CIPS L4M4 Dumps

Compliance with fair trade standards demonstrates the supplier's commitment to social responsibility, including fair wages and ethical working conditions. This aligns with responsible sourcing practices, ensuring that suppliers maintain ethical labor standards, as advocated in the principles of ethical sourcing.

An Invitation to Tender (ITT) is typically used for complex, high-value procurements where the quality and specific features of the goods or services are of paramount importance. This approach ensures that ethical and responsible sourcing criteria are met, aligning with best practices in procuring specialised goods or services.

Weighted criteria allow the buyer to evaluate multiple factors, not just price, to make a fair and balanced decision. This approach ensures responsible sourcing by considering quality, sustainability, and other relevant factors alongside cost, which aligns with public procurement ethics and standards.

In addition to price, factors like lead times, add-on costs, and past performance are important to ensure the supplier meets the buyer's requirements sustainably and reliably. These criteria align with ethical sourcing by promoting value and accountability beyond just cost considerations.

Public sector sourcing prioritises maintaining service levels within budget constraints and often mandates competitive tendering to promote transparency and fairness. These principles align with ethical sourcing practices, ensuring responsible expenditure and fair competition among suppliers.

Liquidity ratios, such as the current and quick ratios, evaluate a company's ability to meet short-term liabilities with current assets. This metric is crucial for assessing a supplier’s financial stability, ensuring continuity and reliability in the supply chain, which aligns with ethical and responsible sourcing principles.

Response times should be tailored to the complexity of the tender. Responsible sourcing encourages flexibility in setting realistic timelines that allow suppliers adequate time to prepare, supporting efficient and effective sourcing without unnecessary delays.

Explanation

The C category is the 'tail spend' - it represents a large number of suppliers of small value items.

I recommend giving this a read ABC Classification & ABC Method | CIPS

Explanation

cash in advance is the most beneficial to a supplier.

Open account /credit account is the most beneficial to the buyer. Learn this as it's a known exam topic.

Explanation

Shareholder Equity = Total Assets - Total Liabilities

Explanation

The CIPS Code of Conduct says to adhere to all laws of countries in which I practice. So if you're in the UK and procure stuff from China, you need to abide by both UK and Chinese laws, not just UK laws.

There's no international procurement laws- these are all different for different countries.

ILO doesn't publish laws.

Explanation

Open account (aka credit account) is most beneficial to the buyer. The supplier delivers the goods then the buyer pays.

Cash in advance is most beneficial to the supplier. The buyer pays for the item before receiving it.

This is a known exam topic.

Explanation

An ITT would include details on the awarding body (usually a brief overview of the buyer), the deadline (bids must be received by a certain date) and qualifications required (such as ISO requirements or competency certificates of staff members if it's a service contract). You wouldn't find pricing schedules in an ITT (this would be provided by the supplier in response to the ITT), nor would you find risk assessments (a supplier might be asked to provide one as part of the quality assessment of the tender though).

Invitation To Tender Simply Explained I Thornton & Lowe (thorntonandlowe.com)

Explanation

The correct answer is 'yes- because a low credit rating would indicate the supplier is financially un-stable'.

The two options beginning with no should automatically be discounted. The other option is incor-rect because credit ratings are private and would therefore not affect reputation.

Explanation

New organisations or those with no loans/ credit cards may have low credit scores. This is simply because they do not have enough financial history to make their scores good. That means banks au-tomatically class them as higher risk, because they simply don't know that they're trustworthy yet.

Explanation

Items of 'Non-Preferential Origin' are subject to tariff quotas and other customs commercial regulations. 'Preferential Origin' goods have no duties or tariffs.

The good news is CIPS have significantly simplified section 3.2 of the syllabus. The new study-guide is much lighter on names of documents and protocols for importing and quotas etc. The focus of this Learning Outcome has shifted more to Inco Terms so I would focus on that for revision, but do make sure you have a basic understanding of documents, law and jurisdiction.

Explanation

A cash flow statement shows the money coming in and out. This would therefore show whether a supplier has enough money coming in, to be able to pay some of it out to a subcontractor.

P&L and Balance Sheets look more broadly at finances, rather than saying what's physically in the bank at a specific given time.

Do learn the difference between these three financial documents for the exam.

