaboration just like partnership sourcing does

B.

Yes, because the concept of 'lowest acquisition cost' ignores the quoted price and focuses on long-term cost factors

C.

No, because partnership sourcing considers 'lowest acquisition cost' together with aspects of supplier partnerships

D.

No, partnership sourcing is not applicable in one-off capital purchases where the concept of 'lowest acquisition cost' applies

Question 5

A low level of trust between parties can often lead to partnership relationships being unsuccessful and failing. Which of the following supports the protection of commercially sensitive information between both parties and can help to retain trust?

Options:

A.

A non-disclosure agreement

B.

An authorised business case

C.

Early supplier involvement

D.

A business continuity plan

Question 6

Which of the following are the stages of team development?

Options:

A.

Starting, forming, benchmarking, performing

B.

Forming, storming, norming, performing

C.

Beginning, working, reviewing, performing

D.

Introducing, forming, managing, performing

Question 7

A buyer is intending to purchase a new product for their business; however, the market has a large number of suppliers. What would be the most beneficial way for them to initially narrow down the supply options?

Options:

A.

Look at lowest-cost suppliers only

B.

Predefine minimum standards suppliers must meet

C.

Go only to companies they have bought other products from

D.

Preselect companies who have the largest market share

Question 8

Grey Stone Memorial Hospital is a private medical facility which has an idea for a vaccine to a deadly disease, but does not have the capacity to make the vaccine itself. It is considering partnering with a well-known pharmaceutical company in order to bring the vaccine to market. What is the biggest risk to Grey Stone?

Options:

A.

Intellectual Property Rights

B.

Increased Costs

C.

Low quality product

D.

Uninformed stakeholders

Question 9

A company is about to invite tenders for a contract to clean external windows at several premises, all at least three storeys high. It is going to do this in two stages. For the first stage, it will issue a pre-qualification questionnaire (PQQ) and, from the replies, select at least five potential suppliers to invite to tender. Which of the following is a selection criterion rather than an award criterion?

Options:

A.

Risk assessments at the premises

B.

Method statements for previous contracts

C.

Price that will be charged

D.

Environmental impact assessment

Question 10

Andrew runs a factory that makes cakes. Vanilla Extract is a vital ingredient in Andrew’s cakes and this is a monopolistic market. Andrew has noticed recently that the quality of the supplier’s product has reduced, and this has led to several complaints from customers. Andrew is considering entering into a Partnership with this supplier as he believes this will help increase the supplier’s performance. Is this the correct thing to do?

Options:

A.

Yes- partnership sourcing can improve performance which will ultimately satisfy the end customer

B.

Yes- partnership sourcing will improve sales figures

C.

No- Andrew should use an alternative supplier

D.

No- Andrew should outsource the vanilla extract.

Question 11

Which of the following would be benefits of partnership sourcing? Select TWO that apply.

Options:

A.

Reduction in inflation

B.

Reduction in costs

C.

No need for contracts

D.

Reduction in stakeholder numbers

E.

Continuity of supply

Question 12

Which of the following macro-environmental factors can affect supply chains?

Options:

A.

social, economic and cost

B.

environmental, ethical and cost

C.

political, economic and social

D.

environmental, ergonomic and social

Question 13

A company has just hired a new cleaning firm to clean their offices. The specification for the clean was detailed in an appendix in the contract and included a list of pre-approved products that the cleaning firm should use. The cleaners that were sent to site had not read the contract and therefore did not use the appropriate products. What is the reason for the failure of this?

Options:

A.

Poor communication

B.

Miscommunication

C.

Distortion of the facts

D.

Communication overload

Question 14

Which of the following describes differentiation as a method of competitive advantage?

    A company that sets out to be the lowest-cost producer in the market

    A company that will seek to be unique in a way that is valued by buyers

    A company producing a standard or budget cost product

    A company producing a product that attracts a premium price charge

Options:

A.

