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NEW QUESTION # 47
A procurement manager for a major retail group is using ratio analysis to assess the financial viability of suppliers who have tendered for a logistics services tender. The recommended supplier has a current ratio of
0.6. What are the potential consequences of awarding the contract to this supplier, given their current ratio is below 1?
- A. The supplier will have cash reserves to cover unexpected expenses
- B. The supplier will be unable to pay its short-term liabilities using current assets
- C. The results of the current ratio do not mean anything as long as the supplier has proven technical merit
- D. The supplier will be unable to cover long-term liabilities from revenues
Answer: B
Explanation:
A current ratio below 1 suggests that the supplier may not have sufficient current assets to cover short-term liabilities, which could pose a risk to the buyer. Assessing financial stability aligns with responsible sourcing practices, as it ensures suppliers can fulfill contracts without disruption.
NEW QUESTION # 48
What course of action should be taken when an audit of a supplier identifies evidence of human rights malpractice?
- A. Allow the supplier to complete current orders placed, while pursuing an alternative source to change to as soon as approved
- B. Remove all business and inform press organisations, who will in turn bring the issue to the attention of formal governmental organisations who can take action
- C. Immediately raise the issue with the supplier and jointly develop a timely action plan to be implemented before a repeat audit
- D. Immediately halt all orders with the supplier, make a record of the violation in the supplier database, and switch to an alternative source of supply
Answer: C
Explanation:
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.
NEW QUESTION # 49
Achieving the 'five rights of procurement' is one of the key objectives of procurement managers. Which of the following are not considered one of the 5 rights? Select TWO.
- A. time
- B. quality
- C. ethics
- D. environment
- E. quantity
Answer: C,D
Explanation:
ethics and environment are not a 'right of procurement'.
The 5 rights are price, quality, quantity, time and place.
NEW QUESTION # 50
The Freedom of Information Act is a piece of UK legislation which allows members of the public to request information on issues such as public sector sourcing. When a request is made, it is compulsory for the public sector to provide this information to the public. Is this statement true?
- A. yes- the information must be provided within 28 days
- B. no- the public sector can choose not to publish information if it is not deamed to be in the public interest
- C. no- the public sector does not need to provide information on sourcing activities
- D. yes- the information must be posted publically online
Answer: B
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.
NEW QUESTION # 51
Which of the following can be interpreted as a normal business practice by some cultures but a form of bribery by others?
- A. verbal contracts
- B. facilitation payment
- C. phishing
- D. golden handshake
Answer: B
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
NEW QUESTION # 52
Why is it important, when awarding high-value contracts, for a buyer to conduct a financial assessment of a supplier?
- A. If a supplier has a high credit score, this means it pays its own suppliers late, which could result in stock outs
- B. A supplier who is highly profitable will be charging prices higher than the average market rate
- C. The buyer must ensure continuity of supply because financial problems of a supplier could affect the supply
- D. Financial assessments provide a holistic view of a company's capability, including quality and delivery performance
Answer: C
Explanation:
Financial assessments help ensure a supplier can meet the demands of a high-value contract without disruptions. This aligns with responsible sourcing principles by promoting stable supplier relationships and reducing the risk of supply chain interruptions due to financial instability.
NEW QUESTION # 53
Which of the following are signs that modern-day slavery might be taking place within the supply chain?
Select THREE.
- A. suppliers who speak English as a second language
- B. supplier based in a country with a low score on the Corruption Perception Index
- C. suspiciously low labour costs
- D. poor quality products
- E. workers that live on-site
Answer: C,D,E
Explanation:
The correct answers are; suspiciously low labour costs, workers living on site and poor quality products (as this signals that the workforce may be unskilled).
A low score on the CPI is a good thing (high scores are more likely to signify slavery concerns) and just because someone speaks English as a second language doesn't mean you automatically need to be suspicious.
That would be prejudice.
NEW QUESTION # 54
Which of the following would you expect to find in an Invitation to Tender? Select THREE
- A. qualifications required
- B. deadline
(Correct) - C. pricing schedule
- D. risk assessments
- E. awarding body
Answer: A,E
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'tfind 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)
NEW QUESTION # 55
Tracey Collum is a procurement professional and married to Nick Collum.
Tracey has been leading a tender for a new radar system, where four suppliers have submitted their bids.
After the bids were received, Nick joined one of the suppliers (Supplier X) as the project director for radar systems.
