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CIPS L4M4 Exam Syllabus Topics:
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NEW QUESTION # 93
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. no- quoting in the supplier's currency increases the risk for the buyer
- B. yes- this puts the risk on the supplier
- C. no- quoting in the supplier's currency does not affect the risk to the buying organisation
- D. yes- this means the price won't go up or down
Answer: A
Explanation:
The correct answer is 'no- quoting in the supplier's currency increases the risk for the buyer'. This questions comes up in a variety of formats in the exam. Remember; if the price is in your own currency (most examples in the exam are given in £) there is less risk than if the prices are quoted in a foreign currency. This is because exchange rates fluctuate; if the price is in £ you always know what you're paying, if it's in another currency the price can change daily depending on if the exchange rate compared to £ has gone up or down.
NEW QUESTION # 94
Many organisations prefer a multi-sourcing approach because of the advantages it provides. Which of the following might be an advantage of multi-sourcing?
- A. It is the only approach that enables the buyer to isolate the best supplier from among many
- B. It increases process flexibility and switching using a range of approved suppliers
- C. It is the only approach that supports the open tendering process
- D. It helps the buyer to increase stock varieties to avoid stock-outs
Answer: B
Explanation:
Multi-sourcing allows organisations to diversify their supply base, providing flexibility, and reducing risk by having multiple suppliers. It is an effective strategy to prevent over-dependence on a single source and allows for competition among suppliers, promoting quality and ethical standards in the supply chain.
NEW QUESTION # 95
A buyer is carrying out an assessment to identify the risk of unethical suppliers being selected for a new contract. Which of the following should the assessment include in order to protect the organisation against ethical reputational risks?
- A. Whether the suppliers have received negative press around their fair treatment of subcontracted staff
- B. The likelihood of suppliers becoming insolvent in the future due to unforeseen circumstances
- C. Performance records (late deliveries/poor quality) of agreed contract deliverables
- D. The average staff retention levels experienced by the suppliers
Answer: A
Explanation:
Assessing the ethical reputation of suppliers is crucial to mitigate risks associated with unethical practices.
Negative media coverage regarding the fair treatment of subcontracted staff is a significant indicator of potential ethical issues within a supplier's operations. Such information can highlight concerns related to labor rights violations, discrimination, or unsafe working conditions, which can adversely affect the buying organization's reputation if not addressed.
Reference:
CIPS Level 4 Diploma in Procurement and Supply, L4M4 Study Guide, Section 3.3.1: Application of the CIPS Code of Conduct
NEW QUESTION # 96
Which documents are used to allow the movement of goods?
* Export or import license
* Non-disclosure agreement
* Customs declaration
* Conflict of interest declaration
- A. 2 and 3 only
- B. 2 and 4 only
- C. 1 and 3 only
- D. 1 and 4 only
Answer: C
Explanation:
To facilitate the legal movement of goods across borders, specific documentation is required. An export or import license authorizes the shipment of goods to or from a particular country. A customs declaration provides details about the goods being transported, ensuring compliance with the importing country's regulations. Non-disclosure agreements and conflict of interest declarations are related to confidentiality and ethical considerations, not the physical movement of goods.
Exact Extract from Study Guide:
"Documents and systems that allow the movement of goods within the EU:
* T1 Documents
* Import/Export Licence
* Single Administrative Document
* New Computerised Transit System
* Customs Declaration Service"
NEW QUESTION # 97
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. the requirement is complex
- B. the suppliers are likely to be unqualified
- C. interest in the tender opportunity is likely to be low
- D. interest in the tender opportunity is likely to be high
Answer: D
Explanation:
you would use a restricted approach when interest is likely to be high. The buyer needs a method of de-selecting unsuitable bidders and creating a shortlist of acceptable organisations.
For complex requirements you could use both an open or restrictive tender- the difference between the approaches is about how many bids you're likely to get rather than the complexity of it.
NEW QUESTION # 98
A buyer in the public sector has put an advert out asking for interested suppliers to express an interest in a potential tender activity to provide a facilities management contract to a hospital trust. The suppliers who have met that criteria are then sent a document detailing how they should submit their tender, how to price the opportunity, asksQuestionsrelating to how they will deliver the service and gives a deadline for bids to be submitted. Which document have the suppliers ben sent?
