Which of the following is a stage in the relationship lifecycle?
- A . Decline
- B . Graduation
- C . Measuring
- D . Testing
A
Explanation:
The relationship lifecycle typically involves phases such as initiation, development, maturity, and decline. Decline is the final stage where the relationship’s effectiveness diminishes, necessitating review or termination. This aligns with CIPS guidelines, which emphasize monitoring and evaluating relationships over time to identify when changes or termination are required.
Which of the following are typical drivers for a partnership between the buyer and the supplier? Select the THREE that apply.
- A . The buyer has a high spend with the supplier
- B . There are many suppliers in the market
- C . The product is critical for the buyer
- D . The product is a commodity
- E . The product is technically complex
- F . The supplier provides the product to a buyer’s competitor
A, C, E
Explanation:
Drivers for partnership include a high spend with the supplier, criticality of the product, and technical complexity. These factors encourage collaboration for cost efficiency, quality improvement, and risk management. Partnerships are less likely when there are many suppliers or the product is a commodity, as competition and standardization reduce the need for close collaboration.
Which of the following options are legitimate reasons for terminating a contract? Select TWO that apply.
- A . You ordered 10,000 items instead of 1,000
- B . One of the contracted parties has clearly failed to perform its duties
- C . There has been a serious breach of contract terms
- D . Your internal stakeholder requested the wrong items
- E . Your MRP system placed a replenishment order that you do not need
B, C
Explanation:
Legitimate reasons for contract termination under CIPS guidelines include failure to perform duties and serious breaches of contract terms. Ordering errors or changes in stakeholder needs are not valid termination grounds unless explicitly stated in the contract. This protects both parties from unjustified termination risks.
Products or services that are more suitable for partnership sourcing match which of the following criteria?
- A . 1 and 2 only
- B . 2 and 3 only
- C . 1 and 3 only
- D . 2 and 4 only
A
Explanation:
Partnership sourcing is suitable for products that contribute to the buying organization’s unique selling point (USP) and for critical products on which key customers depend. This approach ensures strategic alignment and mutual benefits for both parties, focusing on collaboration rather than cost alone.
A partnership relationship in portfolio analysis is appropriate for which category of procurement?
- A . Strategic security
- B . Tactical profit
- C . Tactical acquisition
- D . Strategic critical
D
Explanation:
Partnership relationships are typically used for strategic critical items where the product is essential to operations, and the supplier’s input significantly impacts success. These relationships are nurtured through mutual trust and collaboration to mitigate supply risk and ensure long-term value.
Stephen Jones is assessing the relationships he has with his supplier base.
Which of the following would be drivers for Stephen to adopt a partnership relationship with a supplier?
- A . 1 and 2 only
- B . 2 and 3 only
- C . 1 and 4 only
- D . 2 and 4 only
D
Explanation:
High expenditure levels and the complexity of requirements justify partnership sourcing, as it allows for collaborative problem-solving, innovation, and cost-efficiency. CIPS emphasizes that partnerships are ideal when requirements are complex and require expertise from the supplier.
Sugar Doughnut Ltd has a jam supplier that they have used successfully for over ten years. They have made investments in the supplier’s factory to support them with capital equipment upgrades in return for cost reduction on jam. The two companies also collaborate on bids for large supermarkets when looking to supply doughnuts and work together on quality improvements. No contracts exist between the two companies.
Could this relationship be said to be a partnership relationship?
- A . No, because contracts do not exist between the two companies
- B . No, because they have only worked together for ten years
- C . Yes, because they have demonstrated close collaboration on various projects
- D . Yes, because they both operate in the food sector
C
Explanation:
The relationship qualifies as a partnership due to their collaboration, shared investments, and mutual efforts toward improvement, regardless of the absence of formal contracts. Partnerships focus on shared goals, trust, and strategic alignment rather than mere documentation.
A company supplies IT equipment and buys most of its components from first-tier suppliers in the UK. It wants to analyze its supply market to develop the supply chain and is going to review the main factors that have an influence. The company wants to use the STEEPLED external environmental analysis framework to achieve the best result.
Which of the following STEEPLED factors is most likely to have the greatest effect?
- A . Sociocultural
- B . Technological
- C . Economic
- D . Ethical
B
Explanation:
Technological factors play a pivotal role in IT equipment supply chains. Advancements, obsolescence, and innovation significantly affect production, cost, and competitiveness, making it a primary focus in supply chain development.
