CHARTERED INSTITUTE OF PROCUREMENT &

SUPPLY (CIPS)

LEVEL 5 ADVANCED DIPLOMA

MANAGING ETHICAL PROCUREMENT & SUPPLY

EXAM REVISION QUESTIONS

Q1. In the modern business environment there has been an increased external pressure on
organization to adopt strategies that contributes towards the development and welfare of
communities. However, most of the companies are still behind in implementing these strategies
because they understand the primary obligation of the organization as maximizing profit for its
owners. Which of the following term describes the above statement?

a. Corporate social responsibility

b. Stakeholder engagement
c. Resistance to corporate social responsibility
d. Revenue splitting

Q2. Which of the following are regarded as potential benefits of responsible procurement?

1. Consistent supply security due to increased supplier base

2. Enhanced business reputation and customer loyalty
3. Cost savings due to the application of lifecycle costing
4. Reduction of staff retention for the organization

a. 1 and 2
b. 3 and 4
c. 2 and 3
d. 1 and 4
Q3. Which of the following are examples of modern slavery? Select the THREE that apply.
a. Shift working
b. Forced labour
c. Bonded labour
d. Overtime working
e. Casual labour
f. Human trafficking
Q4. Is it sensible for a manufacturing organization to consider developing a sustainable
procurement policy?

a. No, developing a sustainable procurement policy is costly and will negatively impact the
company’s profits
b. Yes, a sustainable procurement policy will help the organization to consider the impact of
its activities on the environment
c. Yes, sustainable procurement policy ensures the organization complies with international
legislation by minimizing environmental pollution
d. No, the main objective of the organization is to focus on maximizing profits rather than
acting sustainably

Q5. Which of the following are the ways in which equality can be achieved in the supply chain?
1. Trust
2. Respect
3. Encouragement
4. Integrity

a. 1 and 2 (123correct /support)

b. 2 and 3
c. 3 and 4
d. 2 and 4

Q6. Modern slavery has been perceived as one of the issues impacting many supply chains. It is
therefore the role of both consumers and suppliers to work collaboratively toward effective
eradication of modern slavery in supply chains. Which of the following are the ways in which
consumers can tackle modern slavery?
1. Communicating with suppliers who use modern slavery about best operation practices
2. Boycotting the goods produced from modern slavery and child labour
3. Keeping close working relationship with suppliers to identify those who use modern
slavery
4. Buying products that have been certified fair trade

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

Q7. Which of the following are regarded as main offences under the Bribery Act 2010? Select
the TWO that apply.
 a. Refusing to be taken out for launch before e negotiation meeting
b. Failing to prevent a bribe paid to influence decision making
c. Using office assets for organizational gain
d. Failure to provide training on how to eliminate bribery in the work place
e. Offering or promising an advantage in return for a favorable decision

Q8. A large manufacturer that uses rare materials in its products has just announced it is to
increase its focus on sustainability in order to safeguard its supply chain. In this context, which
of the following could be seen as a main driver to this?

a. Resource scarcity
b. Increased accountability
c. Government policy
d. Financial pressure

Q9. Which of the following are likely warning signs of modern slavery?

1. Workers being forced to work

2. Workers and staff receiving very low pay
3. Roles requiring few qualifications
4. An organization renting small accommodation
a. 2 and 3
b. 3 and 4
c. 1 and 2
d. 1 and 3

Q10. Hi-Fashion Brand (HFB) is a well known clothing retailer. Its shops are in all major city
centres and airports. Its CPO is concerned about reputational risk through the supply chain and
has decided to consider only using suppliers that meet the Ethical Trading Initiative. This is
because suppliers are most likely to...

a. Pay staff a living wage

b. Have an annual bonus scheme for staff
c. Provide staff with regular promotions
d. Ensure all staff have clean accommodation

Q11. Which of the following are ways in which procurement professionals can manage language
and cultural barriers when sourcing globally?
 1. Thorough research about exchange rate fluctuations
2. Choosing location carefully and considering compatibility
3. Improving one’s foreign language skills
4. Ensuring proper documentation for all the imports to comply with regulations

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

Q12. Which of the following are ways of managing labour standards in the supply chain? Select
the THREE that apply.

