Ace CIPS L4M6 Certification with Actual Questions Apr 12, 2023 Updated
2023 The Most Effective L4M6 with 120 Questions Answers
CIPS L4M6 Exam Syllabus Topics:
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NEW QUESTION 22
Which of the following would you use to qualify new suppliers? Select THREE.
- A. coordination
- B. competency
- C. cooperation
- D. cash
- E. culture
Answer: B,D,E
Explanation:
This is based on a real exam question- it's looking to see if you can remember Carter's 10 Cs. These are; cash, cost, consistency, culture, clean, communication, competency, capacity, commitment and control. (p.12 in the text book)
NEW QUESTION 23
Which of the following is a valid reason for ending a relationship with a supplier?
- A. the contract has ended
- B. force majeur
- C. the supplier has a new CEO who you don't like
- D. the supplier delivered one delivery late
Answer: A
Explanation:
CIPS state the following reasons for the end of supplier relationships; the contract comes to a natural end, the contract is re-tendered, a material breach or the supplier becomes insolvent (p.15) In this case the only valid option is 'the contract has ended'.
NEW QUESTION 24
Victoria runs a hotel and has recently had several security issues such as attempted robberies. She has decided that she needs to hire a security firm to ensure these issues don't continue. She has done some research and has found there are several local security firms who may be able to provide services to her hotel. However, she hasn't decided exactly what she would require the security firm to do. What should be Victoria's next steps?
- A. Issue a Request for Proposal
- B. Issue a Request for Quotation
- C. Issue an Invitation to Tender
- D. Issue a Prior Information Notice
Answer: A
Explanation:
Victoria should use a 'request for proposal' - this allows the security firms to submit ideas on how best to serve the hotel. They might come up with some ideas that Victoria hasn't thought about and can price against their own ideas. As Victoria doesn't have a concrete specification, an ITT or RFQ are not appropriate. A PIN tells suppliers that a tender opportunity is coming up and is used in the Public Sector. A hotel is not a Public Sector organisation. See p.76 for more information on when to issue a Request for Proposal
NEW QUESTION 25
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 26
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 allows staff to focus on other areas
- B. There is dependency on the supplier, which increases risk
- C. This will be more expensive than providing the service in house
- D. The supplier will not perform as well as an internal team
Answer: B
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 27
Mandy is looking to source windows and doors for a new build apartment block. She has done some initial research and has discovered that there are many suppliers in the marketplace that can supply the items she needs. As it is a high-value project she is thinking of running a formal tender. What should be Mandy's first step?
- A. Run a restricted competition - send out a PQQ
- B. Run a restricted competition- send out a RFI
- C. Run an open competition - send out an ITT
- D. Run an open competition - send out a RFQ
Answer: A
Explanation:
The correct answer is 'run a restricted competition - send out a PQQ'. This Question: tests both your understanding of when to run open and restricted competitions (which is explained on p.75) and your understanding of tender documents. Mandy should run a restricted competition- there are a lot of options in the marketplace and this will allow her to pre-qualify those who best suit her requirements. Running an open competition when there are lots of suppliers would be too time-consuming- you need a way of making a short-list. When you run a restricted competition, the first stage is sending out a PQQ- pre-qualification questionnaire; this document is sent to suppliers asking for necessary information to support their qualification as an approved supplier.
NEW QUESTION 28
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.
- A. Request for Information
- B. Request for Quotation
- C. Invitation to Tender
- D. Pre-Qualification Questionnaire
Answer: A,D
Explanation:
Request for Information and Pre-Qualification Questionnaire can be used for short-listing suppliers. Request for Quotation is used when the only variable is price and you would like suppliers to submit a price for you. Invitation to Tender would be the next stage after RFI / PPQ- this is sent out to those suppliers who have passed selection, and details the second stage of the competition. See p.75 for more details.
NEW QUESTION 29
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?
- A. No- a separate legal agreement should be created to cover IPR
- B. No- a contract is not necessary if it is a partnership.
- C. Yes- IPR should always remain with the buyer- this will protect those rights
- D. Yes- IPR is a valid concern for both parties but will survive the termination of the agreement
Answer: D
Explanation:
The correct answer is 'Yes- IPR is a valid concern for both parties but will survive the termination of the agreement' (p.112). See the section on 'Legal considerations' in chapter 2.4
NEW QUESTION 30
Which of the following are considered 'wastes' which can be removed from a business? Select THREE.
