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L4 M4 > Ethical and responsible sourcing Exam Q's > Flashcards

Ethical and responsible sourcing Exam Q's Flashcards

1
Q

Which of the following is an effective measure for a procurement manager to identify potential risks in
relation to a supplier’s exposure to increases in interest rates?
a. Acid test
b. Gearing
c. Inventory days
d. Turnover

A

b. Gearing

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2
Q

A procurement organisation has a complex and very high spend requirement for a widget. It has many
potential suppliers, all with the capacity and eagerness to deliver the contract. Once awarded, the contract
can be easily switched to an alternative source of supply. Price is just one consideration, but other more
qualitative factors are also important in deciding which supplier to award the contract to.
Which of the following describes the sourcing characteristics of the widget and provides the best method of
awarding the contract?
a. Leverage and competitive tender
b. Strategic and e-auction
c. Routine and supplier negotiations
d. Bottleneck and framework agreement

A

a. Leverage and competitive tender

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3
Q

Which of the following is the most useful to assess a supplier’s liquidity?
a. Current ratio
b. Earnings per share
c. Profit margin
d. Return on equity

A

a. Current ratio

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4
Q

Which ONE of the following INCOTERMS 2020 applies to any form of transportation and carries the
highest risk profile for the buyer?
a. Free on board (FOB)
b. Delivered duty paid (DDP)
c. Ex-works (ExW)
d. Cost insurance and freight (CIF)

A

c. Ex-works (ExW)

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5
Q

A major public sector organisation has a requirement to award a high value services contract.
Procurement for the public sector is highly regulated. The organisation has a clear specification and has
already conducted a market analysis, identifying many potential suppliers that could deliver the contract. It is
an important contract but the requirement is not urgent. The most important factor for the organisation is to
find the best supplier. When considering all of these factors which ONE of the following approaches is the
most appropriate?
a. Direct award
b. Restricted tendering
c. Negotiated procedure
d. Competitive dialogue

A

b. Restricted tendering

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6
Q

Hi-Tech Products Inc (HTPI) has developed a new product. The patent for the product has been registered
worldwide. HTPI has identified target customers and potential distributors for the product to be sold around
the world. HTPI realises that profit margins will be tight and so finding the best suppliers will be key. HTPI is
open to ideas in terms of production processes and is keen to learn more from the supply market, before
running a formal competition. Which ONE of the following should HTPI conduct as a priority?
a. Competitive negotiation
b. Invitation to tender
c. Request for information
d. Supplier appraisal

A

c. Request for information

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7
Q

Q7. Which of the following items found in a supplier’s financial statements are relevant to the gearing ratio?
1. Long-term debt
2. Opening inventory
3. Short-term investments
4. Shareholder’s equity
a. 1 and 3 only
b. 2 and 4 only
c. 2 and 3 only
d. 1 and 4 only

A

d. 1 and 4 only

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8
Q

A supplier’s credit rating is a relevant selection criterion when running a competitive tender. Is this
statement TRUE?
a. Yes, because credit rating will impact on the brand
b. Yes, because the credit rating outlines the financial stability of the supplier
c. No, because credit ratings are unreliable
d. No, because credit ratings should be undertaken after selection

A

b. Yes, because the credit rating outlines the financial stability of the supplier

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9
Q

Which of the following are examples of secondary data that might be useful to understand the market
when sourcing? Select the TWO that apply.
a. Government reports
b. Supplier websites
c. Focus groups
d. Online surveys
e. Customer questionnaires

A

a. Government reports
b. Supplier websites

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10
Q

Which of the following should be considered when calculating ratios relating to a supplier’s liquidity?
Select TWO that apply.
a. Receivables
b. Equity
c. Reserves
d. Profit
e. Inventories

A

a. Receivables
e. Inventories

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11
Q

Which of the following INCOTERMS 2020 carries the lowest risk for the buyer and highest risk for the
Supplier?
a. Delivered duty paid
b. Free on board
c. Ex-works
d. Delivered at terminal