- A. Invitation to Quote
- B. Request for Quotation
- C. Invitation to Tender
- D. Request for Tender
Answer: C
Explanation:
This is an Invitation to Tender.
The only other real document listed in Request for Quotation. This is incorrect because the document asks questions relating to how they will deliver the service. This means price isn't the only factor, which is the case for a RfQ.
Request for Tender and Invitation to Quote are not real things.
NEW QUESTION # 99
A procurement manager of a medium-sized company has suggested to their executive board that implementing an ISO environmental standard would improve procurement practices and reduce environmental and social impacts. However, some colleagues are concerned about the potential complexity and supplier resistance. Should the company go ahead with the recommendation?
- A. Yes, implementation would guarantee that the company is compliant with all environmental laws
- B. No, because ISO standards are only relevant to large organisations
- C. No, ISO standards are too complex for staff and suppliers to understand and follow
- D. Yes, as it would align with, and help to achieve, sustainability goals
Answer: D
Explanation:
Adopting ISO environmental standards aligns procurement practices with sustainability goals and helps reduce environmental and social impacts. Although implementing ISO standards may require initial adjustments, they foster long-term benefits by promoting responsible and ethical sourcing practices across the supply chain.
NEW QUESTION # 100
What would an EBITDA ratio show you?
- A. how effectively a business uses its assets to generate sales
- B. how profitable a business is
- C. how solvent a business is
- D. how much of a business's funding is made up of long term debt
Answer: B
Explanation:
EBITDA stands for 'earnings before interest, tax, depreciation and amortization'. This is a profitability ratio and would show how profitable a business is.
EBITDA: Definition, Calculation Formulas, History, and Criticisms (investopedia.com)
NEW QUESTION # 101
A 'carnet' provides evidence of the origin of goods shipped in an international trade transaction. Is this statement correct?
- A. It is only used when exporting goods from Europe and confirms the country of origin
- B. It is a widely used import document that confirms the origin of goods
- C. It is a document that allows the temporary free movement of goods
- D. It is a type of insurance cover to protect against loss of goods in transit
Answer: C
Explanation:
A carnet (ATA Carnet) is an international customs document that allows for the temporary, duty-free and tax- free movement of goods across borders, usually for exhibitions, trade fairs, or professional equipment. It is not proof of origin (which is confirmed by a certificate of origin), nor is it an insurance document. It is also not restricted to European exports. By reducing customs paperwork and costs for temporary movements, carnets support trade efficiency but do not replace origin or insurance documents. Responsible sourcing requires procurement professionals to know which trade documents are appropriate for compliance and risk management.
Reference: CIPS L4M4 Study Guide (v2), LO: "Application" - international trade documentation.
NEW QUESTION # 102
Ramesh is an IT category manager within the UK's National Health Service and is responsible for the procurement of a new high-value network system, which will spread across multiple doctors' practices and community health centres. Ramesh has reviewed different tender approaches and concluded that the use of a restricted tender is the most appropriate. Which of the following statements is true for a restricted tender process?
- A. The contract will be awarded strictly on pricing criteria
- B. Suppliers responding to the tender are pre-qualified
- C. Direct negotiations occur prior to suppliers submitting their offer
- D. It is only relevant when there are few suppliers in the market
Answer: B
Explanation:
In a restricted tender process, only pre-qualified suppliers are invited to bid, ensuring that participating suppliers have met necessary qualifications. This approach helps in managing high-value contracts by focusing on capable suppliers. Ethical and responsible sourcing in the public sector demands supplier pre- qualification to ensure compliance, transparency, and quality.
NEW QUESTION # 103
Incoterms describe several aspects and responsibilities of transporting goods when sourcing internationally.
Which of the following is described by Incoterms? Select THREE.
- A. what form of transportation will be used
- B. which party arranges insurance
- C. who is responsible for making duty and tariff arrangements
- D. how long the transportation will take
- E. how much the transportation will cost
Answer: A,B,C
Explanation:
Incoterms describe who out of the buer and seller; organises transport and what type of transport this is, who pays for insurance, and who organises duty / tariff arrangements when the goods go through customs. See p.131. Note- some students report a lot of questions on Incoterms in the exam, some say they only had 1. If you can, I'd learn them just to be safe.
