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NEW QUESTION # 217
Elaine works for a British manufacturer of confectionary (sweets/ candy) items. One of the key ingredients is cocoa powder, which cannot be grown in the UK. Elaine therefore needs to look abroad for suppliers. Which of the following are risks that Elaine needs to consider when sourcing internationally? Select THREE
Answer: A,B,E
Explanation:
The correct answers are; currency exchange fluctuations, ethical behavior and cultural differences.
Shortened lead times is not correct because sourcing internationally would result in longer lead times. Export tariffs is not correct as Elaine is importing the items into the UK, not exporting them.
NEW QUESTION # 218
Which of the following would you use to work out a company's gearing ratio? Select TWO.
0current liabilities
Answer: B,D
Explanation:
Gearing measures how much of an organisation's long-term funding is made up of long term debt and loans.
Therefore the correct answers are 'shareholder equity' and 'long term debt'.
There are many question about financial ratios that can come up on the exam. If you're unsure on them I suggest doing further reading outside of the study guide as this will help. I like this youtube video (I'm not associated with the makers of this video but think they're really good at explaining things to beginners) Gearing Ratio explained (youtube.com)
NEW QUESTION # 219
Foresttors Plc is negotiating a new contract for the procurement of timber, a crucial component of its production operations. The company has incorporated environmental, social, and governance (ESG) reporting requirements into the contractual terms. Is this a valid approach?
Answer: C
Explanation:
Incorporating ESG requirements into contractual terms is a valid and increasingly common approach. It ensures that suppliers are contractually obligated to adhere to specific environmental, social, and governance standards, aligning with the buyer's commitment to responsible sourcing. This practice not only promotes ethical behavior but also mitigates risks associated with non-compliance, such as reputational damage or legal penalties.
Exact Extract from Study Guide:
"This unit focuses on responsible procurement practices, ensuring that sourcing decisions align with legal, environmental, and social governance (ESG) principles."
NEW QUESTION # 220
Scott is a procurement manager who is evaluating a bid from a supplier to provide a new IT system to his office that will be used by 100 employees. He is considering the total life-cycle costs. Which of the following should Scott consider? Select THREE
Answer: A,D,E
Explanation:
total life-cycle costs include; acquisition costs, maintenance and training.
Added value and functional fit are quality criteria that should also be evaluated when selecting a supplier, but do not fall under total life-cycle costs.
Note: total life cycle costs and whole life asset management are the same thing. You may see both terms used in the exam. I think CIPS is moving more towards Whole Life Asset Management now as the preferred vocabulary but they're the same thing.
NEW QUESTION # 221
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?
Answer: C
Explanation:
At supplier selection stage, unsuitable suppliers should be removed (those that do not add value or pose a risk).
At develop strategy stage you're not even looking at suppliers yet- you're just deciding what you need. At contract award and asset management it's too late.
CIPS procurement cycle - Procurement Supply Cycle | CIPS
NEW QUESTION # 222
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