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CIPS Managing Ethical Procurement and Supply (L5M5) Sample Questions (Q16-Q21):
NEW QUESTION # 16
Which tier of a supply chain would the original equipment manufacturer have the closest relationship with?
- A. No tier
- B. Tier 1
- C. Tier 2
- D. Tier 3
Answer: B
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
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NEW QUESTION # 17
Fresh Delight, a natural fruit juice company, sources fruit from Citrus Co. under a contract with a "time of the essence" and "retention of title" clause. Citrus Co. delivers fruit every Monday, but Fresh Delight has failed to pay for the last two deliveries. Claiming ownership under the retention of title clause, Citrus Co. attempts to reclaim the most recent delivery. Does Citrus Co. have a valid legal claim to retrieve the goods despite having delivered them?
- A. Yes - the product can be reclaimed under any circumstances
- B. No - if the delivery was made on time, it belongs to Fresh Delight
- C. Yes - the product still belongs to Citrus Co
- D. No - if Fresh Delight signed for the delivery, Citrus Co. has no right to reclaim it
Answer: C
Explanation:
Choice A- The retention of title clause in the contract means Citrus Co. retains ownership of the goods until Fresh Delight has fully paid for them. Even though the goods were delivered, the failure to pay gives Citrus Co. the right to reclaim them. Ownership (title) does not pass to Fresh Delight until payment is made. Correct answer.
Incorrect answer:
Choice B- While the retention of title clause allows Citrus Co. to reclaim the goods in this case, this right is not absolute. The clause must align with relevant legal frameworks, such as insolvency laws, which may limit Citrus Co.'s ability to reclaim goods in certain situations. Thus, goods cannot always be reclaimed "under any circumstances." Choice C- Signing for delivery does not override a retention of title clause. Even if Fresh Delight accepted and signed for the delivery, the ownership of the goods remains with Citrus Co. until payment is received.
Choice D- Timely delivery has no bearing on the ownership of the goods when a retention of title clause is in place. Ownership is tied to the payment, not the delivery schedule. Hence, Citrus Co. can still reclaim the goods if payment hasn't been made.
Reference:
LO-2.2; Page 190; Monitoring Contract Performance
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NEW QUESTION # 18
GlobalPharm Ltd, a pharmaceutical company, has engaged a third-party auditor to assess its compliance with regulatory standards. During the audit, the company identifies potential risks. What is the most significant challenge GlobalPharm Ltd might face when working with a third-party auditor?
- A. Lack of independence in the auditor's recommendations
- B. Reduced decision-making authority within management
- C. Loss of operational control over manufacturing processes
- D. Reputational damage if non-compliance issues are exposed
Answer: D
Explanation:
Choice B- Reputational damage is a critical concern, as non-compliance findings could harm stakeholder trust, regulatory relationships, and the company's public image.
Incorrect answer:
Choice A- The company retains control over operations; auditors only provide assessments.
Choice C- Audits do not reduce management's decision-making authority.
Choice D- Certified auditors are expected to maintain independence.
Reference:
LO-2.3; Page 217-218; Challenges with third party auditors
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NEW QUESTION # 19
NIMBUS TeK, a leading call center employing cost-effective English-speaking workers in countries like India, Pakistan, and the Philippines, has gained a competitive advantage through global sourcing. Which of the following are effective global sourcing practices that the call center has implemented? Select any TWO.
- A. Detailed research of the market and potential suppliers
- B. Key Performance Indicator
- C. Managing relationship with supplier before selection
- D. Service Level Agreement
Answer: A,D
Explanation:
Choice B- Option B is the correct answer as it is a part of RESEARCH under good practices. Choice D- Giving suppliers a clear understanding of the business expectations is a good practice in global sourcing. Therefore is also an answer. Incorrect answer: Choice A- Supplier relationship management is essential but once the supplier has been selected. Choice C- Key Performance Indicator is not a part of good practices in global sourcing. Reference: LO-1.2; Page 70; Competitive advantage through global sourcing
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NEW QUESTION # 20
A global manufacturing company is looking for a collaborative platform to enhance its environmental, social, and governance (ESG) practices. It requires access to practical tools, peer networking, and resources to tackle challenges such as climate change, water sustainability, and supply chain management.
Which organization would best meet the company's needs?
- A. International Procurement Organization (IPO)
- B. Greenpeace
- C. United Nations Environment Programme (UNEP)
- D. Global Environmental Management Initiative (GEMI)
Answer: D
Explanation:
Option B- GEMI is tailored for businesses seeking tools, resources, and collaborative opportunities to enhance their ESG practices. Unlike other options, GEMI specializes in corporate environmental management and provides solutions to the practical challenges companies face in their operations.
Incorrect answer:
Option A- The IPO primarily supports global procurement professionals and organizations in reducing & optimizing their procurement and supply chain strategies. While it may offer insights into sustainable procurement, it does not specialize in environmental or sustainability management across broader operational areas like GEMI does.
Option C- UNEP sets international environmental agendas and fosters policies at the government level, but it does not provide the practical tools and peer collaboration specifically tailored for businesses.
Option D- Greenpeace is an independent global campaigning organization focused on confronting environmental issues such as climate change, deforestation, and ocean protection through activism and advocacy. Its primary approach involves raising public awareness and pressuring corporations and governments to adopt environmentally friendly practices, rather than providing businesses with practical tools or platforms for internal sustainability improvements.
Reference:
LO-2.1; Page 170; Use of risk mitigation strategies to achieve ESG objectives to secure ethical and sustainable procurement and supply arrangements
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NEW QUESTION # 21
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