Nick has asked Tracey to award the contract to Supplier X. What should Tracey do?
- A. Award the contract to Supplier X because Nick will be promoted if Supplier X wins the contract
- B. Award the contract to Supplier X because Tracey can ask for a better price because they are married
- C. Remove Supplier X from the tender due to a conflict of interest and continue with the tender
- D. Ask to be removed from the tender due to a conflict of interest and complete a conflict of interest form
Answer: D
Explanation:
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.
NEW QUESTION # 56
When selecting a supplier on technical merit, its important that the supplier is a good 'functional fit' for the organisation. What is meant by 'functional fit'?
- A. the supplier is able to work at the same technical level as the buyer
- B. the supplier makes a similar profit to that of the buyer
- C. the supplier shares a common supply chain
- D. the supplier is able to adhere to the same ethical standards
Answer: A
Explanation:
The correct answer is 'the supplier is able to work at the same technical level as the buyer'. It's aboutbeing able to integrate the businesses together in terms of IT systems and such like.
NEW QUESTION # 57
Which of the following incoterms has the lowest risk to the buyer?
- A. carriage and insurance paid to
- B. delivered duty paid
- C. free on board
- D. exworks
Answer: B
Explanation:
The lowest risk to the buyer is 'delivered duty paid'. This is because the supplier does all the work transporting the items to the buyer's premises. Incoterms_2020_chart | Intersped
NEW QUESTION # 58
What is a risk of pre-warning a supplier that you will conduct an audit of their facilities?
- A. they will not perform regular duties that day
- B. they will not be able to make that time and date
- C. they will not achieve KPIs
- D. they may coach staff in what to say
Answer: D
Explanation:
A risk of pre-planning an audit is the supplier has time to prepare for it. It's a good thing in that they can get their paperwork in order but the downside is they can overprepare so you don't get a realis-tic representation of what they're doing. One way they can do this is coaching staff in what to say to the auditors.
NEW QUESTION # 59
Which of the following characteristics are likely to be required within sourcing processes undertaken in the public sector?
* An emphasis on long-term supplier relationships where possible
* Maintaining service levels within value and cost parameters
* All dealings between buyers and suppliers are kept confidential
* A competitive tendering process is usually encouraged
- A. 2 and 4 only
- B. 2 and 3 only
- C. 1 and 3 only
- D. 1 and 2 only
Answer: A
Explanation:
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.
NEW QUESTION # 60
A company has a requirement for an item that has been identified as strategic on the positioning model. The company needs to invite competitive tenders and ensure the selected supplier of this item is in a good financial position. What should the company ask the suppliers to send to show that their current assets cover their current liabilities?
- A. Acid test
- B. Gearing ratio
- C. Annual turnover
- D. Profit and loss account
Answer: A
Explanation:
The acid test (quick ratio) is an effective measure of a supplier's ability to meet short-term liabilities, providing insights into financial stability. This aligns with responsible sourcing by ensuring the supplier is financially capable of fulfilling a strategic contract.
NEW QUESTION # 61
What are some of the benefits of conducting unscheduled supplier audits? Select TWO that apply.
- A. Unscheduled audits help to identify non-compliance issues
- B. Unscheduled audits help to achieve an unbiased assessment
- C. Unscheduled audits increase the risk of providing misinformation
- D. Unscheduled audits significantly reduce costs compared to scheduled visits
- E. Unscheduled audits are more time-efficient than scheduled audits
Answer: A,B
Explanation:
Unscheduled audits can provide an unbiased view of supplier practices and help identify compliance issues that might be hidden during scheduled audits. This approach supports responsible sourcing by ensuring accurate assessments of ethical and quality standards.
NEW QUESTION # 62
A Request for Quotation asks a supplier to submit a price only, with no other details provided. Is this TRUE?
- A. Yes- price is the only factor considered
- B. No - specifications, technical details and quantities can also be provided
- C. Yes- this ensures the cheapest supplier is appointed
- D. No - quotations provide samples too
Answer: B
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.
NEW QUESTION # 63
Steff is a procurement manager at Giant Buttons Ltd who are considering offshoring a small section of their manufacturing operations. Which of the following is a risk of offshoring that Steff should consider.
- A. payments by electronic bank transfer
- B. importation rules and tariffs
- C. lower operating costs
- D. exportation rules and tariffs
Answer: B
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.
NEW QUESTION # 64
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