A

a. Delivered duty paid

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12
Q

If a procurement professional believes that there are suspiciously low labour rates being used within
their supply chain, this should raise concerns about which ONE of the following?
a. Bribery
b. Modern slavery
c. Fraudulent behaviour
d. Corruption

A

b. Modern slavery

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13
Q

A large organisation is running a competitive tendering exercise that will lead to the award of a major
contract. Bidders are required to submit extensive personal information about key staff who will be involved
in the delivery of a long-term contract. What will be the most important legislative consideration for the
procurement organisation throughout the tendering process?
a. Product liability
b. Discrimination
c. Health and safety
d. Data protection

A

d. Data protection

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14
Q

The procurement manager (PM) for Middletown Council has been asked to procure some new refuse
containers for households to dispose of food waste. The council have advised there should be one container
per household and that the first order will be for 50,000 units. The specification has been agreed, however,
the PM wants to know the longer-term demand in order to explore economies of scale. The PM reviews the
latest government census records for Middletown to start establishing the potential size of the requirement.
This is an example of what data?
a. Secondary
b. Internal
c. Primary
d. Unstructured

A

a. Secondary

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15
Q

A supplier’s liquidity can be assessed using ratio analysis based on information from a supplier’s financial
statements. You can calculate the current ratio of the supplier when comparing which of the following?
1. Current assets
2. Long-term debt
3. Current liabilities
4. Shareholders’ funds

a. 1 and 2 only
b. 2 and 3 only
c. 3 and 4 only
d. 1 and 3 only

A

d. 1 and 3 only

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16
Q

If auditing an external supplier’s manufacturing site, which of the following can be reviewed to measure
ethical standards?

  1. Factory layout
  2. Transport links to the site
  3. Payroll records
  4. Work schedules

a. 1 and 2 only
b. 2 and 3 only
c. 3 and 4 only
d. 1 and 3 only

A

c. 3 and 4 only

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17
Q

Using secondary data is most likely to meet the specific requirements of the procurement organisation.
Is this a TRUE statement?
a. No, it has already been generated for another purpose
b. Yes, it is available to meet all kinds of requirements
c. No, it is generated by other organisations for their internal use
d. Yes, it is highly confidential and bespoke data

A

a. No, it has already been generated for another purpose

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18
Q

Gearing is a key financial measure of an organisation’s profitability. Is this statement TRUE?
a. Yes, it is used to evaluate the organisation’s cost-to-income ratio
b. No, it considers the organisation’s balance of debt and equity
c. Yes, it relates to the relationship between profits and interest paid
d. No, it is a ratio used to determine the organisation’s liquidity

A

b. No, it considers the organisation’s balance of debt and equity

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19
Q

Award criteria to determine the outcome of a competitive tender include which of the following? Select
the TWO that apply.
a. Branding
b. Price
c. Reputation
d. Distribution
e. Quality

A

b. Price
e. Quality

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20
Q

What are the components of the triple bottom line? Select the THREE that apply.
a. People
b. Procurement
c. Process
d. Price
e. Profit
f. Planet

A

a. People
e. Profit
f. Planet

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21
Q

Strategic sourcing is typically adopted for which type of spend
a. Short term procurements
b. High profit, low risk items
c. High profit, high risk items
d. Services

A

c. High profit, high risk items

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22
Q

Using a weighted scoring system for bid evaluation has the following disadvantages: select those which apply
a. Lower stakeholder engagement
b. No training is necessary
c. Total objectivity is impossible
d. Supports transparency

A

a. Lower stakeholder engagement
b. No training is necessary

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23
Q

Dual Sourcing can be better than single sourcing for the following reasons: select two that apply
a. Lower risk of supply disruption
b. Wide knowledge and expertise
c. Maximum leverage can be applied
d. Relationships will be stronger

