CIPS L4M4 Exam Practice Test Instant Access

Question 1

Zeb is a Procurement Manager at Zig Zag Zips manufacturing. The organisation has a complex supply chain and works with 46 different suppliers, many of these international. Which of the follow-ing would be the most useful for Zeb to address issues of Modern Slavery?

Acarry out regular due diligence checks on the supply base

Bensure all 46 suppliers publish an Anti Slavery Statement in line with the Modern Slavery Act

Cwork with less suppliers to reduce the risk of slavery entering the supply chain

Dask all suppliers to get Fair Trade accredited

Answer : A

Carry out due diligence is the correct answer. The other answers are incorrect:

- ensure all 46 suppliers publish an Anti Slavery Statement in line with the Modern Slavery Act is wrong because the question states that some suppliers are international. The legislation is UK, meaning international suppliers don't have to do the statement. It also only applies to companies with a turnover of 36m, and some of Zeb's suppliers may be smaller than this.

- work with less suppliers to reduce the risk of slavery entering the supply chain is a silly answer be-cause Zeb probably needs all of his suppliers. There's probably a reason he uses that many.

- ask all suppliers to get Fair Trade accredited is also a silly answer. Fair Trade only exists in some industries such as cocoa and bananas. Zig Zag Zips is in manufacturing so it's probably not going to be able to fairtrade accredit some of the stuff it buys.

Question 2

The Freedom of Information Act is a piece of UK legislation which allows members of the public to request information on issues such as public sector sourcing. When a request is made, it is compulsory for the public sector to provide this information to the public. Is this statement true?

Ayes- the information must be provided within 28 days

Byes- the information must be posted publically online

Cno- the public sector can choose not to publish information if it is not deamed to be in the public interest

Dno- the public sector does not need to provide information on sourcing activities

Answer : C

the correct answer is 'no- the public sector can choose not to publish information if it is not deemed to be in the public interest'.

They use something called the 'public interest test' to determine if the information should be re-leased or not. For example they may not respond to a request asking how many bullets the UK Army has in storage, as that would be detrimental to national security interests.

Responses to requests are made within 21 days, not 28.

Question 3

Bob works in the procurement department of a construction firm. He has been asked to procure an item for a short-term project which is considered low risk. What type of sourcing will he be completing?

Atactical

Bstrategic

Coutsourcing

Dinsourcing

Answer : A

tactical is the correct answer; items that are short-term or low value are considered tactical.

Strategic sourcing is long term and high value.

Outsourcing is moving a key business function to an external company.

Insourcing is bringing a previously outsourced part of the company back in-house.

Question 4

Which of the following financial ratios would indicate a supplier's potential exposure risk to a steep rise in inflation?

Aacid test

Bcurrent ratio

Cgross profit margin

Dgearing ratio

Answer : D

The correct answer is 'gearing ratio'.

Gearing measures how much of a company's funding is based on long-term debt or loans- this would be affected by a steep rise in inflation. If a company has a mortgage on their offices or facto-ry and they need to remortgage and inflation has gone up a lot- they'll be paying a lot more on their mortgage. This will severely effect the gearing ratio as they'll have more outgoings than incoming.

Gross profit margin COULD be affected by inflation, for example if you've got hyper-inflation and the country goes into recession and people stop buying your product. However, this answer isn't al-ways right and depends on many factors- the industry, the product, the company etc, so for the purpose of CIPS should be discounted. There are many industries which are immune to inflation.

Question 5

Weighted points systems can be applied to evaluate and compare potential suppliers. For which of the following factors would it be appropriate to use this method?

Financial stability

Supplier reliability

Market demand

Negotiation styles

A1 and 2 only

B2 and 3 only

C3 and 4 only

D1 and 4 only

Answer : A

Financial stability and supplier reliability are quantifiable factors suited to weighted points systems, allowing procurement professionals to objectively assess and compare suppliers. This method aligns with ethical sourcing practices by promoting fairness and transparency in supplier selection.

Question 6

A business may be faced with the challenge of deciding whether to source some of its requirements from external suppliers or whether to make them internally. Which of the following factors is likely to justify the decision to make the requirements internally?

AThe other suppliers are using older technology

BThe availability of in-house competencies and capacity to carry out the production

CExternal suppliers are likely to be overcharging

DExternal sourcing involves cumbersome tendering procedures

Answer : B

Internal production is often justified when a company has the necessary competencies and capacity. This approach aligns with responsible sourcing by leveraging internal capabilities for better control over quality, cost, and compliance with ethical and environmental standards.

Question 7

Damian is a procurement professional in the Public Sector. He has recently run a competition to source new uniforms for hospital staff and has decided on a suitable supplier. Should Damian con-duct post tender negotiation with the supplier?

Ayes- post-tender negotiation may result in a lower price and thus better value for money

Byes- all tender processes should include post-tender negotiation

Cno- this isn't necessary as Damian has selected the most appropriate supplier

Dno- it would be against the law for Damian to do this

Answer : D

Damian works in the Public Sector- it is against the law for the public sector to conduct 'post tender negotiation' after a contract has been awarded. This is because it's not transparent and equal opportunities, which are founding principles of public sector procurement.

Private sector can do whatever they want. They can do post-tender negotiations.

NOTE: this is currently the rules as per Public Contract Regulations 2015. These are being superseded in October by new legislation. The study guide doesn't mention this, but it's happening. At the time of writing (January 2023) we don't have the full details about what the new rules are but I doubt they will change on this particular topic. You can find out more about the changes to Public Sector Procurement here: Transforming Public Procurement - GOV.UK (www.gov.uk)

CIPS Ethical and Responsible Sourcing L4M4 Exam Practice Test