Free and Premium CIPS L4M6 Dumps Questions Answers

Explanation

Tail spend items are low value, high volume. P. 132

Explanation

The three right answers are competing, collaborating and compromising. See the Thomas Kilmann Model on p.87. There are quite a few questions on this in the exam.

Explanation

The correct answer is ‘An unexpected incident has occurred beyond anyone’s control’. A good example of this would be the Covid-19 pandemic- neither the buyer nor supplier could have predicted this, and if this means that the contract can’t be completed – then the contract can be terminated (in the UK at least). A way to avoid this would be to include a Force Majeur clause listing possible circumstances that could occur. When there’s a Force Majeur clause, these eventualities are now classed as foreseen rather than unforeseen. See p.108

Explanation

This is 'cost focus' - Kinky Boots is both focusing on being a cost leaser (by providing the cheapest products) and focusing on a niche market (drag queens). When these two strategies are combined it is called 'cost focus'. There's a couple of questions on Porter's Generic Strategies in the exam- there's a useful diagram of this on P.13

Explanation

The correct answer is ‘Intellectual Property Rights’. Grey Stone will need to share its idea for the vaccine with the pharmaceutical company and this is risky if there is no trust between the parties. See p.134 for more information on Risks of Partnerships.

Comprehensive and Detailed Explanation:

In strategic partnerships, including a continuous improvement clause is vital. This clause commits both parties to ongoing efforts to enhance processes, reduce costs, and improve quality over time. Such a commitment ensures that the partnership remains dynamic and responsive to changes, fostering long-term collaboration and mutual benefit.

Explanation

The correct answer is TUPE: Transfer of Undertakings (Protection of Employment). Details on TUPE can be found on p.115

Explanation

In an oliogopy, supplier power is strong. Sometimes regulators are required in the market to prevent the group of suppliers conspiring together to artificially increase prices. See p.40 for more information on Oligopy markets.

Explanation

The correct answer is “A mechanism for performance management where the buyer has the right to deduct money from payments owed for under performance”. A definition is provided on p.113 and states “If a supplier fails to meet the standard set in the service credits, the buyer has the right to deduct set amounts of money from payments owed to the supplier”

Explanation

The correct answer is ‘The Matrix doesn’t consider whether the stakeholder is for or against the activity’. For a list of other limitations of using Mendelow’s Stakeholder Matrix see p.82

Contracts are normally terminated when their obligations have been fulfilled. Termination due to one late delivery or management changes would be unreasonable unless specified in the contract. Trading with other parties is common unless exclusivity clauses exist.

Competitive dialogue is the most appropriate method for complex, high-value procurements where requirements cannot be fully defined at the outset. This process allows dialogue with shortlisted bidders to refine specifications and negotiate solutions before awarding. CIPS states that this procedure is particularly suited for projects requiring flexibility, multiple negotiation phases, and innovative input from suppliers.

Partnership arrangements promote shared responsibility and joint ownership of outcomes. CIPS highlights that partnerships typically involve:

Shared risks and rewards

Joint performance measurement

Continuous performance review

Collaborative problem resolution

Traditional contracts often place risk entirely on the supplier, rely on adversarial pricing, and use infrequent reviews. Therefore, risk sharing is a defining feature of a partnership.

L4M6 Reference:

Learning Outcome 3: Understand approaches to managing supplier relationships

Topic: Partnership characteristics and governance

CIPS L4M6 Study Guide – Risk allocation and collaboration

Comprehensive and Detailed Explanation:

When a buyer selects a single supplier for a specific period, such as a one-year contract, and excludes other suppliers during this time, this is referred to as asingle sourcedrelationship. This approach is often used to consolidate purchases, achieve economies of scale, and build a more streamlined procurement process for specific goods or services.

Partnerships emphasize mutual goals such as quality improvement and long-term collaboration, contrasting with adversarial relationships that focus on cost and short-term gains.

Bread is a strategic item due to its high spend and critical role in daily operations. A partnership approach ensures consistent quality and reliability, aligning with strategic supplier management principles.

Explanation

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

Explanation

The correct answer is ‘no- as this was not the lollypop sticks intended purpose’. When deciding if something is fit for purpose, you must consider its intended and common purpose. In this case it would be for making lollypops. As the garden centre is using them for something other than their intended purpose, they can’t complain if it doesn’t work. Fit for purpose is discussed on p.65 p.s. there’s a QUESTION NO: like this in the real exam – it’s just not lollypop sticks ; )

Comprehensive and Detailed Explanation:

Joint venturesandstrategic alliancesare common forms of partnerships between companies:

Joint Venture:A business arrangement where two or more parties agree to pool their resources for a specific task, creating a new entity.

