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CIPS Managing Ethical Procurement and Supply (L5M5) Sample Questions (Q32-Q37):

NEW QUESTION # 32
Which tier of a supply chain would the original equipment manufacturer have the closest relationship with?

A. No tier
B. Tier 2
C. Tier 1
D. Tier 3

Answer: C

Explanation:

As shown in the figure, Tier 1 suppliers directly provide systems or services to the OEM. According to the study guide, the correct answer is Choice B. Reference: LO-2.1; Page 146; Mapping supply chains to achieve supply chain transparency

NEW QUESTION # 33
Which of the following are tools that can be used by procurement professionals to evaluate the sustainability risk of contracts, their relative linkages, complexity and also help to identify potential improvements?
1. Macro environmental audit
2. Supplier preferencing
3. Portfolio analysis
4. Supply chain mapping

A. 1 and 3 only
B. 1 and 2 only
C. 3 and 4 only
D. 2 and 4 only

Answer: C

Explanation:
Option 3- Portfolio analysis (e.g., Kraljic Matrix) categorizes purchases based on risk and value. It highlights complexity and prioritizes contracts needing attention but is less focused on sustainability unless explicitly incorporated into criteria.
Option 4- Supply chain mapping provides a visual representation of the supply chain, identifying sources of risk, including sustainability challenges. This is a direct and practical tool for assessing the complexity of contracts, linkages, and areas for improvement.
The most relevant tools for assessing sustainability risks and complexities in contracts are portfolio analysis and supply chain mapping. Therefore, the correct answer is Choice C.
Incorrect answer:
Option 1- This tool involves assessing external factors such as political, economic, social, technological, legal, and environmental (PESTLE) influences on procurement activities. It helps identify sustainability risks associated with external conditions, but it is not contract-specific.
Option 2- Supplier preferencing evaluates how suppliers perceive a buyer's business, determining whether the buyer is a core, strategic, nuisance, or exploitable customer. While useful for relationship management, it does not directly assess sustainability risks or contract linkages.
Reference:
LO-2.1; Page 155-163; Assess methods to achieve ESG standards to secure ethical and sustainable supply chains

NEW QUESTION # 34
Which of the following is NOT an element of a Fair Trade label?

A. Long-term Relationships
B. Traceability
C. Marketing Incentives
D. Minimum Price

Answer: C

Explanation:
Choice B- This is not an element of the Fair-Trade label. While Fair Trade promotes ethical practices, it does not involve offering direct marketing incentives as part of its certification system.
Incorrect answer:
Choice A- This is an element of the Fair-Trade label, ensuring that producers receive a guaranteed baseline payment to protect against market fluctuations.
Choice C- This is an element of the Fair-Trade label, ensuring that certified products can be tracked from production to consumption.
Choice D- Long-term relationships focus on building consistent partnerships between buyers and producers and is also an element.
Reference:
LO-3.3; Page 301; Fair Trade International (FI), global fair-trade organizations and their implications for procurement and supply

NEW QUESTION # 35
Ruben is a new Procurement Manager at XYZ Company. He has been charged with buying a new piece of machinery for a factory. Having looked at several options, and considered sustainability, he has opted to buy the more expensive piece of machinery.
In terms of sustainability, why might he have made this choice?

A. The higher priced item is from a more reputable company
B. The higher priced item will be of better quality
C. The more expensive piece of equipment will be more environmentally friendly
D. In terms of life-cycle costing the more expensive item may be cheaper in the long term

Answer: D

Explanation:
This question is testing if you know about Whole Life Cycle Costing. You'll have come across this already at level 4 (module 7). It's a big part of sustainability. See p.14 for a quick recap on this. In terms of this question, even if you don't remember life-cycle costing, options 1 2 and 4 can't be right- we don't have information in the question that tells us that the higher priced item is better quality, from a reputable company or environmentally friendly- we just don't know based on the information we've been given so these answers can't be right.

NEW QUESTION # 36
A group of small-scale coffee farmers in a rural village has been receiving the Fairtrade Premium for their products. During a recent community meeting, they discuss how to allocate the premium funds for the upcoming year. Which of the following projects would best align with the principles of the Fairtrade Premium in addition to the fair trade price?

A. Allocating the funds to one farmer to expand their personal farming business
B. Distributing the funds equally among the farmers to use as they see fit
C. Investing in building a community health clinic to improve access to healthcare for all villagers
D. Using the funds to subsidize private education for the children of the wealthiest farmers

Answer: C

Explanation:
Choice B- This option aligns with the principles of Fair Trade, as the premium is intended to support projects that benefit the community as a whole, fostering development and sustainability.
Incorrect answer:
Choice A- While this might seem fair at first glance, the Fairtrade Premium is not meant for personal distribution. Its purpose is to fund collective projects that benefit the entire community, such as infrastructure, education, or health initiatives.
Choice C- This option does not align with the principles of equity and inclusivity. Fair Trade encourages using the premium to benefit the entire community, particularly the most vulnerable and marginalized groups, rather than focusing on individuals who are already advantaged.
Choice D- Providing funds to a single farmer for personal business expansion is not in line with the collective approach of Fair Trade. The premium is intended to address community-wide challenges and improve the shared resources and infrastructure for all.
Reference:LO-3.3; Page 305; Fairtrade standards that affect the workplace and producers and their implications for procurement and supply

NEW QUESTION # 37
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