1 and 2 only

B.

1 and 3 only

C.

2 and 3 only

D.

2 and 4 only

Question 15

Janet runs a factory which produces 1 million bread rolls every day. It requires a large amount of flour, and for this to be delivered regularly- in time with manufacturing operations. There are very fewsuppliers in the market place that can deliver the quality of flour Janet requires in the quantities required. Janet has just established a contract with Friendly Flour Limited - what type of supplier is Friendly Flour Limited to Janet?

Options:

A.

bottleneck

B.

strategic

C.

routine

D.

leverage

Question 16

Which of the following factors are considered when using the Kraljic Model to determine the kind of supply relationships and sourcing approaches for a category of items? Select TWO that apply.

Options:

A.

The level of spend

B.

Supplier pre-qualification

C.

The market structure

D.

Key performance indicators

E.

The type of tendering

Question 17

Which of the following are characteristics that differentiate between a partnership relationship and traditional contracting relationships? Select THREE.

Options:

A.

Lower costs

B.

No tender process

C.

Early supplier involvement

D.

Supplier KPIs

E.

No defined end period

Question 18

Lion Manufacturing is about to enter into a partnership with Penguin Logistics, who will provide delivery to and from Lion Manufacturing's factories and warehouses. In this relationship, what type of negotiation strategy should Lion manufacturing use?

Options:

A.

win: win

B.

win: lose with the supplier winning

C.

lose: lose

D.

win: lose with the buyer winning

Question 19

Under which circumstances would a partnership sourcing approach be used?

Options:

A.

1 and 2 only

B.

1 and 3 only

C.

1 and 4 only

D.

2 and 4 only

Question 20

Intellectual Property Rights (IPR) include items such as copywrite and trademarks. A buyer is considering entering into a partnership with their supplier to create a new product which will be released in two years’ time. Should IPR be included into a contract between partners?

Options:

A.

Yes- IPR should always remain with the buyer- this will protect those rights

B.

Yes- IPR is a valid concern for both parties but will survive the termination of the agreement

C.

No- a separate legal agreement should be created to cover IPR

D.

No- a contract is not necessary if it is a partnership.

Question 21

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:

A.

Define the standards both parties are expected to meet

B.

Look at costing models

C.

Promote the new partnership

D.

Complete audits on the performance of both parties

Question 22

When outsourcing, which legislation details the rights of employees who may find themselves now working for the outsourcing company?

Options:

A.

ITT

B.

PCR 2015

C.

OJEU

D.

TUPE

Question 23

Richie has come up with a new idea for sourcing items for the business but feels that it will have mixed reviews within the team. He thinks that some people will be in favour of the idea, and some will beagainst it. He doesn’t think the CEO will have a strong opinion either way. In order to decide whether to put a business case together and present his idea to the CEO- what should Richie do?

Options:

A.

Cost Analysis

B.

Make vs Buy Analysis

C.

Force Field Analysis

D.

Value Engineering Analysis

Question 24

A partnership relationship can be described as any relationship between a buyer and supplier where there is a good level of communication and both parties are happy with each other’s performance. Is this statement TRUE?

Options:

A.

Yes- partnerships are characterised by strong relationships

B.

Yes- partnerships are the only relationship type where both parties are happy with each other’s performance

C.

No- good levels of communication can exist in other types of relationships

D.

No- only strategic relationships involve good levels of communication.

Question 25

The Kraljic Model is most useful for which aspect of procurement?

Options:

A.

category management

B.

cost analysis

C.

risk management

D.

cost reduction

Question 26

How would a buyer measure value for money from a relationship with a new supplier for goods?

Options:

A.

Audit of how suppliers promise

B.

Lowest possible cost

C.

Balance of quality and cost

D.

Quality and volume of goods

Question 27

Which of the following relationship types require the most investment from the buyer?

