Free CIPS L4M6 Practice Exam with Questions & Answers | Set: 5

Explanation

Supplier development is time-consuming and resource-intensive so should only be done with strategic suppliers. P.14

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.

CIPS defines strategic suppliers as those that are critical to organisational performance, continuity of service, and risk management. In this scenario, the staffing agency directly impacts:

Patient safety

Operational continuity

Service delivery

For strategic suppliers, CIPS recommends adopting a partnership sourcing relationship, characterised by:

Long-term collaboration

High levels of trust and communication

Joint problem-solving and planning

Shared responsibility for performance outcomes

Transactional, tactical, or competitive sourcing approaches focus on short-term cost and flexibility and are not appropriate where service failure could have severe consequences.

L4M6 Reference:

Learning Outcome 3: Understand approaches to managing supplier relationships

Topic: Strategic suppliers and partnership sourcing

CIPS L4M6 Study Guide – Supplier segmentation and relationship strategies

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.

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.

In the context of the IT equipment industry,Technologicalfactors are paramount. The rapid pace of technological advancement influences product development, supply chain processes, and market competitiveness. Utilizing the STEEPLED framework, technological considerations would significantly impact the company's supply chain strategy.

As per the CIPS Intelligence Hub:

"STEEPLED analysis is a strategic planning methodology that can be used across all business functions to discover, evaluate, organise, and track external risk."

— CIPS Intelligence Hub: Using STEEPLED analysis to develop your supply chain

The relationship spectrum runs from adversarial/transactional to collaborative partnerships such as strategic alliances and co-destiny. Also included are mid-spectrum arrangements like single sourcing and arm’s length. Options 2 and 3 list valid relationship types, making 2 and 3 correct.

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

Explanation

This is a leverage supplier on the Kraljic Matrix; high cost impact and low risk impact. The diagram on p.20 gives the example of utility services such as electricity as a common leverage supplier. 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

Pareto Analysis is based on the 80/20 principle, which CIPS uses to help procurement professionals:

Identify the small number of items accounting for the majority of spend or value

Focus effort where it adds the most value

Key activities include:

Prioritising procurement time and resources (Statement 1 ✔)

Separating spend into critical few and trivial many (Statement 3 ✔)

Statement 2 relates to Kraljic portfolio analysis, and Statement 4 relates to supplier preferencing, not Pareto.

L4M6 Reference:

Learning Outcome 1: Understand procurement analysis and segmentation tools

Topic: Pareto (80/20) analysis

CIPS L4M6 Study Guide – Spend analysis and prioritisation