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NEW QUESTION # 32
Under the Equalities Act 2010, which of the following is not a protected characteristic?
- A. Weight
- B. Age
- C. Disability
- D. Pregnancy
Answer: A
Explanation:
Comprehensive and Detailed Explanation From Exact Extract of Documents:
The Equalities Act 2010 provides legal protection against discrimination in the UK. The L5M5 study guide (p.35) lists the protected characteristics, which include disability, pregnancy and maternity, age, race, sex, sexual orientation, gender reassignment, marriage/civil partnership, and religion/belief. Weight is not included as a protected characteristic. For procurement, understanding equality legislation is vital to ensuring suppliers uphold fair treatment of employees and do not discriminate unlawfully. Organisations must embed these protections into contracts and supplier codes of conduct.
Reference: Managing Ethical Procurement and Supply (L5M5) Study Guide, p.35
NEW QUESTION # 33
Ben is CEO of a UK company with £20m turnover and suppliers in the UK and Chin a. Must Ben produce an Anti-Slavery Statement for his business?
- A. No - this is not a legal requirement for his company
- B. Yes - it is compulsory for all companies in the UK
- C. Yes - it must be published on his website
- D. No - the government will produce this for him
Answer: A
Explanation:
Comprehensive and Detailed Explanation From Exact Extract of Documents:
The UK Modern Slavery Act 2015 requires companies with an annual turnover of £36m or more to publish an annual Anti-Slavery and Human Trafficking Statement. The L5M5 study guide (p.90) confirms that Ben's company, with a turnover of £20m, does not meet the threshold and is therefore not legally required to publish a statement. However, even if not legally required, organisations are encouraged to act responsibly and voluntarily demonstrate compliance with ethical labour practices. Procurement professionals must be aware of turnover thresholds and ensure compliance when operating in larger organisations.
Reference: Managing Ethical Procurement and Supply (L5M5) Study Guide, p.90
NEW QUESTION # 34
A leading coffee retailer has launched an initiative to purchase raw materials, such as coffee beans, directly from farmers instead of through intermediaries like exporters. By adopting a partnership approach and investing in the local community, what is this practice called?
- A. World Trade
- B. Direct Trade
- C. Fair Trade
- D. Trade Initiative
Answer: B
Explanation:
Choice C - The above practice is known as Direct Trade, where the buyer (in this case, the coffee retailer) works directly with the producers (farmers) without intermediaries such as exporters or traders. Direct Trade focuses on building strong relationships, ensuring fairer pricing for farmers, and often includes investments in the local community.
Incorrect answer:
Choice A - World Trade is a broad term that refers to the global exchange of goods and services and does not describe the specific practice of eliminating intermediaries.
Choice B - Fair Trade, while similar in its focus on ethical sourcing, operates under specific certification standards and often involves a governing body overseeing the supply chain.
Choice D- Trade Initiative is a general term and not a recognized practice like Direct Trade or Fair Trade.
Reference:
LO-3.3; Page 309; Fairtrade standards that affect the workplace and producers and their implications for procurement and supply
NEW QUESTION # 35
Which of the following tools allows you to assess internal factors or drivers?
- A. GDP
- B. ABC Analysis
- C. STEEPLED
- D. SWOT
Answer: D
Explanation:
Comprehensive and Detailed Explanation From Exact Extract of Documents:
SWOT analysis examines both internal factors (Strengths and Weaknesses) and external factors (Opportunities and Threats). According to the L5M5 study guide (p.55), SWOT is a strategic tool for assessing organisational drivers and making informed procurement decisions. In contrast, STEEPLED analyses external macro-environmental factors (social, technological, economic, environmental, political, legal, ethical, demographic). GDP (Gross Domestic Product) is an economic indicator, not an analysis tool, while ABC analysis categorises suppliers or inventory based on importance and value, not internal strategic drivers.