Strategic Alliance:An agreement between companies to pursue objectives while remaining independent organizations.

"Sole trader," "limited company," and "public limited company" refer to business structures, not partnership arrangements.

Effective partnership governance requires balanced representation from both buyer and supplier. If the supplier has fewer members than the buyer, decision-making power becomes unequal, potentially undermining collaboration.

Explanation

In an adversarial relationship "the outcome of the deal… is more important than maintaining the relationship over a long-term period" p.7. They can be characterised by poor communication and can be used for one-off purchases but be careful for words in answers such as 'only' and 'always', as these can be misleading; adversarial relationships aren't always for one-off purchases, and communication isn't always poor. The other answer is incorrect (price is more important) because it doesn't describe the relationship, which is what the question asked.

Explanation

The correct answer is ‘keep satisfied’ because the stakeholder is high power and low interest. This is the top left corner of Mendelow’s Stakeholder Matrix – see p.81

When procuring critical components essential for the continuity of manufacturing processes, timely delivery becomes paramount. Delays can halt production lines, leading to significant financial losses.Therefore, the supplier's ability to meet delivery deadlines is the key selection criterion, as emphasized in the CIPS L4M6 study guide.

Explanation

George should use a weighted award criteria – this will allow him to judge suppliers not only on cost, but also on the quality of their products and whether or not they can provide maintenance. For example George could weight the bids in this way; 40% cost, 30% durability of the panels and 30% maintenance costs. For more information on how weighted award criteria works see p.78

Explanation

The correct answer is ‘items of high value’. This links into the EU procurement principle of ‘Proportionality’ meaning that the procurement process must be proportionate to the value of the contract. Therefore, high value contracts must be procured via competition. What is considered ‘high value’ is decided by ‘thresholds’. These are amended every 2 years to account for inflation etc, but you don’t need to know what the thresholds are for this exam. P.75

Comprehensive and Detailed Explanation:

Partnership arrangements often lead to price stability, as both parties work collaboratively to manage costs and avoid market volatility. Additionally, such relationships can result in cost savings through joint process improvements, shared investments, and economies of scale. While managing a partnership does incur relationship management costs, these are typically offset by the benefits gained. Supplier complacency is a potential risk but not an inherent advantage of partnerships.

Explanation

Value for money is not a principle of EU procurement. The four key principles are; transparency, non-discrimination, proportionality and equality of treatment. The principles are basically about ensuring the procurement process is fair. See p.75

Comprehensive and Detailed Explanation:

Cultural compatibility is crucial in partnership relationships. Differences in corporate culture can lead to misunderstandings, misaligned objectives, and conflicts, ultimately jeopardizing the partnership's success. Therefore, assessing cultural compatibility at the outset is essential.

Explanation

The correct answer is ‘accommodating’. This QUESTION NO: is based on the Thomas-Kilmann Conflict model on p.87. This comes up quite a bit in the exam. It is comprised of 5 techniques for dealing with conflict; competing, collaborating, compromising, avoiding and accommodating. In this instance, the supplier should have a high degree of co-cooperativeness and a low degree of assertiveness as the long-term relationship is very important- more important than the outcome of the disputed invoice.

Comprehensive and Detailed Explanation:

A restricted market is characterized by high barriers to entry, often due to stringent government regulations and the need for substantial financial investment. These factors limit the number of new entrants, resulting in a market dominated by a few established suppliers. While existing suppliers may offer excellent services, the key defining features of a restricted market are the regulatory constraints and the significant capital required to compete.

Explanation

A PIN is a ‘prior information notice’ – it is sent out before the ITT to let suppliers know that an opportunity is coming up and they should look out for it. See p 72 “supplier identification- public sector” for more details.

Across-organisational teambrings together specialists from various departments—such as R&D, marketing, finance, and production—to collaborate on complex projects. This team structure enables diverse perspectives, innovative solutions, and efficient decision-making, which are crucial when developing and launching new products. The CIPS L4M6 guide emphasizes the importance of integrated teamwork in achieving strategic outcomes in procurement and supply chain projects.

The primary objective of cost modelling is to dissect and comprehend the components that constitute a supplier's pricing. By understanding the supplier's pricing strategy, the buyer can identify cost drivers, negotiate more effectively, and seek opportunities for cost savings. This approach aligns with the CIPS L4M6 guidelines, emphasizing the importance of transparency and collaboration in supplier relationships.

Comprehensive and Detailed Explanation:

In scenarios requiring specialized expertise and collaborative input, apartnering relationshipis most appropriate. This type of relationship fosters close cooperation, shared goals, and mutual trust, enabling both parties to contribute effectively to the project's success.

