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CIPS L4M6 exam, also known as the CIPS Supplier Relationships exam, is a professional certification exam designed for procurement and supply chain professionals who are looking to enhance their knowledge and skills in managing supplier relationships. L4M6 exam is part of the Chartered Institute of Procurement and Supply (CIPS) Level 4 Diploma in Procurement and Supply qualification, which is globally recognized as a benchmark for excellence in the procurement profession.
To take the CIPS L4M6 Certification Exam, candidates must have completed the CIPS Level 4 Diploma in Procurement and Supply or have an equivalent qualification. L4M6 exam is computer-based and consists of 60 multiple-choice questions which must be completed in two hours. The questions are designed to test the candidate's understanding of the key concepts and principles of supplier relationship management.
NEW QUESTION # 89
Under what circumstances should a competitive tender not be completed? Select TWO.
- A. When the items are of low value
- B. When there is a clear specifications
- C. When the items are of high value
- D. When there is not a clear specification
Answer: A,D
Explanation:
Note the word 'NOT' in the question. In order for a competitive tender to be successful, there should be a clear specification in place (i.e. you need to know what you want, in order for suppliers to bid for it).
Competitive tendering should also only be used for high value purchases; it's time consuming to do, so you wouldn't do it for low value items such as pens for the office. Therefore the correct answer to this question is
'items are of low value' and 'there isn't a clear specification'. There's a useful table on p.73 of when you would and wouldn't use a competitive tender.
NEW QUESTION # 90
Which of the following are Intellectual Property Rights that you would you encounter in procurement and supply contracts? Select THREE.
- A. Method Statements
- B. Risk Assessments
- C. Patents
- D. Trademark
- E. Copywrite
Answer: C,D,E
Explanation:
Intellectual Property Rights include; Patents, Copywrite, Trademarks and Trade Secrets. P.114
NEW QUESTION # 91
Kinky Boots Ltd provides high heeled shoes in large sizes. Their target market are Drag Queens. There are a couple of rival shoe manufacturers in this market and Kinky Boots Ltd offer the cheapest high heels. What strategy is Kinky Boots Ltd employing in terms of competitive advantage?
- A. differentiation
- B. cost leadership
- C. differentiation focus
- D. cost focus
Answer: D
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.
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NEW QUESTION # 92
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?
- A. threat of new entrant
- B. threat of substitution
- C. supplier power
- D. buyer power
Answer: A
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
NEW QUESTION # 93
Effective cost modelling involves which of the following?
* Data gathering
* Analysis of facts
* Supplier negotiation
* Issuing a request for quotation
- A. 2 and 4 only
- B. 1 and 2 only
- C. 2 and 3 only
- D. 1 and 3 only
Answer: B
Explanation:
Comprehensive and Detailed Explanation:
Effective cost modelling is a process that helps in understanding the cost structure of a product or service. It involves:
* Data gathering:Collecting relevant data related to materials, labor, overheads, and other cost drivers.
* Analysis of facts:Evaluating the collected data to understand cost behaviors and identify areas for cost reduction.
Supplier negotiation and issuing a request for quotation are subsequent steps that may utilize the insights gained from cost modelling but are not part of the modelling process itself.
Reference:
CIPS L4M6 Study Guide
NEW QUESTION # 94
Rachel and Jacky work in the procurement department of Foddy Foods Ltd. They have been told by their CEO to build better relationships with strategic suppliers as this will create value for money for the company.
In what ways can value for money be achieved by building strong relationships with suppliers? Select TWO.
- A. Better payment terms
- B. Innovation developed as part of collaborative projects
- C. Reduction of waste
- D. Reducing costs
Answer: B,C
Explanation:
Supplier relationships can result in value for money in the reduction of waste and in innovation developed as part of collaborative projects. Remember that in CIPS waste doesn't necessarily mean physical waste (as in stuff you don't want any more). There are 7 types of waste including waiting, inventory, transportation etc. So when you develop a relationship with a supplier, this can reduce waste (e.g. you may be able to get deliveries quicker by integrating your ordering system with the supplier's, or you might reduce transportation by agreeing a Consignment stock). Having a good relationship with a supplier isn't necessarily going to get you a reduction in cost or better payment terms. See p.70 for more details on this- there's a short list of ways in which good supplier relationships can bring value for money to a business.
NEW QUESTION # 95
A partnership relationship in portfolio analysis is appropriate for which category of procurement?
- A. Strategic critical
- B. Strategic security
- C. Tactical profit
- D. Tactical acquisition
Answer: A
Explanation:
Partnership relationships are typically used for strategic critical items where the product is essential to operations, and the supplier's input significantly impacts success. These relationships are nurtured through mutual trust and collaboration to mitigate supply risk and ensure long-term value.
NEW QUESTION # 96
A competitive advantage can be gained by doing what?
- A. Engaging in market research
- B. Completing formal tenders for all buying requirements
- C. Increasing your prices
- D. Building better relationships with primary stakeholders
Answer: D
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
NEW QUESTION # 97
Togo Bongos is a manufacturer of percussion instruments, in particular of bongo drums. It requires electricity to run its factories and this is a major factor of cost impact. There are lots of suppliers of electricity in the market and there is no switching costs if Togo Bongos wanted to switch suppliers. What type of supplier is Togo Bongo's electricity supplier?