Reference: Managing Ethical Procurement and Supply (L5M5) Study Guide, p.55
NEW QUESTION # 36
According to CIPS, demand management enables an organization to align its capacity with fluctuations in demand. Effective demand management ensures that products or services are available to the right people at the right time and place. Which of the following actions must the organization take to successfully manage demand?
1. Organization must keep their warehouses full of safety stock to meet demand effectively
2. Organizations must divert funds from other operational activities in order to acquire inventories
3. Organization must be prepared to respond to volatile events
4. Organizations must involve stakeholder in the process for real time information about demand
- A. 3 and 4
- B. 4 and 1
- C. 2 and 3
- D. 1 and 2
Answer: A
Explanation:
Based on the figure from the study guide, demand can be managed in four ways. Among the given options, Choices 3 and 4 are included. Therefore, the correct answer is Option C.
Reference: LO-1.4; Page 109; Demand Management and the need for urgent orders
NEW QUESTION # 37
Seinfeld County Council has entered into a contract with a horticultural services provider. The contract contains a Community Benefit Clause. What is another term for this?
- A. Social value
- B. Reward for performance
- C. KPIs
- D. Payment terms
Answer: A
Explanation:
Comprehensive and Detailed Explanation From Exact Extract of Documents:
A Community Benefit Clause is also known as a Social Value Clause. The L5M5 study guide (p.126) explains that these clauses integrate economic, social, or environmental benefits into public sector contracts. For example, requiring the use of eco-friendly equipment or prioritising local employment. The Social Value Act 2012 formalised this requirement in UK public procurement. Procurement professionals must ensure such clauses are meaningful and enforceable to create real community benefits, not just tick-box exercises.
Reference: Managing Ethical Procurement and Supply (L5M5) Study Guide, p.126
NEW QUESTION # 38
Which of the following statements is TRUE about the adjudication form of dispute resolution? Select TWO
- A. It is an informal process
- B. The decision cannot be legally binding
- C. It is quicker than going through the courts
- D. A decision must be made within 28 days
Answer: C,D
Explanation:
Comprehensive and Detailed Explanation From Exact Extract of Documents:
Adjudication is a formal ADR method, widely used in construction and supply disputes. The L5M5 study guide (p.237) outlines its key features: it is designed to be faster than court proceedings and legally requires that a decision is reached within 28 days of referral. Decisions made can also be legally binding. Contrary to option A, adjudication is not informal; it follows structured legal processes. Option D is also incorrect, as adjudicator decisions may carry binding authority unless overturned later in arbitration or litigation. The process ensures disputes are resolved promptly, preventing long project delays.
Reference: Managing Ethical Procurement and Supply (L5M5) Study Guide, p.237
NEW QUESTION # 39
The ILO's fundamental principles and rights at work are binding on which countries?
- A. All member states of the ILO
- B. Only developed countries
- C. Only those that have ratified the ILO conventions
- D. Only countries with high labor standards
Answer: A
Explanation:
Choice B- This is the correct answer. The International Labor Organization (ILO) requires all member states to uphold its fundamental principles and rights at work, even if they have not ratified the specific conventions associated with these principles. These fundamental principles are part of the ILO Declaration on Fundamental Principles and Rights at Work (1998), which includes:
Freedom of association and the right to collective bargaining.
Elimination of forced or compulsory labor.
Abolition of child labor.
Elimination of discrimination in respect of employment and occupation.
When a country joins the ILO, it automatically accepts an obligation to respect, promote, and realize these fundamental principles, regardless of whether it has formally ratified the associated conventions. This reflects the ILO's commitment to promoting universal labor standards and protecting workers' rights globally.
Incorrect answer:
Choice A- This is incorrect because the fundamental principles apply to all member states, not just those that ratified specific conventions.
Choice C- The principles are universal and apply to all member states, regardless of economic status.
Choice D- Even countries with weak labor standards are obligated to promote these principles as ILO members. So, this is not the answer.