Early supplier involvement ensures the supplier understands process timelines and allows the buyer to leverage supplier capabilities. This improves product development efficiency and enhances outcomes.

Explanation

The correct answer is ‘Building better relationships with primary stakeholders’. This is a direct quote from the start of chapter 2.2: ‘building better relationships with primary stakeholders such as employees, customers, suppliers and communities could lead to increased shareholder wealth by developing a competitive advantage’. The other three options wouldn’t give you a competitive advantage; increasing prices would do the opposite, engaging in market research won’t give you a competitive advantage unless you do something with that research such as implement a change to your business, and completing formal tenders for everything would be a waste of time and resources- there’s no need to tender for low value, low risk items. See p.80

Intense rivalry occurs when suppliers are equally balanced and face high barriers to exit, leading to aggressive competition to retain market share, as described in Porter’s Five Forces model.

Comprehensive and Detailed Explanation:

Obtaining multiple quotations for contracts over a certain value ensures that the organization assesses various options, promoting competition and transparency. This practice helps in achieving value for money by comparing different suppliers' offerings.

Explanation

The correct answer is Forming, storming, norming, performing (p.91). Note; some people add on two additional stages to this; mourning and adjourning. The study guide forgets to mention this, but theexam may ask you about these additional stages. So I strongly recommend doing some further reading on this (it’s called the Tuckman Group Development Model)

Explanation

The correct answer is Measurable, achievable and time-bound. This is from SMART KPIs on p. 151. Smart stands for specific, measurable, achievable, relevant, time-bound. In the exam they come up in different orders so be careful.

Comprehensive and Detailed Explanation:

For one-off, low-value purchases that are readily available from multiple suppliers, anadversarialrelationship is often appropriate. This type of relationship is transactional, with minimal collaboration or long-term commitment. The focus is on obtaining the best price and terms for a specific purchase without investing in developing a deeper relationship.

Explanation

Adversarial and Arm's Length relationships have low levels of trust. Single Source, Partnership and Outsourcing require high level of trust. See p.5 for the Supplier Relationship Spectrum

The relationship spectrum describes the range of possible supplier relationship types, from arm’s-length transactional relationships to strategic partnerships.

CIPS explains that buyers should segment their supplier base and apply the most appropriate relationship type to:

Maximise value

Manage risk

Allocate resources effectively

The other options describe activities or tools, not the concept of classifying supplier relationships.

L4M6 Reference:

Learning Outcome 3: Understand approaches to managing supplier relationships

Topic: Relationship spectrum and supplier segmentation

CIPS L4M6 Study Guide – Supplier relationship models

Legitimate reasons for contract termination under CIPS guidelines include failure to perform duties and serious breaches of contract terms. Ordering errors or changes in stakeholder needs are not valid termination grounds unless explicitly stated in the contract. This protects both parties from unjustified termination risks.

Partnerships require careful planning, including alignment of goals, stakeholder involvement, and clear expectations. Poor planning leads to unmet objectives and lack of value generation, as highlighted by CIPS.

Comprehensive and Detailed Explanation:

Statement B:A strategic alliance is an agreement between two or more parties to pursue a set of agreed-upon objectives while remaining independent organizations. It is typically managed jointly by the partners to achieve mutual benefits without forming a new legal entity.Wikipedia

Statement C:In a joint venture, two or more parties create a new, separate legal entity by contributing equity, and they share in the revenues, expenses, and control of the enterprise. This new company is formed to undertake specific business activities.

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.

Political factors in STEEPLED analysis relate to:

Government policy

Political stability

State intervention in markets

CIPS identifies grants and subsidies and civil unrest or war as political influences that can significantly impact supply chains.

Consumerism is a social factor, and wage rates are economic factors.

L4M6 Reference:

Learning Outcome 1: Understand external influences on procurement

Topic: STEEPLED / PESTLE analysis

CIPS L4M6 Study Guide – Political and macro-environmental factors

Substitute products pose a competitive threat by offering alternative solutions to customers, potentially eroding market share. Effective differentiation and customer retention strategies are essential.

Explanation

Jenny should consider whole life costing. Ensuring value for money means considering a combination of price and quality throughout the lifetime of the product. See p.65 for more on ‘Achieving Value for Money’

Explanation

CIPS state the following reasons for the end of supplier relationships; the contract comes to a natural end, the contract is re-tendered, a material breach or the supplier becomes insolvent (p.15) In this case the only valid option is 'the contract has ended'.