- A. leverage
- B. routine
- C. strategic
- D. bottleneck
Answer: A
Explanation:
This is a leverage supplier on the Kraljic Matrix; high cost impact and low risk impact. The diagram on p.20 gives the example of utility services such as electricity as a common leverage supplier. There are lots of questions on Kraljic in the exam - do revise this topic and ensure you understand each of the four quadrants of the matrix
NEW QUESTION # 98
Fred is a new procurement manager at a large engineering firm. They procure 100s of components and use these to make kitchen appliances such as kettles and toasters. He has been asked by his manager to look into procuring a new component which will go into a new environmentally friendly kettle and has been asked to ensure that the firm receives value for money. What should Fred do?
- A. Invite known suppliers to bid for the contract
- B. Hold an open competition
- C. Put together a business case to make the product in-house
- D. Contact current suppliers to try and get a good deal
Answer: B
Explanation:
Fred should hold a competition as this is a 'key way of achieving value for money' p.67. Fred shouldn't put a business case together to make the product in-house without doing a make vs buy analysis, and that analysis showing make is the way to go. As the firm buy in 100s of components, it's very unlikely that making the component in-house would bring 'value for money'. He should also be careful of only looking at current suppliers or known suppliers- the best supplier of this new component might be unknown to the engineering firm at present.
NEW QUESTION # 99
Pablo has run an open- competition to secure a new contract for a supplier of paper for his Birthday Card making company. He has received 10 submissions from various suppliers and needs to put a team together to evaluate the bids. What type of team should Pablo consider?
- A. A team composed of internal and external stakeholders
- B. A cross-functional team
- C. A team of procurement experts
- D. A team composed of internal stakeholders
Answer: B
Explanation:
Pablo should use a 'cross-functional team'. CIPS love 'cross-functional teams' and refer to them frequently throughout the study guide. A cross-functional team is people from different departments who come together for a purpose, such as to evaluate a tender. The benefit of using a cross-functional team is that you get people with different experiences and knowledge. So in this example a Cross-Functional team could compose of people from various departments such as procurement, logistics, manufacturing and legal. P.76
NEW QUESTION # 100
Gabriel is a procurement manager who wishes to explore a new avenue to procure products for his company.
His manager has told him that he should invite internal stakeholders to a meeting to get their feedback. Who should Gabriel invite? Select THREE.
- A. end-users
- B. suppliers
- C. customers
- D. employees
- E. legal department
Answer: A,D,E
Explanation:
Internal stakeholders are those who work within the business so include the legal department, employees and end-users. End-users mean those people and departments who will be using the product or service. For example if Gabriel is procuring new software- an end-user would be anyone who would be using that software (whether they're employees, volunteers or agencies). CIPS outlines types of stakeholders on p.64
NEW QUESTION # 101
A supplier wishes to develop a new blood collection system for healthcare but needs to work with a clinical expert to develop the device. Why would a partnership be the best approach?
- A. To keep costs down
- B. To gain market share
- C. It is a technically complicated supply
- D. Because it is a low-risk supply
Answer: C
Explanation:
Comprehensive and Detailed Explanation:
Developing a new blood collection system is a complex task that requires specialized knowledge and expertise. A partnership allows the supplier to collaborate closely with a clinical expert, combining their respective strengths to innovate effectively. This collaborative approach is essential for technically complicated supplies where joint development efforts can lead to better outcomes.
Reference:
CIPS L4M6 Study Guide
NEW QUESTION # 102
Mandy is looking to source windows and doors for a new build apartment block. She has done some initial research and has discovered that there are many suppliers in the marketplace that can supply the items she needs. As it is a high-value project she is thinking of running a formal tender. What should be Mandy's first step?
- A. Run a restricted competition- send out a RFI
- B. Run an open competition - send out an ITT
- C. Run a restricted competition - send out a PQQ
- D. Run an open competition - send out a RFQ
Answer: C
Explanation:
The correct answer is 'run a restricted competition - send out a PQQ'. This Question: 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.
NEW QUESTION # 103
Kirsty is designing a specification for a new contract and wants to include some qualitive KPIs for the new supplier, as well as quantitative. Which of the following could she include? Select TWO.
- A. Trust
- B. Deliveries in full and on time
- C. Cost savings
- D. Early supplier involvement
- E. Information sharing
Answer: A,E
Explanation:
The correct answers are information sharing and trust. Further qualitative KPIs are listed on p.102. Deliveries in full and on time would be a quantitative KPI and early supplier involvement is not a KPI at all.
NEW QUESTION # 104
Grey Stone Memorial Hospital is a private medical facility which has an idea for a vaccine to a deadly disease, but does not have the capacity to make the vaccine itself. It is considering partnering with a well-known pharmaceutical company in order to bring the vaccine to market. What is the biggest risk to Grey Stone?
- A. Low quality product
- B. Increased Costs
- C. Uninformed stakeholders
- D. Intellectual Property Rights
Answer: D
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.
NEW QUESTION # 105
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CIPS L4M6 exam, also known as CIPS Supplier Relationships, is a globally recognized certification program designed specifically for procurement professionals who work with suppliers. CIPS Supplier Relationships certification program is ideal for those who have experience working with suppliers and want to develop their knowledge and skills to improve their supplier relationships. L4M6 exam covers a range of topics including supplier performance management, contract management, supplier risk management, and supplier development.
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