Pass Your CIPS L4M6 Exam with Correct 120 Questions and Answers

Latest [Mar 30, 2023] 2023 Realistic Verified L4M6 Dumps

NEW QUESTION 51
Which of the following is a valid reason for ending a relationship with a supplier?

• A. the supplier has a new CEO who you don't like
• B. the supplier delivered one delivery late
• C. the contract has ended
• D. force majeur

Answer: C

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 52
Cigarettes and alcohol are often described as having an 'inelastic price'. What does this mean?

• A. Changes in price will not affect how much of the item is bought
• B. The product is subject to high rates of tax
• C. The product is subject to age restrictions
• D. Changes in price will greatly affect how much of the item is bought

Answer: A

Explanation:
A product with an 'inelastic price' means that consumption doesn't really depend on how much it costs. So you could increase the price of alcohol and cigarettes and people would tend to still buy them. A product with an elastic price means that a change in price would have a large affect on the number of people who bought the item. See p.95 for more details on price elasticity.

 

NEW QUESTION 53
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. Environment
• B. Equality
• C. Equity
• D. Ethics

Answer: 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

 

NEW QUESTION 54
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?

• A. No- Andrew should outsource the vanilla extract.
• B. Yes- partnership sourcing can improve performance which will ultimately satisfy the end customer
• C. Yes- partnership sourcing will improve sales figures
• D. No- Andrew should use an alternative supplier

Answer: B

Explanation:
The correct answer is 'Yes- partnership sourcing can improve performance which will ultimately satisfy the end customer'. The important thing to note in this Question: is the word 'monopolistic'. This means that there are no alternative suppliers- so the 'no' options are wrong- there are no alternative suppliers and no opportunity to outsource. The other answer is incorrect as sales figures isn't Andrew's concern - it's the complaints and quality of the product. Improving performance to satisfy end customers is therefore his main driver for considering a Partnership. See p. 127 for more information on Drivers of Partnership Sourcing. This comes up a lot in the exam

 

NEW QUESTION 55
What is the correct order of the stages of team development?

• A. Forming, storming, norming, performing
• B. Storming, forming, norming, performing
• C. Storming, forming, performing, norming
• D. Forming, norming, performing, storming

Answer: A

Explanation:
The correct answer is Forming, storming, norming, performing (p.91). Note; some people add on two additional stages to this; mourning and adjourning. The study guide forgets to mention this, but the exam may ask you about these additional stages. So I strongly recommend doing some further reading on this (it's called the Tuckman Group Development Model)

 

NEW QUESTION 56
The procurement department is sourcing new uniforms for its housekeeping team. Although the housekeeping team in itself doesn't hold a lot of power within the business, they have a high interest in the activity as it will be them who is wearing the items. When designing the specification, how should the procurement department manage the housekeeping team?

• A. Keep them informed- it's important the housekeeping team know what's going on at each stage of the procurement
• B. Manage them closely- they're key players in this procurement activity
• C. Minimal effort is required as they do not hold a lot of power in the business.
• D. Keep them satisfied- they will be wearing the uniform so need to be happy with it

Answer: A

Explanation:
The housekeeping team have low power and high interest. According to Mendelow's stakeholder matrix, this puts them in the bottom right corner which is 'keep informed'. See p.81 for more information

 

NEW QUESTION 57
Achieving value for money can often be described as the three Es? What are these?

• A. Efficiency, Economy, Ethics
• B. Effectiveness, Efficiency, Economy
• C. Economy, Efficiency, Environment
• D. Ethics, Environment, Economy

Answer: B

Explanation:
The three Es are; Effectiveness, Efficiency and Economy. Sometimes a 4th E is added which is Equity (but this is mainly for the public sector).

 

NEW QUESTION 58
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?

• A. Low quality product
• B. Uninformed stakeholders
• C. Increased Costs
• D. Intellectual Property Rights

Answer: D

Explanation:
The correct answer is 'Intellectual Property Rights'. Grey Stone will need to share its idea for the vaccine with the pharmaceutical company and this is risky if there is no trust between the parties. See p.134 for more information on Risks of Partnerships.

 

NEW QUESTION 59
Red Manufacturing work with around 40 different suppliers. One of these suppliers is Blue Business. Red Manufacturing order regularly from Blue Business, and have never had any issues with their performance. The materials Blue Business supply are of low value and there are several other suppliers of these materials in the market. What type of relationship should Red Manufacturing seek to have with Blue Manufacturing?

• A. arms-length
• B. adversarial
• C. single-source
• D. partnership

Answer: A

Explanation:
The correct answer is 'arms length'. This is a tactical purchase (as it is low value) and keeping the supplier at arms-length means that Red Manufacturing could possibly exploit them to reduce their prices (think back to the Kraljic matrix and where Blue Business would likely fall). A Partnership or Single- Source relationship requires investment into the relationship, and as the products are low value and Red Manufacturing have a lot of other suppliers, they should not be investing time in developing that relationship with Blue Business. An adversarial relationship wouldn't be advantageous as it may lower the performance of the supplier. See the relationship spectrum on p.5 - this is a hot topic for the exam

 

NEW QUESTION 60
Under what circumstances should a competitive tender not be completed? Select TWO.

• A. When the items are of high value
• B. When there is a clear specifications
• C. When there is not a clear specification
• D. When the items are of low value

Answer: C,D

Explanation:
Note the word 'NOT' in the question. In order for a competitive tender to be successful, there should be a clear specification in place (i.e. you need to know what you want, in order for suppliers to bid for it). Competitive tendering should also only be used for high value purchases; it's time consuming to do, so you wouldn't do it for low value items such as pens for the office. Therefore the correct answer to this question is 'items are of low value' and 'there isn't a clear specification'. There's a useful table on p.73 of when you would and wouldn't use a competitive tender.

