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CIPS L4M4 Exam
Ethical and Responsible Sourcing (Page 9 )

Updated On: 1-Feb-2026
Page 5 of 25
PDF with 180 Questions

Which of the following would be a valid reason to make a product inhouse, rather than buy it from a supplier?

  1. improved quality control
  2. less inventory
  3. killset of supplier is higher
  4. threat of substitutions

Answer(s): A

Explanation:

One of the biggest advantages to making an item over buying it is 'improved quality control'.
When you make the product yourself, you can set the quality parameters you require and aren't re- stricted to, or dependant on, what the supplier does. The other options are incorrect- making stuff inhouse would mean you hold more inventory. If the supplier has a higher skillset than you, you would outsource. Threat of substitutions wouldn't impact this decision. For a list of pros and cons relating to the 'make or buy' decision see p.5. This is a hot topic for the exam.



Ramesh is a procurement manager who is looking at his supplier base. He is pursuing a sourcing strategy with the aim of enabling logistical cost reductions. He has made the decision to scale-down his supplier base and purchase from one supplier.

Which type of sourcing arrangement has Ramesh began?

  1. dual
  2. multiple
  3. single
  4. sole

Answer(s): C



Brooklyn Ltd is a manufacturer of windows and has a single sourcing relationship with their supplier of glass.
What relationship style would be best suited?

  1. collaborative
  2. transactional
  3. adversarial
  4. non-critical

Answer(s): A

Explanation:

When single sourcing, you should aim to have a collaborative relationship with the supplier. They're the only ones who provide you with glass, which is a vital part of windows. So you need to make sure you have a good relationship with them and work with them to overcome any issues such as supply chain disruptions. If not- you've got no windows to sell!



In a negotiation, a supplier does not want to upset or offend the buyer, so concedes their own requirement in order to ensure harmony.
Which negotiation tactic is the supplier using?

  1. competitive
  2. collaborative
  3. compromising
  4. accommodating

Answer(s): D

Explanation:

This is accommodating: the supplier puts the buyer's interest above his own. This is from the Thomas Killman model of conflict resolution. There are 5 strategies; competitive, collaborative, avoiding, accommodating and compromising. In the study guide it doesn't mention the name of the model but you do need to know the 5 strategies. The model comes up a lot in other modules so is a good one to learn. Particularly L5M1 which is about management theory.



Liquidity is a solvency measure which determines whether an organisation is able to pay its debt.
Which of the following would you use to assess a supplier's liquidity? Select TWO.

  1. current assets
  2. current liabilities
  3. long-term debt
  4. shareholder's equity

Answer(s): A,B

Explanation:

The correct answer is current assets and current liabilities. There are many Questions about financial ratios on the exam.
If you're unsure on them I suggest doing further reading outside of the study guide as this will help. I like this youtube video (I'm not associated with the makers of this video but think it's a great way to explain liquidity) Liquidity ratios (youtube.com)
You can be asked to work out liquidity in the exam. If you are asked this, the numbers will be very simple to the point you may be able to do the sums in your head. There is also a calculator on the test app you can use.



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