A

a. Lower risk of supply disruption
b. Wide knowledge and expertise

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24
Q

What process helps the buyer evaluate suppliers’ capabilities prior to a formal procurement process
a. RFP
b. RFI
c. RFQ
d. RAF

A

b. RFI

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25
Q

The main advantages of using credit rating agencies to assess suppliers health are: select all that apply
a. they provide a comprehensive weighted score which makes due diligence more efficient
b. The data they draw upon is more up-to-date than available anywhere else
c. A supplier with a good financial score may still be highlighted as high risk because they have recently expanded or may not have any assets
d. They provide guidance on the best contractual clauses to adopt to mitigate the risks identified

A

a. they provide a comprehensive weighted score which makes due diligence more efficient
c. A supplier with a good financial score may still be highlighted as high risk because they have recently expanded or may not have any assets

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26
Q

A sole source is a situation in which
a. The buyer has chosen to award the contract to a single supplier
b. The buyer has extended the contract with an incumbent ‘well performing’ supplier
c. The buyer has awarded the contract to a monopoly supplier
d. The buyer has selected a single supplier from an oligopoly market

A

c. The buyer has awarded the contract to a monopoly supplier

27
Q

Put these tendering stages in the correct sequence
a. Award
b. Plan
c. Implement
d. Contract
e. Initiation

A

BEADC

28
Q

Tactical sourcing can also be know as
a. Asset sourcing
b. Operational sourcing
c. Strategic sourcing
d. Outsourcing

A

b. Operational sourcing

29
Q

Which of the following would appear on the balance sheet: select all that apply
a. Cash in the bank
b. Salaries of senior managers
c. Revenue
d. Land and buildings
e. Amount owed to suppliers
f. Depreciation of equipment

A

a. Cash in the bank
d. Land and buildings
e. Amount owed to suppliers

30
Q

Carters 10 C model does not contain which one of the following
a. Competency
b. Culture
c. Characteristics
d. Cash

A

c. Characteristics

31
Q

Restricted tendering is typically used for the following reasons
a. To maximises the competition
b. To ensure successfully pre-qualified suppliers can not bid
c. To ensure that a supplier meets the buying organisations due-diligence requirements
d. To allow for suppliers to submit outcome based bids

A

c. To ensure that a supplier meets the buying organisations due-diligence requirements

32
Q

Which of the following would be incorporated into a Total Cost of Ownership calculation for a new machine: select all that apply
a. Maintenance costs
b. Training costs
c. Storage
d. Disposal costs
e. Disposal revenue
f. Suppliers profit
g. Insurance

A

A B C D E G

33
Q

Put these in the correct order
a. Issue the ITT
b. Select best value bid
c. Develop evaluation criteria
d. Receive bids

A

C A D B

34
Q

Hedging is the process of
a. Developing an alternative supplier to ensure supply continuity
b. A risk management process in which investments in commodities are made to reduce potential losses
c. A process used by the Chicago Mercantile Exchange to drive down prices
d. Suppliers reacting to their competitors pricing on a real-time basis

A

b. A risk management process in which investments in commodities are made to reduce potential losses

35
Q

A letter of credit is a document which
a. An agreement which sets out the amount of credit an overseas customer can have on their account
b. A document issued by one bank to another bank which acts as guarantee of payment upon presentation of agreed documents
c. A letter of reference provided to the buying organisation from one of the suppliers other overseas customers
d. A document which requests the return of payment (or part) following the rejection of goods

A

b. A document issued by one bank to another bank which acts as guarantee of payment upon presentation of agreed documents

36
Q

A situation in which the buyer focused more on the supplier’s objectives than their own could be described as what sort of approach
a. Collaborative
b. Competing
c. Avoiding
d. Accommodating
e. Compromising

A

d. Accommodating

37
Q

Compared with an ITT, an RFQ is; select all that apply
a. More formal
b. Ideal for medium to high-value contracts
c. Is less detailed
d. Required less resources