a. Reducing the number of qualifications required for a job post

b. Developing effective policies applying to every organization in the supply chain
c. Auditing the entire supply chain and their lower tiers to detect any issues which may arise
d. Minimizing stakeholder engagement in the process of identifying non compliance
e. Carrying out an ongoing training to increase the awareness of supply chain members
f. Charging higher prices for goods to ensure consistent salaries to worker

Q13. ABC is a market leading consumer products manufacturer. It has invested heavily in both
sustainable practices throughout its supply chains and in its advertising materials to promote this
to the market. Which of the following is most likely to be the reward for ABC of such an
investment?
a. Improved brand reputation
b. Increased number of competitors
c. Reduced indirect costs
d. Integrated supplier base

Q14. Which of the following are the risks of low-cost country sourcing?
1. High material cost due to high cost of production
2. Significant risks to intellectual property
3. Currency fluctuations and volatilities
4. Lack of economies of scale

a. 2 and 3
b. 1 and 4
c. 3 and 4
d. 1 and 2
Q15. DTRD Manufacturers is fertilizer producing company has recently been accused of poor
health and safety standards in their workplace. The workers have complained of working without
safety masks to protect them from inhaling poisonous gas from the manufacturing plants. Which
of the following is likely to be the consequence for DTRD Manufacturers if they do not improve
the health and safety standard of workers?

a. Low prices for their products

b. Reputational damage
c. Acquisition of poor quality materials from suppliers
d. Destruction of the operating environment

Q16. Which of the following may be perceived as the motives for low cost country sourcing?

1. Cost reduction
2. Relationship improvement
3. Quality improvements
4. Stakeholder engagement
a. 1 and 2
b. 2 and 4
c. 1 and 3
d. 2 and 3

Q17. Advancements in technology have supported the drive for globalization. Is this correct?

a. No, technology has created significantly increased demand for shorter supply chains
b. Yes, many barriers to communication have now been removed through technology
c. Yes, emerging technologies have forced some companies overseas to retain staff
d. No, increased use of technology has made global trading much more expensive

Q18. Which of the following actions will the organisation have to take in order to successfully
mange demand?

1. Organization must be prepared to respond to volatile events

2. Organization must keep their warehouses full of safety stock to meet demand effectively
3. Organizations must divert funds from other operational activities in order to acquire
inventories
4. Organizations must involve stakeholder in the process for real time information about
demand
a. 1 and 2
 b. 2 and 3
c. 2 and 4
d. 1 and 4

Q19. Stakeholder engagement is an essential process when managing organisation’s demand. Is

this correct?

a. No, stakeholder engagement takes much time and may lead to delays in ma nagging
demand on time
b. Yes, it ensures accuracy of information to be used on forecasting of demand
c. Yes, stakeholders are able to provide the materials required by the organisation reducing
demand variability
d. No, all demand management process should be handled about procurement staff as they
know how much quantities are required

Q20. Which of the following are types of supply chain forecasting that can be used by an
organisation? Select the THREE that apply.

a. Price forecasting
b. Quality forecasting
c. Competitor forecasting
d. Supply forecasting
e. Variability forecasting
f. Demand forecasting

Q21. Although low-cost country sourcing can offer significant benefits to a buyer in reduction of
costs and savings, there are also significant risks. Which of the following should be avoided as a
potential target for low-cost country sourcing?

1. A country where there are established political standards and economic stability
2. A country that is remote geographically but with good transportation routes
3. A country where there are incompatible legal regimes for handling contract disputes
4. A country where there are no established quality or human rights standards
a. 3 and 4
b. 1 and 2
c. 2 and 3
d. 1 and 4
Q22. What are the key performance objectives to consider when undertaking low-cost country
sourcing? Select the THREE that apply.

a. Quantity
b. Time
c. Quality (pge 117 SQDCF)
d. Dependability
e. Flexibility
f. Reliability

Q23. Which of the following are types of supply chain mapping?

1. Value stream mapping

2. Value chain mapping
3. Operational activity mapping
4. Stakeholder mapping
a. 1 and 4
b. 2 and 3
c. 1 and 2 PGE 149
d. 3 and 4

Q24. Which types of relationships are suitable for the parties who have no intentions to establish
a close collaborative relationship?