Comprehensive and Detailed Explanation:

During the onboarding stage:

Pre-qualifying and Assessing Capability:Ensures the supplier can meet the organization's requirements.

Building Trusting Relationships:Establishing open communication and trust sets the foundation for a successful partnership.

Keeping information confidential (Option 1) and focusing solely on the buyer's goals (Option 3) can hinder collaboration.

Comprehensive and Detailed Explanation:

The accommodating conflict management style is characterized by a low concern for self and a high concern for others. This approach involves yielding to others' needs and maintaining harmony, which can be appropriate in situations where preserving relationships is more important than achieving personal goals.

In the context of a commercially sensitive outsourcing project, adopting an accommodating approach may be suitable to ensure stakeholder cooperation and minimize conflict.

Comprehensive and Detailed Explanation:

Extending the notice period in a mutual termination for convenience clause provides the buyer with additional time to:

Identify and engage alternative suppliers

Ensure continuity of supply

Mitigate risks associated with abrupt contract termination

This proactive approach aligns with best practices in contract management, allowing for smoother transitions and minimizing potential disruptions.

Explanation

The correct answer is ‘Yes- partnership sourcing can improve performance which will ultimately satisfy the end customer’. The important thing to note in this QUESTION NO: is the word ‘monopolistic’. This means that there are no alternative suppliers- so the ‘no’ options are wrong- there are no alternative suppliers and no opportunity to outsource. The other answer is incorrect as sales figures isn’t Andrew’s concern – it’s the complaints and quality of the product. Improving performance to satisfy end customers is therefore his main driver for considering a Partnership. See p. 127 for more information on Drivers of Partnership Sourcing. This comes up a lot in the exam

Explanation

The correct answer is both the supplier and the buyer- joint decision making is a key aspect of partnership relationships. A project steering committee decides on priorities, suggests improvements, conducts audits etc. See p.152

Explanation

The correct answer is ‘Yes-partnerships do not have end dates because they involve significant investment’. This is explained on p.126. Partnerships can involve contracts – so the other ‘yes’ answer is incorrect.

Explanation

This is an example of poor-communication. The information was not passed from the person who signed the contract to the staff on site who were to do the cleaning. See p.158 on communication issues.

Explanation

The correct answer is ‘Conduct regular audits’. This is explained on p.153. You wouldn’t do an appraisal on a supplier in a partnership relationship as both parties are equal. Threatening a partner isn’t good for the relationship and a damages clause would be used in a contractual relationship rather than a partnership.

Comprehensive and Detailed Explanation:

For high-value and high-risk contracts, such as facilities management services for multiple schools,competitive tenderingis the most appropriate sourcing approach. This process involves inviting multiple suppliers to submit bids, ensuring transparency, fairness, and the opportunity to assess various proposals to select the most suitable supplier. It helps in mitigating risks and achieving value for money.

Explanation

The three Es are; Effectiveness, Efficiency and Economy. Sometimes a 4th E is added which is Equity (but this is mainly for the public sector).

Explanation

The correct answer is ‘It can lead to a lack of trust’ – this is a quote from p.162. The other answers are all incorrect; in a partnership KPIs are joint between the parties– so there wouldn’t be a situation where one party doesn’t fulfil their KPIs. Commitment doesn’t necessarily have a direct correlation with profit so that answer is incorrect. ‘Sufficient time and resources are put in’ is a positive thing, so can’t be a reason who a partnership fails.

Comprehensive and Detailed Explanation:

The Kraljic Matrix is a strategic tool used to segment the supply base and develop differentiated purchasing strategies based on two key dimensions:

Profit Impact (Level of Spend):This refers to the financial significance of the item or service to the organization. High expenditure items have a greater impact on profitability and thus require more strategic sourcing approaches.

Supply Risk (Market Structure):This pertains to the complexity and dynamics of the supply market, including factors like the number of suppliers, market competitiveness, and potential for supply disruptions. Understanding the market structure helps in assessing the risk associated with sourcing particular items.

By analyzing these two factors, organizations can categorize their purchases into four quadrants—non-critical, leverage, bottleneck, and strategic items—and tailor their sourcing strategies accordingly.

Explanation

The correct answer is ‘run a restricted competition – send out a PQQ’. This QUESTION NO: tests both your understanding of when to run open and restricted competitions (which is explained on p.75) and your understanding of tender documents. Mandy should run a restricted competition- there are a lot of options in the marketplace and this will allow her to pre-qualify those who best suit her requirements. Running an open competition when there are lots of suppliers would be too time-consuming- you need a way of making a short-list. When you run a restricted competition, the first stage is sending out a PQQ- pre-qualification questionnaire; this document is sent to suppliers asking for necessary information to support their qualification as an approved supplier.