Which of the following are typical examples of partnering between companies? Select the TWO that apply.
- A . Sole trader
- B . Limited company
- C . Joint venture
- D . Strategic alliance
- E . Public limited company
C, D
Explanation:
Joint ventures and strategic alliances are examples of partnerships as they involve collaboration between entities to achieve shared objectives. Sole traders and public limited companies describe organizational structures, not partnership types.
A local council requires facilities management services for ten schools based in their region. This service is a high-spend, high-risk, critical contract.
Which sourcing approach would be the most appropriate?
- A . Request for quotation
- B . Competitive tendering
- C . Statement of source requirements
- D . Direct negotiation
B
Explanation:
Competitive tendering is the most suitable approach for high-risk, high-value contracts as it ensures transparency, fairness, and the selection of the most capable supplier based on predefined criteria.
An amicable style approach to ending a buyer-supplier relationship would be most appropriate in
which of the following circumstances?
- A . 1 and 2
- B . 1 and 3
- C . 3 and 4
- D . 1 and 4
A
Explanation:
An amicable approach is critical when alternative suppliers are limited or when ongoing collaboration is required during the termination period. Maintaining positive relations ensures smooth operations and protects reputations in the marketplace.
When a large organization partners with a small supplier to develop new technology, it is necessary for regular communication. Is this statement true?
- 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
B
Explanation:
Effective communication is essential in partnerships to ensure alignment on objectives, progress updates, and issue resolution. Regular communication builds trust and fosters collaboration, leading to successful outcomes.
In the STEEPLED framework, which of the following is an economic factor?
- A . Unemployment rates
- B . Demographics
- C . Supply chain labor standards
- D . Election results
A
Explanation:
Economic factors such as unemployment rates affect labor availability, wages, and consumer purchasing power, directly impacting business operations and supply chains.
Which one of the following would constitute a succession issue when terminating a relationship?
- A . Processing penalties
- B . Deletion of old specifications
- C . Continuity of supplies
- D . Payment of old invoices
C
Explanation:
Ensuring continuity of supplies is critical during termination to avoid disruptions. Succession issues focus on maintaining essential operations while transitioning to new suppliers or arrangements.
Price fluctuations can affect profitability. Is this statement correct?
- A . Yes, if the product’s costs increase and the price does not
- B . No, only decisions made by the chief executive affect the price
- C . No, price is not related to profitability
- D . Yes, as sales may drop if the product is price inelastic
A
Explanation:
Profitability is impacted when product costs rise without corresponding price adjustments.
Understanding cost-price relationships is key to managing profitability in procurement.
Joseph works as a category manager for a large electricity supply company. His company is one of six electricity companies in the country. All have a high annual spend on the same specifications of cable. There are only five cable manufacturers capable of supplying the cables. Joseph has established all the suppliers use the same raw materials using the same types of manufacturing lines. Prices tendered by all suppliers are very similar. After paying for the cable, Joseph’s company spends an additional 25% on moving and installing the cable.
In order to enable Joseph to gain advantage over the other electricity companies, which type of supplier relationship should he adopt?
- A . Single-sourced
- B . Closer tactical
- C . Transactional
- D . Partnership
D
Explanation:
A partnership relationship allows Joseph to collaborate with suppliers on cost savings in manufacturing, logistics, and installation, providing a competitive edge over rival companies.
A buyer has a requirement to purchase 1,000 widgets for a manufacturing company. The widgets are critical for the next stage of the manufacturing process.
What would be the key selection criterion for this buyer?
- A . Ability to deliver by the deadline
- B . Ability to produce low-cost widgets
- C . Ability to meet ISO standards
- D . Ability to add value to the order
A
Explanation:
Timely delivery is essential to prevent disruptions in critical manufacturing processes. While cost and standards are important, they are secondary when urgency and dependency are high.
Under which circumstances would a partnership sourcing approach be used?
- A . 1 and 2 only
- B . 1 and 3 only
- C . 1 and 4 only
- D . 2 and 4 only
B
Explanation:
Partnership sourcing is ideal for high-spend, high-risk situations where collaboration mitigates risks and maximizes value through innovation, efficiency, and trust.