Options:

A.

partnership

B.

strategic alliance

C.

single source

D.

adversarial

Question 28

In which procurement process is a PQQ not issued?

Options:

A.

Open

B.

Restricted

C.

Competitive Procedure with Negotiation

D.

Competitive Dialogue

Question 29

ABC is a company which sources a vital component from a supplier. There are only a few suppliers in the industry and without this component, ABC would not be able to produce their final product. What type of relationship should ABC seek to develop with their supplier?

Options:

A.

outsource

B.

strategic alliance

C.

transactional

D.

arms length

Question 30

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?

Options:

A.

Yes- mediation involves a neutral third party and gets both parties to attempt to reach a compromise

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.

No- mediation could have a negative impact on the companies’ reputation

Question 31

Which of the following is a stage in the relationship lifecycle?

Options:

A.

Decline

B.

Graduation

C.

Measuring

D.

Testing

Question 32

When overcoming stakeholder resistance in a procurement-led project, which of the following groups would have the highest level of influence on other stakeholders?

Options:

A.

2 and 3 only

B.

1 and 4 only

C.

1 and 2 only

D.

3 and 4 only

Question 33

When a large organization partners with a small supplier to develop new technology, it is necessary for regular communication. Is this statement true?

Options:

A.

No, because partnerships do not require regular communication during development of new technology

B.

Yes, because partnerships require regular communication to succeed in meeting mutual objectives

C.

Yes, because a small supplier must be told what to do and when, because they have fewer employees

D.

No, because regular communication will stop a small supplier from doing their work

Question 34

Kirsty is designing a specification for a new contract and wants to include some qualitive KPIs for the new supplier, as well as quantitative. Which of the following could she include? Select TWO.

Options:

A.

Deliveries in full and on time

B.

Information sharing

C.

Trust

D.

Cost savings

E.

Early supplier involvement

Question 35

A medical consumables buyer has adopted a close relationship approach with their suppliers that are considered to be complicated, technical suppliers. Is this the right approach?

Options:

A.

Yes, as the items are of high financial risk

B.

No, as there is often a supply risk with items offered

C.

Yes, as all the items supplied are off the shelf

D.

No, as there are only a small number of suppliers in the marketplace

Question 36

What are service credits?

Options:

A.

A type of payment where goods are delivered before payment is made

B.

A mechanism for performance management where the buyer has the right to deduct money from payments owed for under performance

C.

When a buyer makes a purchase on credit

D.

A clause in a contract that allows for additional bonus payments for meeting KPIs

Question 37

When using competitive forces theory, suppliers are powerful in which of the following situations? Select THREE that apply.

Options:

A.

There are few substitute products

B.

The product is highly differentiated

C.

There is potential for backward integration

D.

The switching costs are high

E.

The volume purchased is not important

F.

The product is undifferentiated

Question 38

David is sourcing a new cleaning contract as he is not impressed with his current cleaning company’s performance. He believes that his current supplier has been overcharging him, and due to budget cuts, he is keen to secure a lower price than what he is paying now. His Manager has suggested using an e-auction as the procurement method. Is this the correct way forward?

Options:

A.

Yes- an e-auction is an electronic system so it will be easy for David to compare bids

B.

Yes- an e-auction will allow David to secure the lowest possible price

C.

No- a reverse e-auction would be more suitable as it will secure the lowest price

D.

No- a reverse e-auction will ensure only high quality suppliers bid for the opportunity

Question 39

Kinky Boots Ltd provides high heeled shoes in large sizes. Their target market are Drag Queens. There are a couple of rival shoe manufacturers in this market and Kinky Boots Ltd offer the cheapest high heels. What strategy is Kinky Boots Ltd employing in terms of competitive advantage?

Options:

A.

cost leadership

B.

differentiation

C.

cost focus

D.

differentiation focus

Question 40

Danny is procuring a new IT software, which he doesn’t know much about. He has done a bit of research on the internet but is still unsure how much he can expect to pay. What should be Danny’s next step?