1. Closer tactical
2. Arm’s length
3. Co-destiny
4. Transactional

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

Q25. Supply chain mapping is required to...

 a. To make sure risks are not available in the supply
b. To gather quality data that allows solving of supply chain issues
c. To widen the supply base for security of suppliers
d. To establish close relationships with all suppliers

Q26. The main contractor has the authority to appoint a subcontractor whenever the need arise in
order to comply with the project deadlines. Is this statement correct?

a. Yes, subcontractors will perform all the highly-specialised tasks that need to be fulfilled.
b. No, a subcontractor must not be appointed without the buyer’s written consent
c. No, a contract is an agreement between two parties, any third party makes it void
d. Yes, once contracted, the supplier has the authority to take any decision that will ensure
the contract is fulfilled

Q27. Mapping the supply chain will improve the transparency of sustainable and ethical practice
compliance. Is this TRUE?

a. No, it not be possible to identify this

b. Yes, but only downstream activities need to be included
c. No, supply chain mapping will only identify costs
d. Yes, it will help to identify areas of good and poor practice

Q28. Which of the following actions can the buying organizations take to improve sustainability
in the supply chain? Select the THREE that apply.

a. Ensuring that prices are communicated clearly and incorporated in the contract
b. Developing programmes to raise awareness of supply chain members about sustainability
c. Mapping of supply chains to identify suppliers who are struggling with environmental
issues
d. Allowing suppliers to charge very high prices so they can invest in business growth
e. Use of on-site audits to identify any relevant issues in the supply chain (to be reviewed)
f. Immediately terminating the contracts of supplier who fails to adopt sustainability
policies

Q29. What contract terms can be used to support sustainability in supply chains?
1. Express terms
2. Community benefit clauses
3. Terms providing reward for performance
4. Implied terms
 a. 2 and 3
b. 1 and 4
c. 2 and 3
d. 3 and 4

Q30. LBTC Inc is a South African mobile phones dealer. They buy mobile phones from China
and sell them to their customers around South Africa. They have signed a contract with
XINXUA Manufacturers, a mobile phone manufacturer in china. LBTC Inc pays half of the
invoice price before the goods are dispatched from China. After the goods are delivered,
inspected and accepted the outstanding balance is paid. However, one of the clauses used in that
contract gives XINXUA Manufactures the right to remain with the ownership of goods until full
payment is received from LBTC Inc. What is the name of the clause used in the contract?
a. Payment clause
b. Indemnity clause
c. Insurance clause
d. Retention of title clause

Q31. Which of the following is likely to result in reputational damage for a company?
a. Buyer and supplier seeking to resolve their conflict through negotiation
b. Use of child labour by one of the organization’s supply chain members
c. Undertaking supply chain audits for lower level tiers to identify any supply chain issues
d. Privately interviewing employees during a supply chain audit

Q32. Which of the following is an example of where long-term availability of supplies would be
more important than short-term gains?
a. Using a new supplier that is more expensive in the short-term than others in the market,
to expand the supply base and to develop capacity in the market
b. Selling products that are manufactured to lower quality standards and therefore have
lower unit prices
c. Driving down costs in the short-term leading in the longer-term to reduced range and
variety of suppliers in the market
d. Reducing quality standards in the short term accepting that customer rejects will increase
in the long term

Q33. The organization Major Construction International (MCI) takes on large scale building
projects, for example the development of schools, shopping centres and hospitals. MCI always
undertakes the role of primary contractor but also uses subcontractors to carry out work. Is this
approach permissible?

a. Yes, but only If MCI notifies the buyer in writing and in advance every time it has
subcontracted
b. Yes, unless the terms and conditions state otherwise
 c. No, procurement organizations will want MCI to be responsible
d. No, MCI employees should always deliver the contract

Q34. 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. Portfolio analysis
2. Macro environmental audit
3. Supply chain mapping
4. Supplier preferencing
a. 1 and 3 only
b. 2 and 4 only
c. 1 and 2 only
d. 3 and 4 only

Q35. An audit undertaken to determine the extent to which an organisation adheres to the
required regulatory guidelines is known as...
a. Regulatory conformance audit
b. Internal audit
c. External audit
d. Compliance audit