NEW QUESTION # 104
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, they must seek as many bids as possible even if it takes longer
- C. No, because international vendors must also be notified of the opportunity
- D. Yes, so that the local pest control sector can decide between them who should bid
Answer: A
Explanation:
Advertising in a local newspaper for urgent services like pest control may not be the most efficient approach.
It can lead to an overwhelming number of responses, many of which may not meet the specific requirements, thereby delaying the evaluation process. For urgent needs, direct sourcing from pre-qualified suppliers or using existing frameworks is often more effective.
Reference:
CIPS Level 4 Diploma in Procurement and Supply, L4M4 Study Guide, Section 2.2: Tendering Procedures
NEW QUESTION # 105
Which of the following are examples of secondary data? Select TWO
- A. networking
- B. commissioned market research
- C. trade fairs and exhibitions
- D. economic indices
- E. comparison websites
Answer: D,E
Explanation:
economic indices and comparison websites are secondary sources of data. The other three are examples of primary sources of data.
Primary= you get the data yourself
Secondary = you find the data from somewhere else
NEW QUESTION # 106
Incoterms are designed to be understood and interpreted on a worldwide basis. What is the interpretation for FOB (Free on Board)?
- A. The buyer takes responsibility for taking the goods from the departure quayside to the ship, plus all subsequent costs
- B. The buyer takes responsibility for the goods after they are loaded on the ship, plus subsequent costs excluding freight charges
- C. The buyer takes responsibility for the goods after they are loaded on the ship, plus all subsequent costs including freight charges
- D. The buyer takes responsibility for transferring the goods from the seller's premises to the ship, plus all subsequent costs
Answer: C
Explanation:
Under theFOB (Free on Board)Incoterm, the seller is responsible for delivering the goods onto the vessel at the named port of shipment. Once the goods are on board, the risk and responsibility transfer to the buyer.
From that point onward, the buyer assumes all costs and risks associated with the transportation of the goods, including freight charges, insurance, unloading, and delivery to the final destination.
This interpretation aligns with the Incoterms® 2020 rules set by the International Chamber of Commerce (ICC). It's crucial to note that FOB is applicable only for sea or inland waterway transport and is not suitable for containerized cargo, where theFCA (Free Carrier)term is more appropriate.
References:
Trade Finance Global: FOB (Free on Board) - Incoterms® 2020 Rule
Maersk: FOB Incoterms® meaning | Free on Board shipping
NEW QUESTION # 107
A buyer has been tasked with placing an order for steel from another country and using Incoterms for delivery. The buyer's organisation has an in-house transportation and export clearance department. During negotiations, the buyer achieved a 25% cost reduction by accepting responsibility for loading, transportation, and export clearance. Which Incoterm has been agreed?
- A. EXW - Ex Works
- B. FOB - Free on Board
- C. CIP - Carriage and Insurance Paid
- D. FCA - Free Carrier
Answer: A
Explanation:
The EXW (Ex Works) term means the seller's responsibility ends once goods are made available at their premises. The buyer must take on costs and risks from that point, including loading, transport, and export clearance. Because the seller is not responsible for logistics, the quoted price is lower. In contrast, FCA includes delivery to a carrier, FOB covers loading onto a vessel, and CIP includes carriage and insurance arranged by the seller. By accepting these responsibilities, the buyer leveraged cost savings, demonstrating knowledge of Incoterms and alignment with efficient sourcing practices.
Reference: CIPS L4M4 Study Guide (v2), LO: "Application" - Incoterms responsibilities and cost-sharing.
NEW QUESTION # 108
A procurement manager suggests implementing an ISO environmental standard to improve procurement practices. Some colleagues worry about complexity and resistance. Should the company proceed?