Options:

A.

Issue a RFI

B.

Issue a RFQ

C.

Issue an ITT

D.

Issue an OJEU

Question 41

Pablo has run an open- competition to secure a new contract for a supplier of paper for his Birthday Card making company. He has received 10 submissions from various suppliers and needs to put a team together to evaluate the bids. What type of team should Pablo consider?

Options:

A.

A team composed of internal stakeholders

B.

A cross-functional team

C.

A team of procurement experts

D.

A team composed of internal and external stakeholders

Question 42

Value for money is often described at the ‘three Es’; economy, efficiency and effectiveness. However some people consider a 4th E which refers to the public sector. What is the fourth E?

Options:

A.

Equality

B.

Environment

C.

Equity

D.

Ethics

Question 43

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:

A.

To understand the supplier's competitive threats

B.

To understand the supplier's financial status

C.

To understand the supplier's pricing strategy

D.

To understand the supplier's investment plans

Question 44

Cigarettes and alcohol are often described as having an ‘inelastic price’. What does this mean?

Options:

A.

Changes in price will greatly affect how much of the item is bought

B.

Changes in price will not affect how much of the item is bought

C.

The product is subject to high rates of tax

D.

The product is subject to age restrictions

Question 45

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

Options:

A.

Getting the best price possible

B.

Shareholder profit and business benefit

C.

Ensuring taxpayers’ money is spent wisely

D.

Getting the best quality possible

Question 46

A software developer is seeking to develop a new fitness trends app. They are looking to create a contract with a fitness expert to give advice on the type of changing fitness trends. What agreement should the app developer aim to achieve?

Options:

A.

Partnering relationship

B.

Cost-based relationship

C.

Quality-based relationship

D.

Traditional contracting relationship

Question 47

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?

Options:

A.

leverage

B.

strategic

C.

routine

D.

bottleneck

Question 48

What is collaborative inertia?

Options:

A.

the concept that the value and performance of two companies combined will be greater than the sum of the separate individual parts

B.

A situation when the apparent output from collaboration is considerably less than expected

C.

When a partnership is unable to create new ideas

D.

Where a third party is invited to join a partnership.

Question 49

Varying levels of commitment is one reason why many partnerships fail. Why is this?

Options:

A.

It can lead to a lack of trust

B.

One party doesn’t fulfil their KPIs

C.

Sufficient time and resources are put in

D.

Less profit is made.

Question 50

When developing a supplier partnership, a buyer can take either a strategic or reactive approach. What would be a reason for a reactive approach?

Options:

A.

You discover that the supplier has a high profit margin

B.

The buyer wishes to create a new product and requires input from a supplier

C.

Sudden changes in the marketplace

D.

It will allow for consolidation in the supply chain

Question 51

An IT company is developing and launching a new product to the market. The project requires experts from different divisions of the business. What type of team should run this project?

Options:

A.

Virtual team

B.

Finance team

C.

Existing performing team

D.

Cross-organisational team

Question 52

In a monopoly market, which of the following statements is true?

Options:

A.

bargaining power of suppliers is strong

B.

bargaining power of buyers is strong

C.

There is strong rivalry

D.

There is a threat of new entrants

Question 53

A garden centre has recently purchased some lollypop sticks to use as plant labels. The staff have written the name of the plant on the lollypop stick and put it next to the plant. This helps them identify which plant is which. However, after a couple of weeks, the lollypop sticks have become mouldy and the writing has faded. Staff are now struggling to identity their plants. The Manager of the garden centre is considering returning the lollypop sticks and asking for a full refund as they were not fit for purpose. Can the Manager do this?

Options:

A.

Yes- the lollypop sticks have gone mouldy- this is unacceptable

B.

Yes- so long as the manager kept the receipt

C.

No- as this was not the lollypop sticks intended purpose

D.

