CIPS Supplier Relationships L4M6 Exam Practice Test

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Total 243 questions
Question 1

You work at XYZ manufacturers and a competitor has just released a rival washing machine to the product that you make. This model is proving popular with customers. What competitive force is at play?



Answer : B, B

This is a threat of a new entrant. The competitor has now entered the washing machine market and is competing directly with you. This is not a threat of substitution as it is the same product. A substitution would be if they invented a new product that washed clothes and people started buying this instead of washing machines. There are many questions in the exam on Porter's 5 Forces - see p. 39


Question 2

Which one of the following is an advantage of early supplier involvement?



Answer : C

Early supplier involvement highlights supplier strengths and capabilities, enabling collaborative development. This supports innovation and optimizes the procurement process.


Question 3

Which of the following relationship types require the most investment from the buyer?



Answer : A, A

Partnerships require the most investment out of those listed. The only relationship type that requires more investment than Partnerships is Co-Destiny. See p.9 for more information on this


Question 4

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?



Answer : D

A partnership relationship allows Joseph to collaborate with suppliers on cost savings in manufacturing, logistics, and installation, providing a competitive edge over rival companies.


Question 5

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?



Answer : B, B

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.


Question 6

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?



Answer : B, B

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.


Question 7

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?



Answer : D, D

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.


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Total 243 questions