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CIPS Supplier Relationships Sample Questions (Q34-Q39):

NEW QUESTION # 34
Intellectual Property Rights (IPR) include items such as copywrite and trademarks. A buyer is considering entering into a partnership with their supplier to create a new product which will be released in two years' time. Should IPR be included into a contract between partners?

• A. Yes- IPR is a valid concern for both parties but will survive the termination of the agreement
• B. Yes- IPR should always remain with the buyer- this will protect those rights
• C. No- a contract is not necessary if it is a partnership.
• D. No- a separate legal agreement should be created to cover IPR

Answer: A Explanation:
The correct answer is 'Yes- IPR is a valid concern for both parties but will survive the termination of the agreement' (p.112). See the section on 'Legal considerations' in chapter 2.4
NEW QUESTION # 35
Which of the following are elements of a business that can develop a company's competitive advantage? Select THREE.

• A. cost leadership
• B. cost focus
• C. organisation culture
• D. human resource management
• E. natural resources

Answer: C,D,E Explanation:
This is one of those questions you have to read carefully- it asks for 'elements of a business'. Cost focus and cost leadership are ways a company can improve their competitive advantage, but they're not elements of a business. The other three options are. Porter created a list of elements of a business that can help a company's competitive advantage- these can be found on p.33-34
NEW QUESTION # 36
The Queen Victoria is a traditional British pub which serves a range of alcoholic beverages. It has a partnership relationship with a local brewery which supplies several types of beer and cider. Logistics is a key concern for the Queen Victoria as deliveries must be made when there is room in the cellar to store the barrels of beer and cider. In what ways could the logistics risk be reduced?

• A. Sharing up-to-date information
• B. Using several suppliers instead of one
• C. Batch ordering
• D. Issuing POs electronically.

Answer: A 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 the question 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.
NEW QUESTION # 37
Harry runs a hotel and has recently decided to contract an external supplier to provide the cleaning of the rooms. What is a disadvantage of doing this?

• A. This allows staff to focus on other areas
• B. There is dependency on the supplier, which increases risk
• C. The supplier will not perform as well as an internal team
• D. This will be more expensive than providing the service in house

Answer: B Explanation:
Using an external supplier always comes with increased risk, as you become dependant upon them, and have less control over their performance (compared to an in-house team). In this example Harry will have the increased risk that the contract cleaners turn up late to their shifts, or don't do a good job. However, there is no reason to believe that the supplier will not perform as well as an internal team- we don't have enough information from the Question: for this to be true. What is true is the RISK is greater. The other answers are incorrect; the Question: doesn't indicate whether outsourcing the cleaning will be more or less expensive for Harry. Allowing staff to focus on other areas is an advantage not a disadvantage. See p.4 for more information on 'External Suppliers'
NEW QUESTION # 38
What are service credits?

• A. When a buyer makes a purchase on credit
• B. A clause in a contract that allows for additional bonus payments for meeting KPIs
• C. A mechanism for performance management where the buyer has the right to deduct money from payments owed for under performance
• D. A type of payment where goods are delivered before payment is made

Answer: C Explanation:
The correct answer is "A mechanism for performance management where the buyer has the right to deduct money from payments owed for under performance". A definition is provided on p.113 and states "If a supplier fails to meet the standard set in the service credits, the buyer has the right to deduct set amounts of money from payments owed to the supplier"
NEW QUESTION # 39
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