- A. Yes, as it would align with and help to achieve sustainability goals
- B. No, ISO standards are too complex for staff and suppliers
- C. No, because ISO standards are only relevant to large organisations
- D. Yes, implementation would guarantee compliance with environmental laws
Answer: A
Explanation:
ISO environmental standards (e.g., ISO 14001) provide a structured framework for managing environmental responsibilities. They support sustainability goals by embedding continual improvement, legal compliance, and stakeholder trust. They are relevant to organisations of all sizes and sectors, not just large firms. While they do not automatically guarantee compliance, they enhance systematic control, training, and supplier engagement. Resistance and complexity can be overcome with phased implementation and awareness- building. CIPS emphasises that adoption of recognised standards demonstrates responsible sourcing, aligns with CSR strategies, and reassures stakeholders about commitment to sustainability.
Reference: CIPS L4M4 Study Guide (v2), LO: "Concepts" - standards, sustainability frameworks, ISO principles.
NEW QUESTION # 109
Pre-qualification of suppliers is used to determine if the suppliers meet the basic requirements of the buying organisation. Which of the following is assessed at the pre-qualification stage?
- A. pricing structure, ethics and financial stability
- B. financial stability, capacity and capability
- C. capability, culture and pricing schedules
- D. capacity, capability and pricing structure
Answer: B
Explanation:
The correct answer is financial stability (this is done by using all of those lovely ratios in chapter 1.3) and capacity and capability (which are part of Carter's 10 Cs).
At PQQ stage you're looking purely at whether the supplier is good or bad (to put it simply). You don't give them details of your requirement yet, so they're not providing a quote / pricing structure / price schedule at this point in time. That would be at the next stage, IF they pass PQQ, when you issue the tender competition.
NEW QUESTION # 110
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. contract award
- B. asset management
- C. supplier selection
- D. develop strategy
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 # 111
What mechanism helps buying organisations achieve a best value outcome in a tender exercise?
- A. Restricting the number of bidders
- B. Advertising requirements
- C. Providing a debrief
- D. Timetabling the process
Answer: C
Explanation:
Providing a debrief allows suppliers to understand the tender process and learn areas of improvement, promoting transparency. This practice supports responsible sourcing by fostering a fair, competitive environment and encouraging suppliers to improve their future offerings.
NEW QUESTION # 112
Sourcing aims to achieve the best value for money by taking into account several factors. Freddy is sourcing a new component for his company which manufactures tractors. Should Freddy take into consideration ethics and sustainability?
- A. yes- ethics and sustainability form part of 'value for money'
- B. yes- ethics and sustainability show that the products are fit for purpose
- C. no- 'value for money' only concerns price and if the product is fit for purpose
- D. no- 'value for money' is concerned with achieving the lowest price
Answer: A
Explanation:
"yes- ethics and sustainability form part of 'value for money' " is the correct answer.
There are several factors that represent value for money and these are listed on p.3. These include; price, delivery, quality, ethics, sustainability and availability.
NEW QUESTION # 113
A procurement manager has a new contract to award. They know there will be considerable interest from potential suppliers, as there are approximately twelve companies in the market. Which of the following is a benefit of using a full competitive tendering process for this new contract?
- A. Only the procurement manager can decide who wins
- B. All suppliers will know how much the others have bid
- C. All bidders will be treated equally
- D. It is a quick and informal process
Answer: C
Explanation:
A full competitive tendering process ensures fairness by treating all suppliers equally, allowing them to compete on a level playing field. This aligns with ethical sourcing principles, especially in the public sector, where transparency and equal opportunity are paramount.
NEW QUESTION # 114
A buyer for a large manufacturing organisation is assessing a sole supplier tender opportunity. The buyer is finding it challenging to differentiate the proposals on unit purchase price. Are there any added values that the procurement manager can use to leverage the sole supplier proposal?
- A. Yes, but only if the buyer decides to re-start the tender opportunity
- B. No, the buyer must make the decision based on the existing information
- C. Yes, the buyer can negotiate on aspects such as after-sales service
- D. No, because a buyer has no leverage over a sole supplier
Answer: C
Explanation:
In cases where price differentiation is minimal, negotiating on added-value services like after-sales support can offer additional benefits. This aligns with responsible sourcing by focusing on long-term value and fostering a cooperative relationship with the supplier.
NEW QUESTION # 115
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