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1 / 7 CIPS L4M4 Exam Ethical and Responsible Sourcing https://www.passquestion.com/l4m4.html 35% OFF on All, Including L4M4 Questions and Answers Pass L4M4 Examwith PassQuestion L4M4 questions and answers in the first attempt. https://www.passquestion.com/ https://www.passquestion.com/ 2 / 7 1.What is the best way to demonstrate that your organisation does not tolerate bribery and corruption? A. Not working with suppliers who you have heard have a reputation for bribery and corruption B. Requesting your supplier’s ethical policies on an annual basis C. Having full anti-bribery training, policies, and procedures in place D. Asking all suppliers to read your organisation’s policy on anti-bribery and corruption Answer: C Explanation: Implementing full anti-bribery training, policies, and procedures demonstrates a proactive stance against bribery and corruption. Ethical sourcing principles encourage organisations to institutionalise comprehensive anti-bribery measures to ensure transparency, fairness, and compliance within the supply chain, reducing the risk of corrupt practices. 2.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. Direct negotiations occur prior to suppliers submitting their offer B. The contract will be awarded strictly on pricing criteria C. Suppliers responding to the tender are pre-qualified D. It is only relevant when there are few suppliers in the market Answer: C 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. 3.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 supports the open tendering process B. It is the only approach that enables the buyer to isolate the best supplier from among many C. It helps the buyer to increase stock varieties to avoid stock-outs D. It increases process flexibility and switching using a range of approved suppliers Answer: D 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. 4.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. 3 / 7 Should the company go ahead with the recommendation? A. Yes, as it would align with, and help to achieve, sustainability goals B. No, ISO standards are too complex for staff and suppliers to understand and follow C. No, because ISO standards are only relevant to large organisations D. Yes, implementation would guarantee that the company is compliant with all environmental laws Answer: A 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. 5.A buyer might opt to do an 'Invitation to Tender' rather than a 'Request for Quotation' process because ... A. The supplier market is an oligopoly where there are a few large suppliers dominating the market B. Time is of the essence, and decisions need to be made quickly without additional stakeholder involvement C. The contract will be low value and there are many suppliers, so a simpler approach is required D. The nature of the goods or services being purchased is complex and high value Answer: D Explanation: 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. 6.A buyer has been tasked with placing an order for steel from another country and using Incoterms for the 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 to arrange loading, transportation, and export clearance. Which Incoterm has been agreed? A. CIP - Carriage and Insurance Paid B. FOB - Free on Board C. FCA - Free Carrier D. EXW - Ex Works Answer: D Explanation: Under the EXW (Ex Works) Incoterm, the buyer assumes responsibility for transportation and export clearance from the seller’s premises. This term aligns with cost-saving measures and the buyer’s internal capabilities for logistics, supporting efficient and responsible sourcing. 7.When assessing social responsibility elements of a supplier's proposal, what type of supporting evidence could a supplier provide? A. Evidence of compliance with fair trade standards 4 / 7 B. Results of a customer service survey on delivery performance C. Quality control reports documenting quality checks in the manufacturing process D. Financial statements detailing profit and loss accounts Answer: A Explanation: 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. 8.In which instance would multiple sourcing be the most applicable approach? A. Sourcing for the provision of a service, where close relationship management is required B. Sourcing a specialised, unique component where the supplier's knowledge is key C. Sourcing for high-cost, strategically important components D. Sourcing for components required at short notice Answer: D Explanation: Multiple sourcing is particularly advantageous for ensuring quick delivery and preventing stock-outs, as it provides the flexibility to source from multiple suppliers. This approach aligns with responsible sourcing by ensuring continuity and reducing risks in the supply chain. 9.What course of action should be taken when an audit of a supplier identifies evidence of human rights malpractice? A. Immediately raise the issue with the supplier and jointly develop a timely action plan to be implemented before a repeat audit B. 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 C. 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 D. Allow the supplier to complete current orders placed, while pursuing an alternative source to change to as soon as approved Answer: A 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 correctand improve supply chain practices rather than punitive measures that may not lead to long-term change. 