Reference:
LO-3.1; Page 248-249; Standards set by the United Nations (UN) and the International Labor Organization (ILO)
NEW QUESTION # 40
Contracts contain different types of clauses. What is the name given to a clause that, if breached, allows damages but not termination of a contract?
- A. Innominate term
- B. Warranty
- C. Condition
- D. Representation
Answer: B
Explanation:
Comprehensive and Detailed Explanation From Exact Extract of Documents:
The L5M5 study guide (p.190) explains that a warranty is a contractual term where breach allows the injured party to claim damages, but the contract continues. By contrast, conditions are fundamental terms-breach may allow termination and damages. Representations are statements made in negotiation, not binding terms, and innominate terms may be treated as conditions or warranties depending on the breach. Understanding the difference is crucial for procurement professionals when drafting and managing contracts, as it affects remedies and supplier relationships.
Reference: Managing Ethical Procurement and Supply (L5M5) Study Guide, p.190
NEW QUESTION # 41
Demand forecasting collects data on a company's supply capacity for an item, including current and projected supply categorized by industry and product end use. Is this statement TRUE?
- A. Yes - it is primarily used by manufacturing companies within the supply chain
- B. No - supply forecasting predicts short- and long-term prices and trends
- C. Yes - it gathers information about both supply and demand
- D. No - demand forecasting analyzes a company's demand for an item, including current and projected demand
Answer: D
Explanation:
Demand forecasting involves analyzing a company's demand for a specific item or SKU, including current and projected demand categorized by industry and product end use. Therefore, the correct answer is Choice A.
Reference:
LO-1.4; Page 114; Short term commercial gains and long term availability
NEW QUESTION # 42
The development of a documented process to assess the environmental performance of suppliers prior to appointment, would be covered by which part of an ISO 14001:2015 environmental management system?
- A. Performance evaluation
- B. Operation
- C. Support
- D. Context of the organization
Answer: B
Explanation:
Choice B- This is the correct answer. The "Operation" clause of ISO 14001:2015 includes the need for an organization to establish processes for managing external impacts, such as assessing the environmental performance of suppliers and considering their sustainability efforts before appointing them.
Incorrect answer:
Choice A- This part of the ISO 14001:2015 focuses on monitoring, measuring, analyzing, and evaluating the environmental performance of the organization. It is more about assessing the internal processes rather than supplier assessment.
Choice C- This part focuses on understanding the external and internal factors that influence the organization's environmental management system, but not directly on supplier assessment processes.
Choice D- This section covers the resources, competence, awareness, communication, and documented information needed to support the environmental management system, but does not directly address the supplier evaluation process.
Reference:
LO-3.2; Page 284; Role of industry standards and frameworks used by organizations in securing ESG considerations and ethical standards
NEW QUESTION # 43
Which of the following is a disadvantage of the ISO14001 standard?
- A. All companies use this for greenwashing
- B. Environmental targets are not set by ISO
- C. Organisations are mandated to have an Environmental Policy
- D. It is different across industries
Answer: B
Explanation:
Comprehensive and Detailed Explanation From Exact Extract of Documents:
ISO14001 is an international standard for environmental management systems. According to the L5M5 study guide (p.277), one disadvantage is that ISO does not set environmental performance targets itself; instead, it requires organisations to define their own targets. This means some organisations may set very easy or minimal goals, limiting actual environmental improvement. Option A is incorrect as ISO14001 applies consistently across industries. Option C is a requirement, not a disadvantage. Option D is an overgeneralisation-while some firms misuse it for "greenwashing," many genuinely use it to improve sustainability.
Reference: Managing Ethical Procurement and Supply (L5M5) Study Guide, p.277
NEW QUESTION # 44
The unethical practice of using information that is not publicly available to trade on the stock market is commonly known as what?
