Pass the CIPS Level 4 Diploma in Procurement and Supply L4M6 Questions and answers with Dumpstech

An amicable termination approach focuses on maintaining goodwill and professionalism when ending a contract. According to CIPS guidance, it is most appropriate in situations where:

The pool of alternative suppliers is small (1): Maintaining good relations is important to preserve future sourcing options. Burning bridges could reduce available suppliers in the future.

The buyer must continue working with the supplier during the notice/termination period (2): An amicable approach ensures cooperation during transition and avoids disruption to operations.

By contrast:

Arm’s-length relationships (3) are transactional and generally require less concern about relationship preservation.

Material breaches (4) usually justify a firmer legal termination approach, rather than amicable negotiation.

Thus, the correct circumstances for an amicable style termination are 1 and 2.

Partnership sourcing improves efficiency through cost reduction and ensures continuity of supply by fostering long-term, collaborative relationships with key suppliers, as highlighted in CIPS guidelines.

Explanation

ABC / Pareto is a "Portfolio Analysis Technique to assess the relationships in a supply chain". This, along with the Kraljic Matrix are two examples of "Supplier Positioning Models". See chapter 2.1 p.17 for more details on this

Value-added benefits are additional services offered by suppliers that enhance the buyer’s operations without significant additional cost. These typically include:

Free training (A) – improves buyer staff skills.

Customer service hotlines (C) – improves responsiveness and support.

Expert consulting services (D) – provides specialist knowledge.

Options B, E, and F are operational necessities, not “value-added extras.”

Explanation

Fred should hold a competition as this is a ‘key way of achieving value for money’ p.67. Fred shouldn’t put a business case together to make the product in-house without doing a make vs buy analysis, and that analysis showing make is the way to go. As the firm buy in 100s of components, it’s very unlikely that making the component in-house would bring ‘value for money’. He should also be careful of only looking at current suppliers or known suppliers- the best supplier of this new component might be unknown to the engineering firm at present.

Early Supplier Involvement (ESI) is a strategic procurement approach designed to add value during the early stages of specification, design, or development. CIPS highlights that suppliers often possess specialist technical knowledge, innovation capability, and market insight that buyers may lack.

By involving suppliers early, organisations can:

Improve product or service design

Reduce lifecycle costs

Improve quality and functionality

Reduce time to market

Options A, B, and D focus on administrative convenience, budget spend, or supplier pricing power, none of which represent the strategic intent of ESI.

L4M6 Reference:

Learning Outcome 3: Understand approaches to managing supplier relationships

Topic: Early Supplier Involvement (ESI) and value creation

CIPS L4M6 Study Guide – Collaboration and innovation with suppliers

Explanation

The logistics risk can be reduced by ‘Sharing up-to-date information’. If the Pub tells the supplier when it’s running low, they can then time the deliveries more accurately. P. 136. A lot of the questions on the ‘Partnerships’ chapters of the book are common-sense questions like this. It involves reading thequestion and using logic, rather than relying on your knowledge of procurement. If you found this question easy – that’s a good sign for the exam.

Comprehensive and Detailed Explanation:

Partnership sourcing is most appropriate for products that are critical to the buyer's business, involve high spend, and are technically complex or require innovation. The chocolate brownie cake is the company's most popular product, indicating high sales volume and strategic importance. Establishing a partnership with suppliers for this product can lead to benefits such as improved quality, innovation, and supply chain efficiency.

Explanation

The Kraljic model "plays a key part in category management" p.19 of the textbook. Category Management = the spend in an organisation, broken down into categories of related products (e.g. IT, facilities management, marketing). Each of these categories could be plotted on the Kraljic Matrix.

Comprehensive and Detailed Explanation:

The described relationship includes:

Joint Product Development:Collaborative involvement in strategic projects indicates a deep partnership.

Integrated Systems:JIT delivery systems require synchronized operations, reflecting significant integration.

These elements are hallmarks of a significant integration partnership.