Balance Sheet: Explanation, Components, and Examples (investopedia.com)

Profit and Loss Statement Meaning, Importance, Types, and Examples (investopedia.com)

Cash Flow Statement: How to Read and Understand It (investopedia.com)

Explanation

The buyer should seek a 'collaborative' relationship. Transactional and arms-length relationships are more suited to tactical sourcing. Partnerships are reserved for joint-ventures.

Explanation

EXW- exworks is a suitable incoterm for transporting goods both by rail and boat. It can be used regardless of the mode of transport. The other three are for transport over water. P. 143 Shipping Incoterms: the Complete Guide - Guided Imports

Some students report a lot of questions on Incoterms in the exam, some say they only had 1. Best bet is to learn them if you possibly can.

A credit rating is one of many tools used to assess a supplier’s financial health. Responsible sourcing requires a comprehensive assessment of suppliers, considering multiple factors, to ensure a balanced and ethical approach to supplier selection.

Explanation

The correct answers are 'it is easy to drive down costs' (as you can pit the suppliers against each other) and 'low risk of failure to supply' (if one supplier can't provide what you need, the other supplier might be able to).

Economies of scale and supplier loyalty are advantages of single-sourcing.

There is a risk of failure to supply is a risk associated with single sourcing.

There's a useful table of advantages and disadvantages of single / multi sourcing on p.22. Types of sourcing is a key topic for the exam.

Explanation

The correct answer is Invitation to Tender. This is sent out to suitable suppliers inviting them to bid for the opportunity.

A PQQ - pre-qualification questions naire- is sent to suppliers to see if they are suitable. The QUESTION NO: states these suppliers have already been deemed suitable, so they've already passed PQQ

A RFQ - request for quotation- would be used when the only variable is price, so is not suitable for complex tenders.

RFT isn't a thing. I made the last one up.

Explanation

they are stock markets.

What is the FTSE 100 Index? Complete Beginner's Guide (moneycheck.com)

BSE SENSEX – Wikipedia

CIPS members who adhere to the CIPS Code of Conduct gain insight into ethical business practices and retain their membership and access to CIPS resources. This commitment to ethical standards supports responsible sourcing by fostering a community of professionals who value integrity and best practices.

Explanation

The Consumer Rights Act 2015 is about product safety and making sure products sold on the market are fit for purpose. It gives buyers rights and protections. The Consumer Rights Act 2015 - Citizens Advice

There's a long list of legislation on p.105. I wouldn't worry about memorizing them all but just have an idea of what legislation relates to what area. E.g. GDPR is about Data Protection and the Com-petitions Act is about Marketplace competition. Most of them are quite obvious from the name.

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.

The gross profit margin ratio is calculated by subtracting the cost of goods sold (COGS) from income from sales, then dividing by income from sales. This ratio indicates the profitability of a supplier, a critical factor in assessing financial health, which helps buyers ensure reliable supply continuity.

Explanation

Futures exchanges are used to trade commodities. It's when a buyer and supplier agree a price and deal for something in the future. For example a carrot farmer may agree to sell his carrots to Gary in 3 months time when they're finished growing. It's used when the product / commodity isn't ready yet.

It's also used for hedging and other complex financial stuff- but you don't need to know that yet. Commodities and Future contracts are a big part of L5M4 to warn you though. Futures Contract Definition: Types, Mechanics, and Uses in Trading (investopedia.com)

Explanation

the right to change nationality is not included in the UN Declaration of Human Rights. There are 30 in total but you're not expected to know them all. You should know the big ones though which are; life, security, belief, equal treatment, free speech and expression. A summary can be found here: Universal Declaration of Human Rights | United Nations

Explanation

the correct answer is 'no- the public sector can choose not to publish information if it is not deemed to be in the public interest'.

They use something called the 'public interest test' to determine if the information should be re-leased or not. For example they may not respond to a request asking how many bullets the UK Army has in storage, as that would be detrimental to national security interests.

Responses to requests are made within 21 days, not 28.

Explanation

This is a facilitation payment. It's when a sum of money is given for 'helping to facilitate' a contract. E.g. a procurement manager may accept a facilitation payment from a supplier for selecting him to be a new supplier for a big contract.

In the UK this is definitely considered a bribe. It's also against the CIPS Code of Conflict

DDP (Delivered Duty Paid) requires the supplier to cover all delivery costs, including import duties and taxes. This term ensures that the buyer receives the goods without additional charges, aligning with public sector procurement practices for cost-effective and transparent sourcing.