Q36. Automotive Manufacturing Group (AMG) is a global organisation. Its supply chains, both
upstream and downstream, have multiple layers and involve numerous different organisations
and several locations around the world. Its Chief Procurement Officer (CPO) has highlighted this
as a major risk factor for AMG and has prioritised undertaking a detailed supply chain mapping,
in the first instance to analyse AMG’s supply chain structures. The CPO believes that
understanding these structures will help AMG develop more effective risk management
strategies. This initial analysis will focus primarily on developing a better understanding of
which of which of the following within AMG’s supply chains?
1. Tiers
2. Branding
3. Innovation
4. Complexity

a. 1 and 4
b. 2 and 3
c. 3 and 4
d. 1 and 2
Q37. Which of the following are the requirements of a third-party auditor that the organisation
must take into account? Select the THREE that apply?
a. An auditor from a international company
b. Have to be approved by a certifying body
c. Must act ethically, fairly and professionally
d. Have to be consistent and systematic in their approach pge 210
e. Must have the ability to identify all the hidden supply issues
f. Should have more than 10 years operating

Q38. Is litigation the right approach to resolve conflict between the parties?

a. No, conflict should not be taken to court as they will damage the reputation of the
businesses
b. Yes, litigation ensures full compliance to contract obligations
c. Yes, but only after other dispute mechanisms have been applied
d. No, contract termination offers better benefits than litigation

Q39. Which of the following are the main benefits of using alternative dispute resolution (ADR)
to resolve contractual disputes?

1. ADR mechanism involve use of legal experts who will represent the parties well
2. ADR ensures that good working relationship between the parties is maintained
3. ADR can only be applied as the last resort to resolve a conflict
4. ADR ensures confidentiality and reputation are maintained
a. 1 and 4
b. 2 and 3
c. 3 and 4
d. 2 and 4
Q40. Which of the following are the principles of international labour organisation?

1. Freedom of association and right to collective bargaining

2. Freedom to bargaining higher salaries in the workplace
3. Elimination of all form of forced and compulsory labour
4. The right to charge higher prices to ensure a company’s sustainability
a. 1 and 3
b. 2 and 4
c. 3 and 4
d. 1 and 2
Q41. Which of the following are examples of child labour that needs to be eliminated in the
workplace? Select the THREE that apply.

a. Working for pocket money

b. Helping around with household chores
c. Any work that interferes with the child schooling
d. Any work that harm the child physically, morally or socially
e. A work that forces the child to give up on schooling
f. Helping in a family business during weekends

Q42. You are responsible for introducing a new ethics code into your supply chain. What is the
most effective way of ensuring that this is communicated to all relevant parties?

a. Email all suppliers with a copy of the new code asking them to comply with it
b. Set up meetings with suppliers to discuss expectations and actions
c. Develop contract change requests covering these requirements
d. Create a series of posters that can be put up in the reception of your office

Q43. Which of the following are methods that ILO uses to monitor labour standards in supply
chains?

1. Reporting
2. observations
3. On-site visits
4. Investigation

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

Q44. TRANSFLIT Crafters is a German company prides which itself with producing small and
portable aircrafts which they supply to the rest of the world. They are currently devising a
strategy meant to reduce costs in all areas of their organisation. They have decided to outsource
their cleaning services to Time Cleaners Limited, a highly reputable cleaning company in
German. Is this a justifiable decision?

a. Yes, this will enable them to focus their resources on their core competencies and
improve their competitive advantage
b. No, the outsourcing company will charge them higher price which will affect their
profitability
 c. Yes, outsourcing will allow the two companies to share the costs hence reducing the cost
to TRANSFLIT Crafters
d. No, outsourcing decision is only justifiable for core competencies which require high and
special competence

Q45. . Which of the following are the risks of outsourcing services to a specialist third party
organisation?

1. Negative impact on collaborative relationship between the parties

2. Failure to agree on justifiable and reasonable service cost
3. Risks of intellectual property
4. Loss of key personnel and expertise

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

Q46. A buyer for a sugar manufacturing company have to undertake two negotiations with two
different suppliers, the other one for the supply of sugar cane to produce sugar, the other for the
supply of packaging material. He has devised two negotiation styles to use with these suppliers.
For the supplier of sugar cane, he is intending to use the negotiation which will be focused on
finding the mutually beneficial outcome for both parties with the aim being to form a long-term
working relationship. For the other supplier, he intends to use the negotiation style in which he
will stand for his own needs and achieving maximum gains at the expense of the supplier. What
are the two negotiation styles the buyer is intending to use?