Which of the following are features of a partnership sourcing relationship compared with a traditional adversarial relationship? Select TWO that apply.
- A . Emphasis on quality with zero defects
- B . Emphasis on the lowest price
- C . Emphasis on inspection of incoming supplies
- D . Emphasis on short-term relationship
- E . Emphasis on long-term relationship
A, E
Explanation:
Partnerships emphasize mutual goals such as quality improvement and long-term collaboration, contrasting with adversarial relationships that focus on cost and short-term gains.
A competitor develops an alternative type of vacuum cleaner to one produced by your organization.
Is this an example of the threat of substitutes, one of the five forces of competition described by competitive forces theory?
- A . Yes, customers may switch to alternative products
- B . Yes, there are no barriers to entry; it is an oligopoly
- C . No, it does not serve the same purpose
- D . No, it is a threat from a new entrant to the market
A
Explanation:
Substitute products pose a competitive threat by offering alternative solutions to customers, potentially eroding market share. Effective differentiation and customer retention strategies are essential.
A local government procurement team is undertaking a full review of their current internal working processes. The team of buyers currently have a partnership-style relationship with their routine suppliers.
Is this the best relationship style to use?
- A . No, as there are many suppliers available
- B . No, as these are critical items to the buying organization
- C . Yes, as they present a great deal of risk to the organization
- D . Yes, as these are low-value items
A
Explanation:
Routine suppliers typically supply low-value, low-risk items. Maintaining partnerships in such cases is inefficient since alternative suppliers are readily available. Adopting a transactional or adversarial relationship would be more appropriate.
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?
- A . Quality-based relationship
- B . Traditional contracting relationship
- C . Partnering relationship
- D . Cost-based relationship
C
Explanation:
A partnering relationship fosters collaboration and ensures the fitness expert is actively involved in developing insights, which is crucial for innovation and mutual success in a knowledge-sharing environment.
When overcoming stakeholder resistance in a procurement-led project, which of the following groups would have the highest level of influence on other stakeholders?
- A . 2 and 3 only
- B . 1 and 4 only
- C . 1 and 2 only
- D . 3 and 4 only
B
Explanation:
Negative leaders and promoters hold the most influence. Negative leaders can sway opposition, while promoters can actively advocate for project success. Managing these stakeholders effectively is crucial in procurement projects.
A company is relocating its manufacturing base to a low-cost country and is considering a partnership with a local supplier for its key components rather than a tender process. Although there are some concerns regarding confidentiality and component competitiveness, the procurement director is recommending a partnership strategy to the board of directors. The recommendation is based on a range of advantages including, but not limited to, gaining local market knowledge.
Is this a valid recommendation?
- A . No, because confidentiality risk will be higher in a partnership
- B . Yes, as intellectual property costs will be lower in a partnership
- C . No, local market knowledge is guaranteed in a tender process
- D . Yes, as investment costs can be shared in a partnership
D
Explanation:
Partnerships provide access to local market knowledge, enable shared investments, and mitigate risks associated with relocation. These advantages outweigh concerns that can be managed through strong contracts and confidentiality agreements.
An automotive company has hired Tom as the procurement manager. Tom is to manage a team of two people who have worked in the department for a number of years. Conflict exists between the two members of staff due to an overlap of responsibilities.
Which of the following processes would be most appropriate for Tom to use to reduce this conflict?
- A . Tom could avoid mentioning the conflict and hope that it is resolved without action
- B . Tom could hire an additional member of staff to take on some of the duties
- C . Tom could restructure the team so both members do not have to work together
- D . Tom could arrange a meeting and set performance targets for each member
D
Explanation:
Arranging a meeting to clarify roles and setting performance targets provides clear expectations and encourages accountability. This aligns with CIPS guidelines on managing conflicts through constructive engagement.
A common reason attributed to many partnerships failing is …
- A . A bad advertising campaign
- B . Not winning every contract they bid for
- C . No contract being in place
- D . Poor communication
D
Explanation:
Poor communication leads to misunderstandings, unmet expectations, and conflict, undermining partnerships. CIPS stresses the importance of transparent and regular communication to ensure alignment and success.
Which of the following are advantages for the buyer of early supplier involvement with the buyer’s product development team?