- A. Inventory
- B. Equity
- C. Over-processing
- D. Stockout
- E. Transportation
Answer: A,C,E
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 31
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?
- A. arms length
- B. transactional
- C. strategic alliance
- D. outsource
Answer: C
Explanation:
As the component is vital to their business, ABC should seek a collaborative relationship with the supplier. There are three types of collaborative relationship (co-destiny, partnership and strategic alliance). Of these only strategic-alliance is given as an option. Remember - strategic purchase = collaborative relationship with supplier. There are many questions on the Relationship Spectrum on the exam. See p.5 for more details
NEW QUESTION 32
Which of the following are characteristics that differentiate between a partnership relationship and traditional contracting relationships? Select THREE.
- A. Lower costs
- B. No tender process
- C. No defined end period
- D. Early supplier involvement
- E. Supplier KPIs
Answer: B,C,D
Explanation:
The correct answers are; no tender process, early supplier involvement and no defined end-period. A partnership wouldn't automatically mean lower costs, and in a partnership the KPIs are usually a joint performance measurement rather than set to the supplier. For more information on the difference between partnerships and contractual relationships see p.124-5
NEW QUESTION 33
Which of the following are possible drivers for partnership sourcing? Select THREE.
- A. Working together will create synergies
- B. The protection of intellectual property rights
- C. The marketplace has become more volatile
- D. The need to improve performance to satisfy the end customer
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 34
Early Supplier Involvement can be described as a collaborative relationship between a buyer and a supplier to develop a new project. Handfield's model describes four different levels of supplier involvement ranging from none to 'black box' (which is when the design is primarily driven by the supplier. What other level features on this model?
- A. Red Box- when the supplier provides legal advice to the buyer on areas such as copywrite
- B. White Box - when there is informal integration and the buyer consults with a supplier on a design
- C. Grey Box - when the involvement is buyer driven
- D. Blue Box - when the buyer creates the product without input from the supplier
Answer: B
Explanation:
The Handfield ESI model is on p.98 and comprises of Black Box, Grey Box, White Box and None. Therefore Red and Blue can be automatically discounted. The correct answer is White Box as the definition given is correct. Grey Box is a formalised supplier integration; joint development activity between buyer and supplier. I have no idea why Handfield calls his system after coloured boxes- but it's only briefly mentioned in the study guide and is not likely to be a big topic in the exam.
NEW QUESTION 35
Which of the following are NOT one of the four key principles of procurement in the EU?
- A. Non-Discrimination
- B. Transparency
- C. Value for Money
- D. Proportionality
Answer: C
Explanation:
Value for money is not a principle of EU procurement. The four key principles are; transparency, non-discrimination, proportionality and equality of treatment. The principles are basically about ensuring the procurement process is fair. See p.75
NEW QUESTION 36
Which of the following are not a valid reasons to terminate a relationship with a supplier? Select TWO.
- A. The supplier made one late delivery
- B. The supplier has a change in senior management
- C. The supplier becomes insolvent
- D. The supplier suddenly increases prices
- E. Supply base rationalisation
Answer: A,B
Explanation:
Two invalid reasons are; one late delivery and a change in senior management. Valid reasons to terminate a relationship are listed on p.107 and include the three listed here, as well as a material breach, damage to reputation and the supplier merges or is acquired by another company.
NEW QUESTION 37
Fred is a new procurement manager at a large engineering firm. They procure 100s of components and use these to make kitchen appliances such as kettles and toasters. He has been asked by his manager to look into procuring a new component which will go into a new environmentally friendly kettle and has been asked to ensure that the firm receives value for money. What should Fred do?
- A. Invite known suppliers to bid for the contract
- B. Hold an open competition
- C. Put together a business case to make the product in-house
- D. Contact current suppliers to try and get a good deal
Answer: B
Explanation:
Fred should hold a competition as this is a 'key way of achieving value for money' p.67. Fred shouldn't put a business case together to make the product in-house without doing a make vs buy analysis, and that analysis showing make is the way to go. As the firm buy in 100s of components, it's very unlikely that making the component in-house would bring 'value for money'. He should also be careful of only looking at current suppliers or known suppliers- the best supplier of this new component might be unknown to the engineering firm at present.
NEW QUESTION 38
Which of the following is an advantage for the suppler of entering into a partnership with a buyer?
- A. The Intellectual Property Rights of the buyer become yours
- B. They may gain an increased volume of business
- C. There is more flexibility when selling the product
- D. They no longer have to try as hard to win business.
