CIPS L4M6 SUPPLIER
RELATIONSHIPS
PRACTICE TEST 60
QUESTIONS
Question 1: A buyer is deciding whether to use an internal workshop or an external specialist for a critical component. Which factor most strongly supports using the internal supplier?
Choices:
1) Access to a larger external customer base 2) Elimination of all �xed production costs 3) Automatic access to economies of scale 4) Greater control over continuity and protection of intellectual property Correct Answer: Greater control over continuity and protection of intellectual property Explanation: Using an internal supplier can provide greater control over continuity, quality and sensitive intellectual property. External suppliers may o�er scale or specialist expertise, but those bene�ts do not support the internal option.Page 1
Question 2: Which description best �ts an arm's-length supplier relationship?
Choices:
1) Exclusive sourcing with extensive information sharing 2) High interdependence with joint decision making 3) Long-term joint investment with shared strategic objectives 4) Infrequent purchasing with limited commitment and parties acting independently Correct Answer: Infrequent purchasing with limited commitment and parties acting independently Explanation: An arm's-length relationship is relatively distant and low-commitment. Purchases are typically infrequent or low importance, and buyer and supplier largely act independently.Question 3: On the CIPS relationship spectrum, which relationship generally involves the greatest mutual interdependence and joint decision making?
Choices:
1) Closer tactical 2) Transactional 3) Co-destiny 4) Arm's-length
Correct Answer: Co-destiny
Explanation: Co-destiny sits at the highly collaborative end of the relationship spectrum. The parties are strongly interdependent and make important decisions with their shared future in mind.Page 2
Question 4: A buyer deliberately awards all demand for a standard component to
one supplier even though several capable suppliers exist. What is this arrangement?
Choices:
1) Single sourcing 2) Parallel sourcing 3) Sole sourcing 4) Multiple sourcing
Correct Answer: Single sourcing
Explanation: Single sourcing is a deliberate decision to use one supplier when alternatives exist.Sole sourcing is di�erent because only one viable source is available.Question 5: During supplier relationship management, what is the main purpose of segmenting suppliers?
Choices:
1) To replace performance measurement with informal communication 2) To apply identical management e�ort to every supplier 3) To match relationship e�ort and strategy to supplier importance and risk 4) To remove all low-spend suppliers immediately Correct Answer: To match relationship e�ort and strategy to supplier importance and risk Explanation: Segmentation helps procurement decide where to invest relationship- management resources. Strategic or high-risk suppliers normally need more intensive management than routine suppliers.Page 3