- A . 1 and 2 only
- B . 1 and 3 only
- C . 2 and 3 only
- D . 2 and 4 only
D
Explanation:
Early supplier involvement ensures the supplier understands process timelines and allows the buyer to leverage supplier capabilities. This improves product development efficiency and enhances outcomes.
Philip is working with a supplier where the annual spend is low but the market risk is high.
What portfolio analysis category would be appropriate?
- A . Strategic
- B . Leverage
- C . Non-critical
- D . Bottleneck
D
Explanation:
Bottleneck items pose high risk despite low spend. Effective management of these suppliers minimizes supply chain disruptions, aligning with portfolio analysis strategies.
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?
- 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
B
Explanation:
Setting minimum standards helps filter suppliers efficiently, ensuring that only capable and reliable suppliers are considered. This approach supports both cost and quality objectives.
Which one of the following is an advantage of early supplier involvement?
- A . Supplier is responsible for all intellectual property risks
- B . Large investment in supplier communications
- C . Understanding of supplier capabilities
- D . No need for supplier non-disclosure agreements
C
Explanation:
Early supplier involvement highlights supplier strengths and capabilities, enabling collaborative development. This supports innovation and optimizes the procurement process.
A law firm is ending an agreement with a client they have represented for many years.
What is the most important legal consideration to be taken before terminating?
- A . Employee rights
- B . Confidentiality
- C . Finance
- D . Security
B
Explanation:
Confidentiality is critical in professional relationships, especially for law firms, as they handle sensitive client information. Ensuring that all legal obligations to protect this information are met aligns with ethical and legal best practices.
When using competitive forces theory, suppliers are powerful in which of the following situations? Select THREE that apply.
- 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
A, B, D
Explanation:
Suppliers gain power when their products have limited substitutes, are highly differentiated, or when switching costs are high. These factors reduce buyer leverage and increase supplier influence, as described in Porter’s Five Forces model.
Which of the following are advantages of partnering?
- A . Supply chain consolidation
- B . Continual improvement
- C . Hard to displace
- D . Prioritization of transactions
A, B
Explanation:
Partnering supports supply chain consolidation and continual improvement by fostering collaboration and shared objectives. These benefits align with the strategic goals of building resilient and efficient supply chains.
Which of the following are the stages of team development?
- A . Starting, forming, benchmarking, performing
- B . Forming, storming, norming, performing
- C . Beginning, working, reviewing, performing
- D . Introducing, forming, managing, performing
B
Explanation:
The stages of team development as defined by Tuckman include forming, storming, norming, and performing. These stages reflect how teams evolve and mature through collaboration and problem-solving.
A textile company is purchasing a new item which is low value. This item is likely never to be required again by the company and is widely available from many different suppliers.
Which commercial relationship type would be most effective for the buyer to choose?
- A . Adversarial
- B . Closer tactical
- C . Outsourcing
- D . Partnership
A
Explanation:
For low-value, non-recurring items with many suppliers, an adversarial relationship focusing on competitive pricing and minimal engagement is most appropriate. Partnerships are unnecessary for such transactions.
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.
- A . Fast charging markers
- B . Customer price expectation
- C . New substitute technology
- D . Cost of investment
- E . Legal implication of partnering
B, C
Explanation:
Understanding customer price expectations and the potential for substitute technology are critical in product development to anticipate market trends and competitive threats, aligning with risk management principles.
A low-cost fashion retailer based in Europe is looking at adding value in their procurement activities. The retailer buys clothing for resale with a very small profit margin applied, relying on volume sales to make a profit.
Which of the following added-value approaches will be the most critical for the procurement team of the retailer to focus on with their supply chain?
- A . Improving timescales
- B . Quality enhancement
- C . Reduction of inventory
- D . Price management
D
Explanation:
Price management is crucial for low-cost retailers to maintain profitability. This includes negotiating better pricing, managing costs effectively, and ensuring competitive pricing for volume sales.
Construct Builders Ltd works very closely with a supplier called Solid Timber Co on house-building projects. They have a very close working relationship, sharing investment, setting pricing levels, and looking at sharing resources. The two companies also work closely together to set strategic directions and explore new markets for long-term growth. There is no formal contract in place between the two companies.
Using the relationship spectrum, what relationship does this scenario best describe?
- A . Constructive
- B . Transactional
- C . Co-operative
- D . Partnership
D
Explanation:
The relationship reflects a partnership due to the strategic alignment, resource sharing, and focus on long-term growth, even without a formal contract. CIPS highlights that partnerships are based on trust and collaboration.