1. Collaborative style
2. Avoiding style
3. Compromising style
4. Competitive style

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

Q47. Which of the following are methods can be used to prevent the occurrence of bribe and
corruption in supply chains?

1. Whistle blowing
2. Terminating a relationship with a corrupt strategic supplier
 3. Creating policies on the acceptance of gifts
4. Immediately firing employees who accept gifts and hospitality from suppliers

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

Q48. . If a procurement professional believe that there are suspiciously low labour rates being
used within the supply chain, this should raise concern about which one of the following?

a. Fraudulent behaviour
b. Bribery
c. Modern slavery
d. Corruption

Q49. Which of the following are examples of fraud in a supply chain? Select the THREE that
apply.

a. Giving money to a procurement officer to influence his decision

b. Having a coffee with the supplier’s manager before a negotiation
c. Asking probing questions to put more pressure on the supplier
d. Setting a high invoice price to get the share of the money paid
e. Quoting higher prices to account for costs of production
f. Misuse of company assets for personal gain

Q50. An international airline has a contract for the supply of its staff uniforms. It is reviewing a
new potential supplier, but the airline has some concerns as to whether the new proposed supply
chain meets the airline high standards on ethical and responsible sourcing. How can the airline
ensure that all the supply chain parties meet its requirements?

a. Obtain questionnaires from all subcontractors

b. Undertake unannounced site visits
c. ensure all supply chain parties have a published code of conduct
d. Complete checks on sub-contractors websites

Q51. Procurement managers always have a role to play in effective abolition of fraud in the
supply chain. Is this statement true?

a. No, because procurement managers only needs to focus on the procurement tasks that
contributes towards overall business strategy
b. Yes, because fraud gives organisation an opportunity to implement policies to improve
their competitive advantage
 c. No, because subordinates are the only people who can see fraud taking place
d. Yes, because fraud is a source of financial risk for the organisation and must be
eliminated at all costs

Q52. Which of the following are regarded as the pillars of sustainability? Select the THREE that
apply.

a. Social factors
b. Political factors
c. Legal factors
d. Environmental factors
e. Economic factors
f. Ethical factors

Q53. Which of the following are regarded as the pre-condition for fraud in the supply chain?
Select the TWO that apply.
a. Due diligence of suppliers
b. Poor financial controls
c. Motive for fraudulent activities
d. Tight security measure
e. Effective logistical strategies

Q54. Low-cost country sourcing is characterized with which of the following?

a. National regulations compliance

b. Poor quality inputs
c. Greater geographical distances
d. High labour costs

Q55. A buyer is seeking to use a conflict management style which takes into account its own
concerns and those of the supplying organisation. Is ‘accommodating’ the right conflict
management style to use in this situation?

a. Yes, accommodating recognise the mutual ground between the two parties in a
negotiation
b. No, accommodating will lead to the buyer ignoring its concerns at the expense of those of
the supplier
c. Yes, accommodating helps in keeping both satisfied and makes the relationship last
longer
d. No, accommodating cannot be used as a means of resolving conflict
Q56. Modern business environment has been recently characterised by increasing rate of
globalisation and the need to acquire labour and resources from across the borders. This increase
can be accounted to easiness of companies to expand into new territories due to formation of
trading blocs and elimination of trade barriers. From the above statement, the increased rate of
globalisation has been caused by which of the following?

a. Cost drivers
b. Market drivers
c. Technological drivers
d. Political drivers

Q58. Demand management process includes which of the following?

a. Information regarding availability of supplies from suppliers

b. Prices of products offered by different suppliers
c. Feedback mechanisms from different supply chain partners
d. Prices charged by an organization’s customers

Q59. Which ONE of the following performance objectives allows an organisation to adapt to
changes in customer demand in order to fulfil them satisfactorily?

a. Quality
b. Reliability
c. Flexibility
d. Dependability

Q60. Which of the following is perceived as the main driver behind supply chain tiering?
a. Price reduction
b. Information and communications technology
c. Legal compliance
d. The need for collaborative relationship