- A. Greasing the wheels
- B. Bribery
- C. Insider trading
- D. Kickback
Answer: C
Explanation:
Comprehensive and Detailed Explanation From Exact Extract of Documents:
Insider trading occurs when individuals use confidential or non-public information to gain an unfair advantage in stock market trading. The L5M5 study guide (p.3) identifies insider trading as an example of unethical business behaviour. It is illegal in most jurisdictions because it undermines market fairness and investor confidence. Bribery (A) and kickbacks (B) involve corrupt practices in procurement, while "greasing the wheels" (D) refers to facilitation payments. Procurement professionals must avoid insider trading directly and indirectly (e.g., suppliers disclosing confidential financial information) to maintain ethical compliance and governance.
Reference: Managing Ethical Procurement and Supply (L5M5) Study Guide, p.3
NEW QUESTION # 45
Which organisation is responsible for the creation of the 2030 Sustainable Development Agenda?
- A. UN
- B. NATO
- C. ISO
- D. ILO
Answer: A
Explanation:
This is the UN. There are 17 sustainability goals and these are listed on p.3. For the exam it's a good idea to familiarise yourself with them, but there's no need to learn them all off-by-heart.
NEW QUESTION # 46
Knowledge that is not taught or learned from books but gained through personal experience is known as what?
- A. Tacit knowledge
- B. Primary knowledge
- C. Inherent knowledge
- D. Implied knowledge
Answer: A
Explanation:
Comprehensive and Detailed Explanation From Exact Extract of Documents:
The L5M5 study guide (old p.40, new p.64) defines tacit knowledge as knowledge gained through personal experience, observation, and practice rather than formal education. For example, an employee may develop an instinct for supplier negotiation strategies over years of practice. By contrast, explicit knowledge can be formally recorded and taught. Tacit knowledge provides competitive advantage because it is harder for competitors to imitate. Procurement leaders must capture and share tacit knowledge within teams to strengthen organisational learning.
Reference: Managing Ethical Procurement and Supply (L5M5) Study Guide, p.64
NEW QUESTION # 47
The main aim of the ILO is to promote rights at work and improve social protection. Is this TRUE?
- A. No - the purpose of the ILO is to increase international trade
- B. No - the ILO was formed in 1975 to encourage globalisation
- C. Yes - the ILO sets trade rules between nations
- D. Yes - the ILO is an agency of the UN which deals with labour problems
Answer: D
Explanation:
Comprehensive and Detailed Explanation From Exact Extract of Documents:
The International Labour Organisation (ILO) is a specialised UN agency founded in 1919 to promote labour rights and improve social protection. The L5M5 study guide (p.87) confirms that the ILO's mission includes eliminating child labour, eradicating forced labour, and promoting fair wages and safe workplaces. It does not set trade rules (that is the WTO), nor was it created to drive globalisation. For procurement professionals, understanding the ILO is critical when assessing supplier practices against international labour standards, especially in global supply chains.
Reference: Managing Ethical Procurement and Supply (L5M5) Study Guide, p.87
NEW QUESTION # 48
Green Book Ltd wants to include ESG measures in contracts. Which of the following is not an ESG performance measure?
- A. On time in full delivery
- B. Social value
- C. Waste reduction
- D. ED&I (Equality, Diversity & Inclusion)
Answer: A
Explanation:
Comprehensive and Detailed Explanation From Exact Extract of Documents:
The L5M5 study guide (p.194) confirms that On Time In Full (OTIF) delivery is a standard performance metric but is not an ESG measure. ESG measures include waste reduction (E), social value (S), and ED&I (S), which assess ethical, social, and environmental responsibilities. Procurement professionals must distinguish between operational KPIs and sustainability-focused KPIs to ensure contracts drive both efficiency and ethical responsibility.
Reference: Managing Ethical Procurement and Supply (L5M5) Study Guide, p.194
NEW QUESTION # 49
ABC Group, the country's largest textile company, is considering partnering with a Fair Trade-certified supplier to support sustainability and ethical practices. However, they are concerned about potential challenges in working with a Fair Trade organization. Which TWO of the following challenges might ABC Group face in this partnership?