How would a buyer measure value for money from a relationship with a new supplier for goods?
- A . Audit of how suppliers promise
- B . Lowest possible cost
- C . Balance of quality and cost
- D . Quality and volume of goods
C
Explanation:
Value for money is achieved through a balance of quality and cost, ensuring that the goods meet performance requirements while being cost-effective, as per procurement best practices.
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?
- 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
C
Explanation:
Cost modeling helps in understanding supplier pricing strategies, identifying cost drivers, and opportunities for negotiation or cost reduction, which supports profitability improvements.
Which of the following are examples of ways in which businesses can add value? Select THREE that apply.
- A . Through delivering excellent service
- B . Creating a win-win price
- C . Product features and benefits
- D . Reducing customer service levels
- E . Investing in customers
- F . Offering convenience
A, C, F
Explanation:
Adding value involves enhancing customer experience through excellent service, providing differentiated product features, and offering convenience. These align with procurement strategies aimed at driving customer satisfaction and loyalty.
The director of procurement for a global telecommunications firm has segmented their expenditure and has decided to focus on developing relationships with their bottleneck suppliers.
Is this the correct process?
- A . No, as there is lots of variety of goods available
- B . No, as there is vast competition
- C . Yes, as there are low costs to switching suppliers
- D . Yes, as there are little or no other options available
D
Explanation:
Bottleneck suppliers often control critical or scarce resources. Developing relationships with these suppliers is crucial to mitigate risks and ensure continuity of supply, per procurement best practices.
A large office orders weekly from a stationery supplier. The items are low-cost, and if the delivery is a day late, it does not affect the running of the office.
Where would this supplier be positioned in a supplier matrix?
- A . Routine
- B . Leverage
- C . Critical
- D . Bottleneck
A
Explanation:
Routine suppliers provide low-value, low-risk items with minimal operational impact. These suppliers are managed with minimal engagement or oversight in a cost-effective manner.
In the Purchasing Portfolio Matrix, a leverage product is a product in a market where it is easy to switch suppliers and the quality is standardized. Is this TRUE or FALSE?
- A . False, the product is in a supply market which is highly complex and the product is of low importance
- B . False, the product is in a supply market which is highly complex and the product is of high importance
- C . True, the product is in a supply market which is of low complexity and the product is of high importance
- D . True, the product is in a supply market which is of low complexity and the product is of low importance
C
Explanation:
Leverage products are characterized by high spend and low complexity, giving buyers the ability to negotiate favorable terms due to supplier competition and standardization.
A partnership approach to a buyer-supplier relationship, as opposed to a traditional adversarial approach, would have which of the following characteristics?
- A . Greater levels of transparency
- B . Increased supplier contractual terms
- C . Specifications designed by the buyer
- D . Shared cost benefits
A, D
Explanation:
Partnerships are built on trust and transparency, with shared benefits such as cost reductions and improved processes. Adversarial relationships, in contrast, focus on price and contractual obligations.
Hungry Sandwich Co. produces over 5,000 freshly made sandwiches on-site every day. The main ingredient that Hungry Sandwich Co. buys is bread. It is the item they spend the most money on, and they have a long-term partnership agreement with a local bakery to manufacture and supply fresh bread every morning. Using a supplier positioning matrix, which is the appropriate category for bread for Hungry Sandwich Co.?
- A . Non-critical
- B . Bottleneck
- C . Abundant
- D . Strategic
D
Explanation:
Bread is a strategic item due to its high spend and critical role in daily operations. A partnership approach ensures consistent quality and reliability, aligning with strategic supplier management principles.
Kyle Grant is a procurement director at ATSS Ltd and has introduced a new policy within the procurement function. The policy requires the procurement function to obtain quotations from multiple suppliers if a contract is worth over £10,000.
What is the primary aim of this policy?
- A . To deliver an agile process
- B . To ensure value for money is achieved
- C . To allow procurement to select the lowest price
- D . To enable a reduction in competition
B
Explanation:
Obtaining multiple quotations ensures value for money by comparing suppliers based on cost, quality, and other criteria. It promotes competitive pricing and informed decision-making.
Rivalry between suppliers is more likely to be intense in which of the following situations?
