Free CIPS L5M6 Practice Exam with Questions & Answers | Set: 3

Risk assessments in procurement often use a likelihood × severity matrix. Risks are scored on scales from 1–5, and the scores are multiplied. A score of 2 indicates a minor risk with low impact and/or low probability. For comparison, risks with scores in the upper range (e.g., 20–25) are considered major risks that demand immediate mitigation. Minor risks, although not ignored, are often monitored rather than heavily resourced. This structured approach ensures procurement teams focus resources on the most significant threats while still maintaining oversight of low-level risks. By categorising risks this way, category managers create clarity for decision-makers and align procurement risk management with enterprise-wide frameworks.

The first step in A.T. Kearney’s 7 Step Model of Strategic Sourcing is Supplier Portfolio Generation. The model provides a structured approach to sourcing, beginning with an understanding of current spend and supplier landscape before progressing to strategy development and implementation.

The seven steps are:

Profile spend and supply base.

Develop sourcing strategy and cost comparison.

Generate supplier portfolio.

Select implementation path.

Select competitive suppliers.

Integrate operations with suppliers.

Continuously benchmark supply market.

The reason supplier portfolio generation is first is because procurement must identify potential suppliers and the overall supply base structure before choosing strategies or engaging in competitive selection. Skipping this step risks building a strategy without understanding available market options.

Thus, while options C and D are important later in the process, they cannot occur without first mapping the supplier portfolio.

[Ref: CIPS L5M6 Study Guide, Chapter 1.2 – Strategic Sourcing Models, esp. p.31–32]

This is a bottleneck item. According to the Kraljic Matrix, bottleneck items are characterized by high supply risk and low profit impact, which makes them difficult to source. Holding contingency stock is a recommended strategy for such items.

CIPS highlights that the review stage of the Procurement Cycle offers the greatest opportunity to add value. This is because it involves assessing whether objectives have been met, identifying lessons learned, and capturing continuous improvement opportunities. While specifying requirements and supplier selection are critical, the review stage ensures that outcomes are measured against expectations and future strategies are refined. For example, reviewing contract performance may reveal contract leakage or highlight areas where better supplier engagement could drive innovation. This feedback loop transforms procurement from a transactional process into a learning system. By institutionalising review mechanisms, organisations improve their resilience and ensure that procurement strategies evolve with business needs and market changes.

Supplier power is strong when buyers have fewer choices and suppliers have leverage. This occurs where:

No substitutes are available [A]: Buyers are locked into what suppliers provide, increasing supplier power.

Supplier’s customers are fragmented [B]: When customers are fragmented [many small buyers], they cannot collectively negotiate, so suppliers hold more power.

Forward integration is possible [D]: Suppliers can bypass buyers and sell directly to the end customer, which gives them negotiating strength.

Options C and E relate more to buyer power:

Switching costs are low [C]: This reduces supplier power as buyers can easily move.

Undifferentiated products [E]: This strengthens buyer power since products are interchangeable.

[Ref: CIPS L5M6 Study Guide, p.116 – Porter’s Five Forces model]

The correct answer is CSR [Corporate Social Responsibility]. In modern procurement, tenders are no longer evaluated solely on price and quality. Organisations increasingly consider ethical, environmental, and sustainability performance as part of supplier evaluation. CSR factors include labour practices, carbon footprint, use of sustainable materials, and compliance with ethical trading standards.

Other options represent different procurement tools but are not additional evaluation factors:

TCO [Total Cost of Ownership]: A financial analysis tool, not a tender factor.

ITT [Invitation to Tender]: A formal document, not a factor.

PQQ [Pre-Qualification Questionnaire]: Used for initial supplier screening, not tender evaluation.

Integrating CSR into tenders reflects the wider move towards responsible procurement. It ensures suppliers align with the buyer’s values and long-term risk management priorities.

[Ref: CIPS L5M6 Study Guide, p.39 – CSR considerations in tenders]

Reeves, Moose and Venema (2014) established that products move through the four quadrants of the BCG matrix more quickly in the modern business environment compared to the past. This is a reflection of faster innovation cycles, market saturation, and increased competition. The other three statements are the opposite of what their research proved.