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| Topic | Details |
|---|
| Topic 1 | - Understand options for sourcing requirements from suppliers: This section covers the sourcing process, approaches, options, and award criteria for obtaining requirements from suppliers. The sub-topics provide a foundation for strategic sourcing.
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| Topic 2 | - Understand compliance issues when sourcing from suppliers: It explores legislative, regulatory, and organizational requirements for sourcing. It compares the use of audit and other mechanism of feedback.
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| Topic 3 | - Understand the key processes that can be applied to the analysis of potential external suppliers:
|
| Topic 4 | - This section examines analyzing market data, obtaining quotations
- tenders, and assessing responses. The sub-topics focus on key processes for evaluating potential suppliers.
|
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CIPS Ethical and Responsible Sourcing Sample Questions (Q28-Q33):
NEW QUESTION # 28
Jamilla is looking to find a new supplier who can deliver raw materials of wood and paper to her company Woody Manufacturing Incorporated. The requirement is for regular orders of high volume. She has issued a Request for Quotation. What will this assess the suppliers on?
- A. which price is the most ethical
- B. who can deliver the items the cheapest
- C. the five rights of procurement
- D. who can deliver the highest quality items
Answer: C
Explanation:
According to p.75 "a RFQ attempts to assess which supplier can achieve the Five Rights of Procurement".
Although price is the only factor considered when using a RFQ- it's important to consider this price in detail; can the supplier deliver the right QUALITY of product for this price?, can they deliver the item WHEN we need it for this price? etc.
The answer is not 'who will deliver it the cheapest' because Jamilla might not pick the cheapest sup-plier. If the cheapest supplier has inferior quality paper, or can only make deliveries every other Tuesday then Jamilla may not select them.
NEW QUESTION # 29
What type of ratio measures a company's ability to meet short-term obligations, focusing on converting assets to cash?
- A. Liquidity ratio
- B. Dividend per share
- C. Earnings per share
- D. Profitability ratio
Answer: A
Explanation:
Liquidity ratios (e.g., current ratio, quick ratio) measure whether a company can cover short-term debts with liquid assets like cash, receivables, and inventory. These ratios provide insight into a supplier's ability to remain operational without defaulting on immediate obligations. Profitability ratios show long-term returns; EPS and dividends per share apply to shareholders, not supply continuity. Responsible sourcing emphasises liquidity as a key measure of supplier stability, as poor liquidity can cause supply interruptions or business failure, jeopardising contracts and buyer obligations.
Reference: CIPS L4M4 Study Guide (v2), LO: "Application" - financial appraisal, liquidity assessment.
NEW QUESTION # 30
Which of the following would you use to work out a company's gearing ratio? Select TWO.
0current liabilities
- A. shareholder equity
- B. net profit
- C. gross sales
- D. long term debt
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 # 31
In which circumstances would it be relevant to apply the Pareto principle (80/20 rule) to supplier expenditure analysis? (Select TWO)
- A. To identify expiry dates of contracts
- B. To identify optimum opportunities to change supplier relationships
- C. To identify performance-related payment frequency
- D. To identify extent of cost variation in a contract
- E. To identify strategic suppliers requiring closer management
Answer: B,E
Explanation:
The Pareto principle (80/20) shows that around 80% of spend is often concentrated with 20% of suppliers. It is relevant for identifying strategic suppliers (D) that require close management and opportunities to improve or change relationships (E) for greater value. Contract expiry dates (B) and payment frequency (A) are administrative details, not Pareto analysis outputs. Cost variation (C) relates to performance analysis, not spend concentration. Responsible sourcing uses Pareto analysis to allocate resources effectively, focusing attention on the most impactful supplier relationships.
Reference: CIPS L4M4 Study Guide (v2), LO: "Implementation" - spend analysis and supplier relationship management.
NEW QUESTION # 32
Credit rating agencies can assist procurement professionals. Typically, which of the following can be obtained from a credit rating agency report? Select TWO that apply.
- A. Product pricing information
- B. Tender submission pricing
- C. Payment history
- D. Rebate information
- E. Financial stress score
Answer: C,E
Explanation:
Payment history and financial stress scores provide insights into a supplier's financial health and stability.
This information is crucial for procurement professionals in assessing whether a supplier can fulfill long-term commitments, supporting responsible sourcing by mitigating financial risks.
NEW QUESTION # 33
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