- A . 1 and 2 only
- B . 2 and 4 only
- C . 1 and 3 only
- D . 1 and 4 only
B
Explanation:
Intense rivalry occurs when suppliers are equally balanced and face high barriers to exit, leading to aggressive competition to retain market share, as described in Porter’s Five Forces model.
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?
- 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
A
Explanation:
Defining standards ensures clear expectations and provides a foundation for accountability and alignment, which are critical for the success of any partnership.
A comprehensive approach to managing the termination of a contractual relationship would include …
- A . Attacking the personalities, not the problem
- B . Setting aside the value of existing work done by both parties
- C . Giving qualitative feedback only
- D . Setting remedies and compensation for contractual breaches
D
Explanation:
Effective termination includes remedies and compensation to address any contractual breaches, ensuring fairness and compliance with legal and ethical obligations.
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?
- A . Risk assessments at the premises
- B . Method statements for previous contracts
- C . Price that will be charged
- D . Environmental impact assessment
B
Explanation:
Selection criteria focus on the supplier’s capability and experience (e.g., method statements). Award criteria are used to evaluate and compare proposals during the tender process, such as price or environmental considerations.
Which of the following would be benefits of partnership sourcing? Select TWO that apply.
- A . Reduction in inflation
- B . Reduction in costs
- C . No need for contracts
- D . Reduction in stakeholder numbers
- E . Continuity of supply
B, E
Explanation:
Partnership sourcing improves efficiency through cost reduction and ensures continuity of supply by fostering long-term, collaborative relationships with key suppliers, as highlighted in CIPS guidelines.
National Hospital Trust (NHT) has entered into a partnership relationship with a major facilities management provider. The two organizations have agreed on the approach to undertake regular reviews and audits. The audit approach will include which of the following?
- A . Category management and supplier rationalization
- B . Specification development and management
- C . Lessons learned and continuous improvement
- D . Macro and micro environmental analysis
C
Explanation:
Regular reviews focusing on lessons learned and continuous improvement ensure the partnership remains effective and aligned with objectives. This supports ongoing collaboration and operational excellence.
Which of the following tender processes available to a buyer involves a Pre-Qualification Questionnaire (PQQ) to identify, assess, and create a shortlist of suppliers being invited to the Invitation to Tender (ITT) stage? Select TWO that apply.
- A . Open Procedure
- B . Mini-Competition Procedure
- C . Restricted Procedure
- D . Two-stage Procedure
- E . Competitive Bidding Procedure
C, D
Explanation:
The Restricted and Two-stage procedures involve a PQQ stage to shortlist suppliers before issuing an ITT. This approach is common for contracts requiring stringent supplier qualifications.
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?
- 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
A
Explanation:
Complex and technical suppliers often involve high financial risks due to the critical nature of their products. A close relationship ensures better collaboration, risk management, and value generation.
A large construction group has a critical contract with a brick supplier. This represents high-value spend, and the contract has a five-year duration.
What type of commercial relationship would be the most appropriate?
- A . Partnership
- B . Transactional
- C . Closer Tactical
- D . Outsourcing
A
Explanation:
Given the criticality and high value of the contract, a partnership is most suitable. This allows for long-term collaboration, mutual investment, and risk sharing to achieve strategic goals.
Fashion buyer Kamal Sumai is working closely with a key overseas supplier and is monitoring and forecasting cost volatility within the fabric market. Kamal has decided it is the right time to raise a purchase order with his supplier for a greater quantity of fabric than he currently needs. Kamal is attempting to avoid an imminent price increase.
What is this tactic known as?
- A . Spot buying
- B . Forward buying
- C . Derivative buying
- D . Hedging buying
B
Explanation:
Forward buying involves purchasing in advance to lock in current prices and avoid future increases.
This strategy is effective in volatile markets where price hikes are anticipated.
What are the relationship characteristics of a Partnership?
- A . Short-term focus and one-off transactions
- B . An adversarial relationship
- C . Sharing ideas and risk
- D . Focus on price competitiveness
C
Explanation:
Partnerships emphasize collaboration, shared risks, and mutual benefits. Unlike adversarial or transactional relationships, they focus on long-term goals and joint value creation.