 

NEW QUESTION 61
A doctor's surgery requires a complex database system to manage all of its patients data, which is highly sensitive. The system also needs to link to other departments of the health service such as physiotherapy and intensive care. The Manager of the surgery is considering outsourcing the management of the database to an IT company. What is the Manager's main motivation for doing this?

• A. This will result in economies of scale
• B. This will result in cost-savings
• C. The supplier is an expert in their field
• D. This will free-up internal resources

Answer: C

Explanation:
The reason for outsourcing in this example is that the IT firm is an expert in their field. The requirement is complex and important and this is the reason why it is not being delivered in-house. The other answers given CAN be reasons for out-sourcing, but don't relate to this example. For a full list of reasons a company could use outsourcing see p. 4-5

 

NEW QUESTION 62
Which of the following is characteristic of an adversarial relationship?

• A. They are only used for one-off purchases
• B. The outcome of the deal is more important than the long term relationship
• C. The communication is always poor
• D. The price is more important than the quality of the product

Answer: B

Explanation:
In an adversarial relationship "the outcome of the deal... is more important than maintaining the relationship over a long-term period" p.7. They can be characterised by poor communication and can be used for one-off purchases but be careful for words in answers such as 'only' and 'always', as these can be misleading; adversarial relationships aren't always for one-off purchases, and communication isn't always poor. The other answer is incorrect (price is more important) because it doesn't describe the relationship, which is what the question asked.

 

NEW QUESTION 63
In Public Sector procurement a PIN is sent out to inform suppliers of an upcoming tender opportunity. What does PIN stand for?

• A. Procurement Identification Number
• B. Possibilities Identified Notice
• C. Procurement Information Number
• D. Prior Information Notice

Answer: D

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 64
Togo Bongos is a manufacturer of percussion instruments, in particular of bongo drums. It requires electricity to run its factories and this is a major factor of cost impact. There are lots of suppliers of electricity in the market and there is no switching costs if Togo Bongos wanted to switch suppliers. What type of supplier is Togo Bongo's electricity supplier?

• A. bottleneck
• B. leverage
• C. strategic
• D. routine

Answer: B

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

 

NEW QUESTION 65
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. Invitation to Tender
• C. Pre-Qualification Questionnaire
• D. Request for Quotation

Answer: A,C

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 66
Varying levels of commitment is one reason why many partnerships fail. Why is this?

• A. Less profit is made.
• B. It can lead to a lack of trust
• C. One party doesn't fulfil their KPIs
• D. Sufficient time and resources are put in

Answer: B

Explanation:
The correct answer is 'It can lead to a lack of trust' - this is a quote from p.162. The other answers are all incorrect; in a partnership KPIs are joint between the parties- so there wouldn't be a situation where one party doesn't fulfil their KPIs. Commitment doesn't necessarily have a direct correlation with profit so that answer is incorrect. 'Sufficient time and resources are put in' is a positive thing, so can't be a reason who a partnership fails.

 

NEW QUESTION 67
In the 1990s a company spent a lot of time and money developing a device that you could carry around that could play CDs. The product spent a long time in development but when it was released the sales figures were very disappointing. This was in part due to the fact another product was released at a similar time which had much more developed technology and could play music without the cumbersome size of a portable CD player. Which of the following did the company not consider when developing the product?

• A. power of buyers
• B. rivalry among existing competitors
• C. threat of new entrant
• D. threat of substitution

Answer: D

Explanation:
The portable CD player has been replaced with a substitute product. This threat wasn't considered by the company and this resulted in poor sales. There are many questions in the exam on Porter's 5 Forces - see p. 39

 

NEW QUESTION 68
Sandra is a buyer for a large supermarket and has been increasing unhappy with the performance of a long-term supplier of bananas. Over time the deliveries have become unreliable and this has had impacts on the supermarket's profitability. What should Sandra do first?

• A. Give written notice to the supplier of plans to terminate
• B. Obtain business approval to terminate the contract
• C. Develop an exit strategy
• D. Review the market and look for an alternative supplier

Answer: B

Explanation:
The first step is to obtain business approval to terminate. If Senior Management don't give approval, then the rest of the stages can't happen and Sandra will be stuck with her current banana supplier. There's a good diagram on p.109 detailing the steps to supplier termination.

 

NEW QUESTION 69
Francisco has entered a partnership with Pedro, who is a key supplier, and wants to ensure that the partnership achieves all of Francisco's goals. As well as qualitative and quantitative KPIs, what other measures could Francisco take to ensure the partnership is a success?

• A. Conduct regular audits
• B. Threaten the supplier with termination if he underperforms
• C. Do frequent appraisals on the supplier
• D. Ensure there is a damages clause in the contract

Answer: A

Explanation:
The correct answer is 'Conduct regular audits'. This is explained on p.153. You wouldn't do an appraisal on a supplier in a partnership relationship as both parties are equal. Threatening a partner isn't good for the relationship and a damages clause would be used in a contractual relationship rather than a partnership.

 

NEW QUESTION 70
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. Condensed Procurement Vocabulary
• B. Common Procurement Vocabulary
• C. Clear Procurement Vocabulary
• D. Complete 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 71
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?

• A. The categories are hard to remember
• 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. Nowadays, Stakeholders fall into more than four categories

Answer: C

Explanation:
The correct answer is 'The Matrix doesn't consider whether the stakeholder is for or against the activity'. For a list of other limitations of using Mendelow's Stakeholder Matrix see p.82

 

NEW QUESTION 72
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. Using several suppliers instead of one
• B. Issuing POs electronically.
• C. Sharing up-to-date information
• D. Batch ordering

Answer: C

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 73
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