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.

Explanation

a factory ordering a new machine is the correct answer.

Strategic sourcing is for high value, high risk items. The other options given are tactical sourcing as they are low value (eggs, paper and plastic cups).

See p.3 for the differences between tactical and strategic sourcing

Explanation

ISO 20400 is sustainable procurement.

14000 is environment

9001 is quality management

27001 is information security

Explanation

Intracompany trading is when two departments in the same company do trading. AND when two companies owned by the same parent company do trading.

INTRA means 'within' - so it's doing business with yourself.

Explanation

"Meet current liabilities" is a posh way of saying "can you pay your bills". You're therefore looking for a liquidity ratio- a ratio that looks at assets vs liabilities (i.e. money in the bank vs money owed out). The Acid Test is a liquidity ratio. It's sometimes called the 'quick ratio'. Both terms come up on the exam. The other options are financial ratios but aren't for liquidity.

Explanation

current assets, current liabilities and equity can be found on a balance sheet. Net and gross sales will be found on a profit and loss account.

Incoterms are grouped as E (Ex Works), F (Free Carrier), C (Carriage Paid To), and D (Delivered Duty Paid), reflecting various stages of responsibility transfer between buyer and seller. Understanding Incoterms is critical for responsible sourcing, as it clarifies logistics and cost responsibilities.

Explanation

The correct answer is 'yes- the public sector should advertise as a call for competition'. They do this in the Official Journal of the European Union (OJEU). Public Sector has to be transparent abouteverything and treat all suppliers equally. So they can't just approach the ones they like.

In the study guide it says OIEU and this is a typo. It's OJEU.

What is The OJEU in 2 minutes or less (trackerintelligence.com)

Addressing human rights issues collaboratively by developing an action plan allows for improvement and correction. This approach is consistent with ethical sourcing principles, which encourage responsible intervention to correct and improve supply chain practices rather than punitive measures that may not lead to long-term change.

Explanation

In a 'Credit Account' payment mechanism- the supplier receives payment after the goods are delivered, in line with agreed payment terms (which may be 30 days or something like that).

Explanation

The correct answer is importation rules and tariffs. This is because in offshoring some of the manufacturing will be done in another country then shipped back to the UK. The products will have to go through customs so may be subject to tariffs and duties.

Steff's not exporting anything in the scenario and paying electronically and getting lower costs are not RISKS.

Engaging with business managers while making sourcing recommendations ensures that the buyer considers multiple perspectives, reducing potential biases and improving decision-making. This approach aligns with ethical sourcing practices by promoting collaboration and transparency in tender decisions.

Defining corrective actions and running supplier development programs are effective remedial actions following an audit. These approaches support continuous improvement, aligning with responsible sourcing by helping suppliers meet ethical and performance standards.

To maintain integrity and avoid conflicts of interest, Tracey should declare the conflict and remove herself from the tender process. Ethical sourcing practices emphasize transparency and fairness, which prevent potential biases and maintain trust within procurement processes.

Capacity and compatibility are critical factors in supplier appraisal. Evaluating these factors ensures that the supplier can meet the buyer’s requirements in terms of production capacity and aligns with responsible sourcing by ensuring the supplier’s values and practices are compatible with the buyer’s expectations.

Explanation

ethics and environment are not a 'right of procurement'.

The 5 rights are price, quality, quantity, time and place.

Single sourcing can be appropriate when set-up costs are high, making it impractical to involve multiple suppliers. This aligns with responsible sourcing principles, particularly for high-value or specialised items, where relationship management and collaboration with one supplier can enhance quality and efficiency.

Explanation

Continuity of supply for the buying organisation is an advantage of TUPE regulations.

TUPE is the Transfer of Undertakings (Protection of Employment). It's when the workforce / em-ployees of one company go to work for another one, usually after their company is bought out. They're transferred to the new company along with the furniture and buildings.

TUPE is UK specific. You don't need to know too much details about it for this exam - just what it is and the benefits. The main benefit is people don't lose their jobs when their company gets bought out. Basic guide to TUPE (pinsentmasons.com)

Explanation

Request for Quotations can include more details than just prices. They can include specs and technical drawings and samples. It's like saying 'we can give you this price with these conditions'.

The other no answer is wrong because RfQ don't always include samples. A sample wouldn't be possible for a quote for an IT consultancy piece of work.

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