Explanation

The correct answer is ‘Yes- the Public Sector is regulated by EU procurement regulations which prohibits this’. This is stated on p.122. Please note that this study guide and exam were written before Brexit. Once Brexit happens, nobody knows what will happen with this.

Poor communication leads to misunderstandings, unmet expectations, and conflict, undermining partnerships. CIPS stresses the importance of transparent and regular communication to ensure alignment and success.

Explanation

Equity is the fourth E- this means the extent to which the service is available. See p.65 for details on the 4 Es

Partnership sourcing improves efficiency through cost reduction and ensures continuity of supply by fostering long-term, collaborative relationships with key suppliers, as highlighted in CIPS guidelines.

Partnering supports supply chain consolidation and continual improvement by fostering collaboration and shared objectives. These benefits align with the strategic goals of building resilient and efficient supply chains.

Comprehensive and Detailed Explanation:

Arestricted marketis characterized by:

High entry barriers: Significant capital investment, stringent regulatory requirements, or specialized knowledge needed to enter the market.

Limited profitability: Existing suppliers may operate on thin margins, deterring new entrants.

These factors result in a market with few competent and capable suppliers, limiting competition and options for buyers.

Explanation

The correct answers are; They are likely to be able to gain price stability and There may be greater continuity of supply. The other options are an advantage for the supplier rather than the buyer (They will gain an increased volume of business) and a disadvantage of entering into a partnership (The supplier may become complacent). As you may have guessed from these questions – Partnerships come up a LOT in the exam. See p.130 for info on pros and cons of partnerships.

Comprehensive and Detailed Explanation:

Collaborative partnering relationships are characterized by high levels of trust, mutual objectives, shared information, and long-term commitment. Among the options provided:

Co-destiny: This represents the highest level of collaboration, where both parties' futures are closely linked, and decisions are made jointly for mutual benefit.

Strategic alliance: This involves a formal agreement between organizations to pursue shared objectives while remaining independent entities.

These relationship types are positioned on the collaborative end of the relationship spectrum, emphasizing joint efforts and shared success.

Comprehensive and Detailed Explanation:

Partnerships between buyers and suppliers are often driven by:

High Spend:Significant expenditure justifies the investment in developing a closer relationship to achieve cost savings and efficiencies.

Critical Products:Items that are essential to the buyer's operations necessitate a reliable and collaborative supplier relationship.

Technical Complexity:Complex products benefit from joint development efforts, shared expertise, and coordinated problem-solving.

Conversely, commodities and markets with many suppliers typically lend themselves to transactional relationships rather than partnerships.

Explanation

The portable CD player has been replaced with a substitute product. This threat wasn't considered by the company and this resulted in poor sales. There are many questions in the exam on Porter's 5 Forces - see p. 39

Within the STEEPLED analysis framework, socio-cultural (social) factors relate to demographics, workforce behaviour, societal attitudes, and population trends.

Labour mobility directly relates to how easily workers move between regions, industries, or employers, affecting:

Availability of skilled labour

Recruitment and retention

Supplier workforce stability

The other options belong to different STEEPLED categories:

Employment law → Legal

Environmental regulations → Environmental

Consumer confidence → Economic

L4M6 Reference:

Learning Outcome 1: Understand external influences on procurement and supply

Topic: STEEPLED and PESTLE analysis

CIPS L4M6 Study Guide – Macro-environmental analysis

The Restricted and Two-stage procedures involve a PQQ stage to shortlist suppliers before issuing an ITT. This approach is common for contracts requiring stringent supplier qualifications.

Improving supplier commitment and loyalty is a core theme of Supplier Relationship Management (SRM) within L4M6. CIPS emphasises that long-term, collaborative relationships encourage suppliers to invest time, resources, and innovation into the buyer relationship.

Providing guaranteed order levels reduces supplier uncertainty and risk, improving trust and encouraging commitment. This aligns with the concept of mutual dependency and relationship stability, which strengthens supplier loyalty.

The other options are incorrect because:

A stand-off approach discourages collaboration

Over-promising future work damages trust if unmet

Excessive penalties create adversarial relationships

L4M6 Reference:

Learning Outcome 3: Understand approaches to managing supplier relationships

Topic: Supplier commitment, trust, and collaboration

CIPS L4M6 Study Guide – Relationship spectrum and SRM principles

Explanation

Two invalid reasons are; one late delivery and a change in senior management. Valid reasons to terminate a relationship are listed on p.107 and include the three listed here, as well as a material breach, damage to reputation and the supplier merges or is acquired by another company.