A partnership was created between a company and one of its local suppliers when the managing directors of each company met and thought partnering could be a good idea. No other departments were included in the discussions. The partnership has been in place for over a year, but neither of the companies has achieved any additional benefits. The company has been unable to offer any increased business to the supplier, and the supplier has been unable to improve on the quality of its products. The partnership is going to be terminated.
What is a possible main reason for the failure of
the partnership?
- A . Poor planning
- B . Market changes
- C . Distance barrier
- D . Cultural differences
A
Explanation:
Partnerships require careful planning, including alignment of goals, stakeholder involvement, and clear expectations. Poor planning leads to unmet objectives and lack of value generation, as highlighted by CIPS.
Which circumstances make a buyer more attractive to the supplier?
- A . Where the brand profile is high
- B . When the buyer negotiates longer credit terms
- C . Where the buyer exercises a stringent code of conduct
- D . When the buyer is very procedural in its systems
A, C
Explanation:
Buyers with a strong brand profile and adherence to ethical standards attract suppliers, as they provide market prestige and assurance of fair practices. This aligns with CIPS’s emphasis on ethical procurement.
According to Michael Porter, what is procurement?
- A . a support activity which provides a source of competitive advantage
- B . a primary activity which provides a source of competitive activity
- C . a primary activity which provides value for money
- D . a secondary activity which provides value for money
A
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
Which of the following are considered part of the ‘5 Rights of Procurement’? Select THREE.
- A . place
- B . quality
- C . cost
- D . focus
- E . time
A, B, E
Explanation:
The 5 Rights of procurement are; place, quality, quantity, time, price. (Price and Cost are not the same thing). See p.38
In a monopoly market, which of the following statements is true?
- 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
A
Explanation:
In a monopoly there is only one supplier- therefore their power is strong. Buyers in this market are price takers and their power is weak. There is generally a strong barrier to entry into a monopoly market so the threat of new entrants is low. There is no rivalry. There are many questions in the exam on Porter’s 5 Forces – see p. 39
In an oliogopy market, what would a regulator do?
- A . prevent price fixing and collusion
- B . stop the market becoming a monopoly
- C . ensure value for money for buyers
- D . ensure health and safety standards
A
Explanation:
In an oliogopy, supplier power is strong. Sometimes regulators are required in the market to prevent the group of suppliers conspiring together to artificially increase prices. See p.40 for more information on Oligopy markets.
Which of the following would not affect rivalry in a marketplace? Select TWO.
- A . industry growth or decline
- B . exit barriers
- C . switching costs
- D . supply chain disruption
- E . legislative changes
D, E
Explanation:
Legislative changes wouldn’t affect rivalry in a market as all suppliers would be equally as affected, the same with supply chain disruptions. Factors which do affect rivalry include; industry growth and decline, product differences, brand identity, switching costs, diversity of competitors and exit barriers. These are listed on p.41
Which of the following factors would you use to analyse the macro-environment? Select THREE.
- A . social
- B . cultural
- C . political
- D . philosophical
- E . legislative
A, C, E
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
Gabriel is a procurement manager who wishes to explore a new avenue to procure products for his company. His manager has told him that he should invite internal stakeholders to a meeting to get their feedback. Who should Gabriel invite? Select THREE.
- A . end-users
- B . legal department
- C . customers
- D . suppliers
- E . employees
A, B, E
Explanation:
Internal stakeholders are those who work within the business so include the legal department, employees and end-users. End-users mean those people and departments who will be using the product or service. For example if Gabriel is procuring new software- an end-user would be anyone who would be using that software (whether they’re employees, volunteers or agencies). CIPS outlines types of stakeholders on p.64
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?
- A . Equality
- B . Environment
- C . Equity
- D . Ethics
C
Explanation:
Equity is the fourth E- this means the extent to which the service is available. See p.65 for details on the 4 Es
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?
- 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
C
Explanation:
The correct answer is ‘no- as this was not the lollypop sticks intended purpose’. When deciding if something is fit for purpose, you must consider its intended and common purpose. In this case it would be for making lollypops. As the garden centre is using them for something other than their intended purpose, they can’t complain if it doesn’t work. Fit for purpose is discussed on p.65 p.s. there’s a QUESTIO N N O : like this in the real exam C it’s just not lollypop sticks ; )
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 . Hold an open competition
- B . Contact current suppliers to try and get a good deal
- C . Invite known suppliers to bid for the contract
- D . Put together a business case to make the product in-house
A
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.