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CIPS Managing Ethical Procurement and Supply (L5M5) Sample Questions (Q106-Q111):
NEW QUESTION # 106
In what circumstances is Expert Determination the most suitable method for resolving contract disputes?
- A. technical disputes
- B. international contracts
- C. personality disputes
- D. high value contracts
Answer: A
Explanation:
Choice C- This is the correct answer. Expert Determination is particularly suited for disputes that require specialized technical knowledge, such as issues related to engineering, construction, or IT systems. An independent expert with relevant expertise can assess and resolve the dispute effectively.
Incorrect answer:
Choice A-Expert Determination is not specifically suited to international contracts. While it could be used in such cases, it is more about the nature of the dispute (technical issues) rather than the geographic scope of the contract.
Choice B- The value of the contract does not determine the suitability of Expert Determination. Other methods like arbitration or litigation are often more common for resolving high-value disputes.
Choice D- Expert Determination is not designed to handle personality conflicts or disputes rooted in interpersonal disagreements. Mediation or other relationship-focused methods are more appropriate in such cases.
Reference:
LO-2.4; Page 236; Escalating non-compliance and making exit arrangements
NEW QUESTION # 107
When developing an ESG policy, which of the following steps should be taken first?
- A. Draft the policy
- B. Identify the need
- C. Gather Information
- D. Consult with stakeholders
Answer: B
Explanation:
Steps to take to develop an ESG policy:
1) Identify the need
2) Identify who will take lead responsibility
3) Gather information
4) Draft the policy
5) Consult with stakeholders
6) Approve the policy
7) Procedures
8) Implement the policy
9) Monitor
So the correct answer is D.
Reference:
LO-1.1; Page 32-33; The development of ESG focused procurement and supply policies in securing ethical and sustainable procurement and supply arrangements
NEW QUESTION # 108
As a procurement manager, you are evaluating the ethical sourcing practices of a company dedicated to improving labor standards across its supply chain. Your task is to match each labor code or standard with the most appropriate supplier relationship model that aligns with its principles.
Company 1: A multinational food corporation collaborates closely with a cocoa supplier in West Africa to establish a transparent supply chain. The company actively supports farmers in adopting sustainable agricultural practices, ensures fair wages, and is deeply committed to eradicating child labor. Their partnership is based on long-term engagement, working together to implement economic empowerment initiatives that benefit both the suppliers and the broader community.
Company 2: A global corporation sources raw materials from multiple international suppliers, ensuring compliance with ILO labor standards through audit reports and annual inspections. The company takes a compliance-driven approach, holding suppliers contractually accountable for adhering to regulations on fair wages, working conditions, and labor rights.
Company 3: A leading apparel brand outsources garment production to factories across several countries. The company has established a voluntary sustainability framework, encouraging suppliers to comply with environmental, human rights, labor, and anti-corruption standards. While participation is not legally binding, suppliers are expected to demonstrate a commitment to ethical and responsible business practices.
Company 4: A cost-driven enterprise prioritizes low-cost procurement, selecting suppliers based on price competitiveness. The company imposes strict penalties on suppliers that fail to meet contractual obligations regarding working hours, wages, and labor conditions, but does not engage with them beyond performance monitoring and enforcement. There is no collaborative effort to improve ethical sourcing or labor standards.
Now, match each company's approach with the most suitable supplier relationship spectrum, identifying how each aligns with global labor codes and ethical sourcing frameworks.
- A. ETI (Ethical Trading Initiative): Collaborative
- B. ILO MNE Declaration: Transactional
Answer: A,B
Explanation:
Company 1: Labor Code/Standard: ETI (Ethical Trading Initiative): ETI focuses on improving worker conditions, eradicating child labor, and promoting fair wages through collaboration between companies and suppliers. Supplier Relationship Spectrum: Collaborative: The company works closely with suppliers to implement sustainable farming practices and find long-term solutions for economic empowerment, which defines a collaborative relationship. Company 2: Labor Code/Standard: ILO MNE Declaration: The ILO MNE Declaration sets global labor standards and ensures compliance through audits and inspections, aligning with the practices described. Supplier Relationship Spectrum: Transactional: The company's relationship focuses on holding suppliers accountable through contracts and inspections, indicating a transactional relationship with minimal collaboration. Company 3: Labor Code/Standard: UN Global Compact: The description refers to a framework covering environmental, labor, human rights, and anti-corruption standards, which aligns with the voluntary principles of the UN Global Compact. Supplier Relationship Spectrum: Outsourced: The company outsources production to suppliers while ensuring compliance with standards, characteristic of an outsourced relationship. Company 4: Labor Code/Standard:SA8000: SA8000 focuses on workplace standards like wages and working hours, which the company enforces through penalties and monitoring. Supplier Relationship Spectrum: Adversarial: The relationship prioritizes cost and relies on strict enforcement rather than engagement or collaboration, making it adversarial. Reference: Chapter 2 & 3
NEW QUESTION # 109
Which of the following strategies can procurement professionals use to effectively manage language and cultural barriers in global sourcing?
1. Improving foreign language skills
2. Think and act with an open mind
3. Insisting that English is the only business language used
4. Ensuring proper documentation for all the imports to comply with regulations
- A. 2 and 3
- B. 2 and 4
- C. 1 and 2
- D. 4 and 1
Answer: C
Explanation:
Managing language and cultural barriers
O View culture within the language
O Choose location carefully
O Know and communicate business goals
O Check and monitor relationships
O Communicate well
O Improve foreign language skills
O Think and act with an open mind
O Have patience
O Be respectful
The correct answer is Option A.
Reference:
LO-1.3; Page 82-84; Language and culture
NEW QUESTION # 110
Smith Industries, a production company, plans to hire an external organization to audit its operations. Which TWO qualifications should be required when selecting an independent third-party auditor?
- A. Be approved by a certified body
- B. At least 5 years of experience
- C. Appropriate professional qualification
- D. Have strong communication skills
Answer: A
Explanation:
Choice B - Approval or accreditation by a recognized certification body ensures that the auditor operates according to established professional and ethical standards. This is critical for maintaining trust and the reliability of the audit process.
Choice D- A formal qualification demonstrates the auditor's foundational knowledge and competency in auditing principles and methodologies. This is mandatory as it establishes the credibility and technical ability of the auditor.
Incorrect answer:
Choice A -Experience indicates practical exposure to audits, which can contribute to the auditor's ability to handle complex or unique scenarios. While valuable, this is not always mandatory, as less experienced auditors can still possess the necessary skills if well-qualified.
Choice C -Strong communication skills enable the auditor to clearly convey findings, recommendations, and areas for improvement to the organization. While important, this is often considered a soft skill rather than a mandatory criterion.
Reference:
LO-2.3; Page 210; Sourcing third parties for auditing services
NEW QUESTION # 111
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