A

c. Is less detailed
d. Required less resources

38
Q

When does an RFI get issued before an RFQ
a. Sometimes
b. Never
c. Often
d. always

A

a. Sometimes

39
Q

A performance specification is sometimes know as what
a. A Technical specification
b. An input specification
c. A output or outcome specification
d. A conformance specification

A

c. A output or outcome specification

40
Q

Which of the following offences fall under the Bribery act 2010
a. Giving a bribe
b. Receiving a bribe
c. Failure to prevent a bribe
d. Bribing foreign public officials

A

a. Giving a bribe
b. Receiving a bribe
c. Failure to prevent a bribe
d. Bribing foreign public officials

41
Q

A Tariff can best be described as
a. Rules relating to the type of goods, their quota and import duty when imported from overseas
b. A payment made to allow the entry of a particular good into the country
c. The duties paid by particular customers to a supplier in order to allow them to export overseas
d. The import duty associated with particular types of goods when imported from specific countries

A

d. The import duty associated with particular types of goods when imported from specific countries

42
Q

When it comes to remedial action relating to finding potentially unethical practices in the supply chain the buyer needs to first focus on which of the following
a. Root cause analysis
b. Preventative action
c. Dispute resolution
d. Invoking liquidated damages claim

A

a. Root cause analysis

43
Q

Which of the following is not typically a category of commodity classification
a. Metals
b. Food
c. Agriculture
d. Livestock
e. Energy

A

b. Food

44
Q

In which section of the CIPS code of conduct included the statement that procurement personnel should reject any business practice which might reasonably be deemed improper
a. Promote the eradication of unethical business practices
b. Enhance the proficiency and stature of the profession
c. Ensure full compliance with the law
d. Maintain the highest standard of integrity in all business relationships

A

d. Maintain the highest standard of integrity in all business relationships

45
Q

What is a T1 document
a. A document that must accompany goods whilst in transit through the EU until they reach their final destination
b. A document that is used to control the traceability of goods entering or leaving the EU
c. A document that contains the export license and trade control authorization for military goods leaving the USA
d. A document that contains the export license from the originating EU country to allow customs clearance for shipment outside of the EU

A

a. A document that must accompany goods whilst in transit through the EU until they reach their final destination

46
Q

The misuse of assets or items entrusted to a person for a particular purpose can be know as
a. Embezzlement
b. Bribery
c. Damage
d. Hedging

A

a. Embezzlement

47
Q

What is the name of the document which describes what is required of those involved in transporting, carrying and consigning goods until their point of delivery
a. Carnet
b. Shipping document
c. Carrier instruction
d. Bill of lading

A

d. Bill of lading

48
Q

The incoterm which maximises the responsibility and liability of the supplier is
a. EXW
b. DDP
c. DAT
d. FAS

A

b. DDP

49
Q

What is a Sight Draft
a. guarantee given by the buyers bank to the supplier that the exporting supplier will be paid when pre-agreed conditions are met
b. A guarantee of payment from the buyers bank that the exporting supplier will retain title until the goods have been receipted by the buying organisation
c. A guarantee by the sellers bank that money will be refunded to the overseas buying organisation should the item purchase fail within its warranty period.
d. A guarantee of payment from the buyers bank that ensures that the exporting supplier retains title of the goods until the importing buyers has receipted and paid for them

A

d. A guarantee of payment from the buyers bank that ensures that the exporting supplier retains title of the goods until the importing buyers has receipted and paid for them

50
Q

The fraud triangle suggest 3 main reasons that individuals come to commit fraud. Which one of the following is correct
a. Pressure, Opportunity, Risk of success
b. Perceived Pressure, Opportunity, Rationalisation
c. Perceived Pressure, Perceived Opportunity, Rationalisation
d. Peer Pressure, Scale of opportunity, risk of success