- A. Fair Trade standards may require investments in audits supported by self-assessment reports and office reviews adding costs to the business
- B. The Fair Trade certification process may require complex audits, and if there is a longer period between audits, activities could change and will no longer be compliant
- C. The product prices from Fair Trade suppliers are often significantly lower than conventional suppliers, making it hard to remain competitive
- D. There are no real challenges, as all Fair Trade products are guaranteed to be competitive and cost-efficient
- E. Improved stakeholder perception of the brand, which can lead to reputational benefits
Answer: A,B
Explanation:
Choice A- Obtaining Fair Trade certification often involves a thorough and detailed audit process, which demonstrates a company's positon at a period of time. If there is a longer period between audits, there is a chance that activities and processes could change within business and they will no longer be compliant with a fair trade organisation.
Choice C- This is correct. Fair Trade standards accreditation come at a cost and four yearly independent audits supported by self assessment reports and office reviews take time and resources.
Incorrect answer:
Choice B- This is incorrect. While Fair Trade products aim to provide ethical and sustainable options, they can come with challenges such as higher costs and longer certification processes.
Choice D- This is incorrect. Fair Trade products typically come with higher prices due to ethical production costs and fair wages. These prices are often higher, not lower, than those from conventional suppliers.
Choice E- This is a benefit of associating with a fair trade organisation and not a challenge.
Reference:
LO-3.3; Page 297-298; The World Fair Trade Organization (WFTO) and its principles and Charter of Fair Trade and implications for procurement and supply
NEW QUESTION # 50
Which of the following are regarded as potential benefits of responsible procurement?
1. Reduction of staff retention for the organization
2. Enhanced business reputation and social improvements
3. Increased operational risks due to supplier diversity
4. Cost savings due to the application of lifecycle costing
- A. 4 and 1
- B. 2 and 3
- C. 2 and 4
- D. 1 and 2
Answer: D
Explanation:
Choice 2- Selecting sustainable good and services from responsible suppliers creates a positive reputation, and social improvements increase therefore a business attracts new customers.
Choice 4- Responsible procurement uses life cycle costing which considers the whole life span of a product rather than the initial purchase cost only. Thus is more cost effective because costs that arise throughout the product's life are also taken into account.
Incorrect answer:
Choice 1- Responsible procurement shows commitment to long term environmental and social issues which helps to retain employees and attract new employees. Employees want to be associated with such business which are investing in the future and makes employees more motivated. Therefore choice 1 is the wrong choice.
Choice 3-This is not a benefit. While engaging a diverse supplier base can introduce complexity, it typically enhances resilience rather than increasing risks.
Reference:
LO-1.1; Page 10; Analyze the application of ethical and ESG (Environmental, Social and Governance) factors in supple chains
NEW QUESTION # 51
Banks, investors, and consumers form which type of stakeholder?
- A. Connected internal stakeholder
- B. Connected external stakeholder
- C. External stakeholder
- D. Internal stakeholder
Answer: B
Explanation:
Comprehensive and Detailed Explanation From Exact Extract of Documents:
Stakeholders are categorised based on their relationship to the organisation. The L5M5 study guide (p.105) explains that connected external stakeholders are outside the organisation but directly linked through financial or contractual relationships. Banks (financiers), investors (shareholders), and consumers (customers) fall into this category. Internal stakeholders (A) include employees and management, while external stakeholders (B) are broader groups such as regulators and communities without direct contracts. "Connected internal stakeholders" (C) is not a valid classification. Procurement professionals must identify and manage stakeholder expectations to maintain ethical, transparent supply chains.
Reference: Managing Ethical Procurement and Supply (L5M5) Study Guide, p.105
NEW QUESTION # 52
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CIPS L5M5 Exam Syllabus Topics:
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