Answer: B
Explanation:
The correct answer is 'They may gain an increased volume of business'. The other options are just not true. See p.130 for advantages and disadvantages of partnerships from both the buyer and supplier's perspective. This is a hot topic for the exam.
NEW QUESTION 39
Rachel and Jacky work in the procurement department of Foddy Foods Ltd. They have been told by their CEO to build better relationships with strategic suppliers as this will create value for money for the company. In what ways can value for money be achieved by building strong relationships with suppliers? Select TWO.
- A. Reduction of waste
- B. Innovation developed as part of collaborative projects
- C. Reducing costs
- D. Better payment terms
Answer: A,B
Explanation:
Supplier relationships can result in value for money in the reduction of waste and in innovation developed as part of collaborative projects. Remember that in CIPS waste doesn't necessarily mean physical waste (as in stuff you don't want any more). There are 7 types of waste including waiting, inventory, transportation etc. So when you develop a relationship with a supplier, this can reduce waste (e.g. you may be able to get deliveries quicker by integrating your ordering system with the supplier's, or you might reduce transportation by agreeing a Consignment stock). Having a good relationship with a supplier isn't necessarily going to get you a reduction in cost or better payment terms. See p.70 for more details on this- there's a short list of ways in which good supplier relationships can bring value for money to a business.
NEW QUESTION 40
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 few suppliers 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?
- A. routine
- B. strategic
- C. leverage
- D. bottleneck
Answer: B
Explanation:
Friendly Flour Ltd is a strategic supplier; this is a critical supplier, responsible for core products. They represent a high risk impact and a high cost impact. This is the top-right hand corner of the Kraljic matrix. 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 (see p.20)
NEW QUESTION 41
In public sector procurement, tenders are advertised with CPV codes, which provide a reference to describe the product or service being tendered. What does CPV stand for?
- A. Complete Procurement Vocabulary
- B. Common Procurement Vocabulary
- C. Clear Procurement Vocabulary
- D. Condensed Procurement Vocabulary
Answer: B
Explanation:
CPV stands for Common Procurement Vocabulary. This is explained briefly on p.72 but it doesn't really go into much detail as to what CPVs are or how they work. CPVs are a string of numbers which refer to an object that is being procured. For example the CPV for Fire Doors is 44221220. When a Tender gets advertised for Fire Doors, it will have this CPV code on, and any suppliers who provide fire doors will get a notification if they have this CPV code on their profile. It's basically a code that links suppliers with tender opportunities.
NEW QUESTION 42
Lee is a procurement manager at Real Pirates Ltd and he has a contract with Peg Leg Industries for the supply of fake, wooden legs for his team of Pirates. Real Pirates Ltd have been working with Peg Leg Industries for almost 10 years but recently Lee has discovered he will need to terminate the contract due to 'Contract Frustration'. What could be the reason for this?
- A. The supplier has committed a material breach
- B. An unexpected incident has occurred beyond anyone's control
- C. The supplier has leaked confidential information about Real Pirates Ltd to a competitor
- D. The supplier has become insolvent
Answer: B
Explanation:
The correct answer is 'An unexpected incident has occurred beyond anyone's control'. A good example of this would be the Covid-19 pandemic- neither the buyer nor supplier could have predicted this, and if this means that the contract can't be completed - then the contract can be terminated (in the UK at least). A way to avoid this would be to include a Force Majeur clause listing possible circumstances that could occur. When there's a Force Majeur clause, these eventualities are now classed as foreseen rather than unforeseen. See p.108
NEW QUESTION 43
In Public Sector procurement a PIN is sent out to inform suppliers of an upcoming tender opportunity. What does PIN stand for?
- A. Possibilities Identified Notice
- B. Prior Information Notice
- C. Procurement Information Number
- D. Procurement Identification Number
Answer: B
Explanation:
A PIN is a 'prior information notice' - it is sent out before the ITT to let suppliers know that an opportunity is coming up and they should look out for it. See p 72 "supplier identification- public sector" for more details.
NEW QUESTION 44
According to Michael Porter, what is procurement?
- A. a primary activity which provides value for money
- B. a primary activity which provides a source of competitive activity
- C. a support activity which provides a source of competitive advantage
- D. a secondary activity which provides value for money
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 45
Value for money in the private sector is concerned with what?
- A. Shareholder profit and business benefit
- B. Ensuring taxpayers' money is spent wisely
- C. Getting the best quality possible
- D. Getting the best price possible
Answer: A
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.
NEW QUESTION 46
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