A

c. Perceived Pressure, Perceived Opportunity, Rationalisation

51
Q

TUPE is legislation to protect employees when
a. Outsourced contracts are moved between suppliers
b. International suppliers are being used
c. Downsizing is taking place, including redundancies
d. A new procurement is awarded to a supplier

A

a. Outsourced contracts are moved between suppliers

52
Q

Sustainable development can best be defined as
a. Development that meets the needs of the population in the present without negatively affecting the resource needs of future generations
b. Development that meets the organisations needs over the long term in order to be more successful than the competition
c. Development that meets the needs of different countries to ensure that their relative poverty is low
d. Development that encourages lower consumption now so that future generations can enjoy better lifestyles than previous generations

A

a. Development that meets the needs of the population in the present without negatively affecting the resource needs of future generations

53
Q

An income statement can also be know as what
a. A cash flow statement
b. A profit and loss account
c. A sales forecast
d. A asset and liability statement

A

b. A profit and loss account

54
Q

Which tendering approach would be best suited to a procurement for which the buying organisation did not know how to deliver the desired outcome
a. A restricted tender using a conformance specification
b. A outcome specification within a open tender
c. An open tender using a output specification
d. An restricted tender with a technical specification

A

b. A outcome specification within a open tender

55
Q

Services which contribution significantly to operational performance and are of strategic importance would best suit which of the following
a. Retain in-house
b. Outsource
c. Elimination
d. A strategic alliance

A

a. Retain in-house

56
Q

Which of the following regulations apply to both public and private sector organisations: select those which apply
a. GDPR
b. Health and safety at work act
c. PCR 2015
d. Modern Slavery Act
e. Unfair contract terms act

A

a. GDPR
b. Health and safety at work act
d. Modern Slavery Act
e. Unfair contract terms act

57
Q

A PQQ seeks to answer which of the following questions: choice as many as relevant
a. The financial health of the buying organisation
b. The accreditations of the potential supplier
c. The suppliers capacity
d. The suppliers preferred terms and conditions
e. The KPIs the supplier has measured the customer against

A

b. The accreditations of the potential supplier
c. The suppliers capacity
d. The suppliers preferred terms and conditions

58
Q

For Intra-company trading the primary objective of the transfer pricing arrangements is likely to be what?
a. To minimise taxation
b. To ensure that internal suppliers are treated as fairly as external suppliers
c. To ensure costs are accurately attributed to the internal customer
d. To deal effectively with exchange rates

A

a. To minimise taxation

59
Q

For a KPI to be effective they should be which of the following
a. Realistic, Measurable, Specific, Time bound, Achievable
b. Time bound, Measurable, Specific, Achievable, Relevant
c. Specific, Monitorable, Achievable, Realistic, Time bound
d. Measurable, Suitable, Relevant, Time bound, Achievable

A

b. Time bound, Measurable, Specific, Achievable, Relevant

60
Q

Services which contribution little to operational performance and are of low strategic importance would best suit which of the following approaches
a. Retain in-house
b. Outsourcing
c. Elimination
d. A strategic alliance

A

c. Elimination

61
Q

When profiling spend with suppliers in order to identify the strategic, closer tactical and transactional relationships needed, buyers will often use a tool called
a. ABC analysis
b. Spend matrix
c. Pareto analysis
d. Supplier hierarchy profiling

A

a. ABC analysis

62
Q

A ‘leverage’ item on the Kraljic matrix has which of the following characteristics
a. Low profit impact, low supply risk
b. High supply risk, low profit impact
c. High risk impact, low profit supply
d. High profit impact, low supply risk

A

d. High profit impact, low supply risk

63
Q

Reasons for outsourcing are not likely to include which of the following
a. To achieve value for money
b. To avoid the need to recruit and train in-house staff
c. To benefit from suppliers capabilities
d. To help your organisation focus on its non-core activities
e. To reduce CSR risks
f. To reduce the organisations overheads

A

d. To help your organisation focus on its non-core activities
e. To reduce CSR risks

L4 M4 (1 decks)

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