Ethical and Responsible Sourcing - L4M4 Exam Practice Test

Question 1

The procurement team received an urgent request from the business to source quotations forpest control services. The team decided to use a local newspaper to advertise the requirements. Was this an appropriate approach to use in the circumstance?

A. No, because they might receive too many irrelevant proposals which may delay the assessing process

B. Yes, so that the local pest control sector can decide between them who should bid

C. No, because international vendors must also be notified of the opportunity

D. Yes, they must seek as many bids as possible even if it takes longer

Correct Answer: A

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Question 2

During which stage of the procurement cycle would you remove suppliers that do not add value, or could pose a risk to the buying organisation?

A. asset management

B. supplier selection

C. contract award

D. develop strategy

Correct Answer: B

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Question 3

Philip is a procurement manager at XYZ Company which imports raw materials from abroad. Sup-pliers provide quotes to Philip in their local currency. Is this the best way to reduce the risk to XYZ Company of currency fluctuations?

A. yes- this means the price won't go up or down

B. no- quoting in the supplier's currency does not affect the risk to the buying organisation

C. no- quoting in the supplier's currency increases the risk for the buyer

D. yes- this puts the risk on the supplier

Correct Answer: C

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Question 4

What is the best way to prevent potential issues of conflicts of interest?

A. openly declare potential conflicts

B. do not work with suppliers who have relationships with the procurement team

C. do not hire family members

D. create a risk register

Correct Answer: A

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Question 5

An organisation wants to measure its Triple Bottom Line. Which of the following should be considered to help achieve this goal?

A. Procedure and process performance

B. Innovation and creativity performance

C. Financial and environmental performance

D. Quality and lead time and performance

Correct Answer: C

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Question 6

Which of the following financial documents would show whether a supplier has sufficient funds to pay their subcontractors in the short term?

A. balance sheet

B. profit and loss account

C. ESG policy

D. cash flow statement

Correct Answer: D

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Question 7

Tulip Rose Industries is using a restricted approach to tendering for a new contract for the facilities management of their seven factories which produce furniture made of organic materials. What is likely to be the reason they are using a restricted approach?

A. interest in the tender opportunity is likely to be high

B. the suppliers are likely to be unqualified

C. the requirement is complex

D. interest in the tender opportunity is likely to be low

Correct Answer: A

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Question 8

Using a weighted scorecard to assess and compare supplier proposals is beneficial for which of the following reasons?

A. It provides an objective and consistent approach to evaluating bids and ensures that best value for money is achieved

B. It increases bias towards suppliers who otherwise might not have been awarded the contract

C. Deciding on what score to give each criterion is subjective and can avoid transparency in the selection process

D. The focus on price simplifies the assessment process, making it easier to select the lowest cost supplier

Correct Answer: A

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Question 9

Greg is doing some research on a potential supplier and is concerned that the supplier's funding is based on long-term debts and loans. Working with this supplier therefore might bring additional risks to Greg's business. What should Greg do about his concerns?

A. work out the supplier's gearing ratio

B. do an Acid Test

C. use the Return on Investment Ratio

D. work out the supplier's EBITDA

Correct Answer: A

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Question 10

Sourcing is part of the procurement cycle and is likely to be used in conjunction with which activities? (Select TWO)

A. Raising purchase requisitions

B. Uploading goods received notes

C. Requesting quotations

D. Creating call-off orders

E. Identifying potential suppliers

Correct Answer: C,E

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Question 11

A buyer is considering trading with a new overseas supplier and wants to assess anti-bribery risks in that country. Which information sources would be useful? (Select TWO)

A. International Court of Arbitration (ICC)

B. International Standards Organisation (ISO)

C. United Nations Sustainable Development Goals (UNSDGs)

D. Local Anti-Corruption Legislation

E. Transparency International (TI)

Correct Answer: D,E

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Question 12

The procurement team at Grape Juice Limited often use a weighted point system when ap-praising potential suppliers. What is a disadvantage of using a weighted point system?

A. it allows transparency

B. it is hard to be objective

C. it is time-consuming to create

D. it is easy to manipulate

Correct Answer: A

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Question 13

It is important that buyers take an approach that is reasonable and fair when selecting suppliers to work with.
Which of the following is a voluntary document which can help procurement professionals treat suppliers respectfully?

A. EU Procurement Directive 2014

B. ISO 9001

C. ILO is an organization

D. CIPS Code of Conduct

Correct Answer: D

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Question 14

Mark is an audio visual category buyer in the public sector and is looking to purchase a large quantity of interactive screens for medical lecture rooms across a university campus. Mark expects this to cost in excess of £950,000 and suggests to his user group that a competitive tendering process should take place. Was this the right approach?

A. Yes, as all public sector procurement should go through a competitive tendering process

B. No, competitive tendering should only be used when the value justifies the resources required

C. No, because the competitive tendering process will be time-consuming for the university

D. Yes, because the anticipated value requires a competitive tendering process to take place

Correct Answer: D

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Question 15

A company has a requirement for an item that has been identified as strategic on the positioning model. The company needs to invite competitive tenders and make sure the selected supplier of this item is in a good financial position. What should the company ask the suppliers to send to show that their current assets cover their current liabilities?

A. Profit and loss account

B. Gearing ratio

C. Acid test

D. Annual turnover

Correct Answer: C

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CIPS Ethical and Responsible Sourcing - L4M4 Exam Practice Test

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