10.Faisal is a medical equipment maintenance services procurement specialist within a local hospital. Faisal is responsible for ensuring contracts are in place that will ensure operational continuity of high-value pieces such as radiology equipment. When carrying out tender opportunities for these services, Faisal will specify, as an essential requirement, that certain standards are adhered to. Which of the following is a benefit of incorporating standards as a requirement within a specification? A. Standards provide clear guidelines and remove the risk of ambiguity 5 / 7 B. Standards will mirror the buyer's requirements in its entirety C. Standards will ensure suppliers meet all the buyer's requirements D. Standards will ensure low pricing is submitted in the tender response Answer: A Explanation: Incorporating standards within specifications provides clear guidelines for suppliers, reducing ambiguity and helping ensure consistency in quality and performance. This aligns with ethical and responsible sourcing practices by promoting transparency and setting consistent expectations for suppliers. 11.An organisation wants to measure its Triple Bottom Line. Which of the following should be considered to help achieve this goal? A. Quality and lead time and performance B. Innovation and creativity performance C. Financial and environmental performance D. Procedure and process performance Answer: C Explanation: The Triple Bottom Line framework evaluates an organisation's impact on social, environmental, and economic factors. Financial and environmental performance are critical components, along with social metrics, aligning with responsible sourcing goals to promote sustainability and ethical practices. 12.Which of the following can be undertaken by the buyer in relation to the governance of a supplier's ethical and sustainable behaviours? 1. Review the insurance clauses in the contract 2. Check that the supplier's internal policies are up to date 3. Check the supplier's conflict of interest register for their contract 4. Review the non-disclosure agreement for their contract A. 1 and 3 only B. 1 and 4 only C. 2 and 3 only D. 2 and 4 only Answer: C Explanation: Regularly checking supplier policies and conflict of interest registers helps ensure that suppliers are upholding ethical standards, which supports responsible sourcing practices. This governance activity aligns with ethical guidelines to promote transparency and prevent conflicts that could affect the integrity of the supply chain. 13.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 results of the current ratio do not mean anything as long as the supplier has proven technical merit 6 / 7 B. The supplier will be unable to cover long-term liabilities from revenues C. The supplier will have cash reserves to cover unexpected expenses D. The supplier will be unable to pay its short-term liabilities using current assets Answer: D 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. 14.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 the goods after they are loaded on the ship, plus all subsequent costs, including freight charges 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 taking the goods from the departure quayside to the ship, plus all subsequent costs D. The buyer takes responsibility for transferring the goods from the seller's premises to the ship, plus all subsequent costs Answer: A Explanation: Under FOB (Free on Board), the buyer assumes responsibility once the goods are loaded onto the ship, including costs and risks beyond this point. This Incoterm is commonly used in international trade, helping both parties clarify responsibilities and promote fair risk distribution. 15.Single sourcing is only used by buyers where the total requirement is too small to justify splitting orders among more suppliers. Is this statement correct? A. No, because single sourcing should only be used where there is just one supplier in the market B. Yes, because many suppliers tend to increase stock variety and stock proliferation C. No, because single sourcing may also be used when a requirement demands expensive set-up costs D. Yes, because single sourcing works well within a volatile supply environment Answer: C Explanation: 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. 16.When assessing the financial performance of a potential supplier, it is important to understand how much gross profit they are making. The gross profit margin ratio uses which of the following pieces of information from the profit and loss (statement of financial performance)? Select TWO that apply. A. Cost of goods sold B. Value of equity capital C. Income from sales 7 / 7 D. Current liabilities E. Total current assets Answer: A,C Explanation: 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. 17.As a procurement officer for a large organisation, a supplier approaches you on social media offering to take you out for dinner to discuss a recent open opportunity and mentions a financial reward if you help them win the business. You accept the invite. Was this the right thing to do? A. Yes, you are free to do what you like outside of business hours B. No, it is not appropriate to discuss open opportunities with one provider and not another C. Yes, you are keen to see what is on offer as you are only on minimum wage currently and need extra money D. No, but you will go for the dinner and see what they offer, because it is up to you to decide if you should accept Answer: B Explanation: Accepting an invitation under such circumstances would violate ethical standards, as it could create a conflict of interest. Ethical sourcing and procurement practices require impartiality, and any perceived favoritism or bias can harm the organisation's integrity. 18.Other than price, what should a buyer consider when evaluating supplier quotations? 1. Lead times 2. Add-on costs 3. Wastage rates 4. Past performance A. 1, 2, and 4 only B. 1, 2, and 3 only C. 2, 3, and 4 only D. 1, 3, and 4 only Answer: A Explanation: 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. CIPS L4M4 Exam Ethical and Responsible Sourcing https://www.passquestion.com/l4m4.html Pass L4M4 Exam with PassQuestion L4M4 questions an https