No- the manager cannot prove that the product is faulty

Question 54

Which of the following are correct statements with regards to a joint venture and with regards to a strategic alliance? Select TWO that apply.

Options:

A.

A strategic alliance creates a new company formed between the partners

B.

A strategic alliance is managed by both partners

C.

In a joint venture, a new company is formed between the partners

D.

A joint venture is also known as vertical integration

E.

A strategic alliance is a permanent arrangement

Question 55

Which of the following statements is an advantage to the buyer of early supplier involvement? Select the THREE that apply.

Options:

A.

Clarity of roles and responsibilities

B.

Shared expertise for problem solving

C.

Improved understanding of seller capabilities

D.

Lower development costs

E.

Low costs of switching suppliers

F.

Supplier pre-qualification expertise

Question 56

Which of the following would you use to qualify new suppliers? Select THREE.

Options:

A.

competency

B.

cash

C.

culture

D.

cooperation

E.

coordination

Question 57

A buyer should concentrate their efforts on managing the start and onboarding stage of a supplier relationship by ...

    Keeping all information and plans confidential from the supplier

    Pre-qualifying and assessing the supplier's capability

    Focusing solely on the buying organisation's goals

    Building a positive and trusting relationship

Options:

A.

1 and 2

B.

1 and 3

C.

3 and 4

D.

2 and 4

Question 58

Under what circumstances should a competitive tender not be completed? Select TWO.

Options:

A.

When the items are of high value

B.

When the items are of low value

C.

When there is a clear specifications

D.

When there is not a clear specification

Question 59

Which of the following is not a stage in the relationship life-cycle?

Options:

A.

on-boarding

B.

qualification

C.

performance management

D.

design the specification

Question 60

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

Options:

A.

Bank manager

B.

Finance director

C.

Trade union managers

D.

Maintenance engineers

E.

Shareholders

Question 61

When using portfolio analysis, in which segment would you place a product with high expenditure, potentially provided by a large number of suppliers?

Options:

A.

Strategic

B.

Acquisitive

C.

Critical

D.

Leverage

Question 62

A common reason attributed to many partnerships failing is ...

Options:

A.

A bad advertising campaign

B.

Not winning every contract they bid for

C.

No contract being in place

D.

Poor communication

Question 63

In the 1990s, a manufacturer of portable music players partnered with a mini-disk producer. The aim of the partnership was to reduce the size and cost of the devices and enhance flexibility. Sales of the product after launch were low due to a competitive launch of small digital players, which offered better flexibility to customers at a comparable price. The partners suffered substantial loss and never recovered the investment. In order to mitigate the risk described, what should both partners have considered before investing in the product? Select the TWO that apply.

Options:

A.

Fast charging markers

B.

Customer price expectation

C.

New substitute technology

D.

Cost of investment

E.

Legal implication of partnering

Question 64

Which of the following are not stages of team development? Select TWO.

Options:

A.

Forming

B.

Mourning

C.

Achieving

D.

Adjourning

E.

Accepting

Question 65

Innovation is a key consideration when entering into a partnership. Is this statement true?

Options:

A.

Yes- joint innovation projects are often a strong motivation for entering into a partnership

B.

Yes- innovation is the only reason to enter into a partnership

C.

No- the key consideration when entering a partnership is cost reduction

D.

No- innovation is best achieved in a contractual relationship where KPIs can be monitored closely.

Question 66

Debbie is a procurement manager at a small manufacturer company. She had a contract in place with a company that provides uniforms, but finds that she doesn’t need to order much from them as the staff re-wear the same clothes to work. The contract has now expired. Should Debbie do a Competitive Tender to source a new contract?

Options:

A.

Yes – the contract has now expired so she must do a new competitive tender

B.

Yes- competitive tender is the only option to procure uniforms

C.

No- the contract is not of significant value

D.

No- Debbie should continue using the same supplier- it doesn’t matter that the contract has expired.

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Total 226 questions