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CIPS Ethical and Responsible Sourcing Sample Questions (Q134-Q139):

NEW QUESTION # 134
Incoterms describe several aspects and responsibilities of transporting goods when sourcing internationally.
Which of the following is described by Incoterms? Select THREE.

A. how much the transportation will cost
B. which party arranges insurance
C. what form of transportation will be used
D. who is responsible for making duty and tariff arrangements
E. how long the transportation will take

Answer: B,C,D

Explanation:
Incoterms describe who out of the buer and seller; organises transport and what type of transport this is, who pays for insurance, and who organises duty / tariff arrangements when the goods go through customs. See p.
131. Note- some students report a lot of questions on Incoterms in the exam, some say they only had 1. If you can, I'd learn them just to be safe.

NEW QUESTION # 135
A company has a requirement for an item that has been identified as strategic on the positioning model. The company needs to invite competitive tenders and ensure the selected supplier of this item is in a good financial position. What should the company ask the suppliers to send to show that their current assets cover their current liabilities?

A. Gearing ratio
B. Annual turnover
C. Profit and loss account
D. Acid test

Answer: D

Explanation:
The acid test (quick ratio) is an effective measure of a supplier's ability to meet short-term liabilities, providing insights into financial stability. This aligns with responsible sourcing by ensuring the supplier is financially capable of fulfilling a strategic contract.

NEW QUESTION # 136
Tulip Rose Industries is using a restricted approach to tendering for a new contract for the facilities management of their seven factories which produce furniture made of organic materials. What is likely to be the reason they are using a restricted approach?

A. the suppliers are likely to be unqualified
B. the requirement is complex
C. interest in the tender opportunity is likely to be high
D. interest in the tender opportunity is likely to be low

Answer: C

Explanation:
you would use a restricted approach when interest is likely to be high. The buyer needs a method of de-selecting unsuitable bidders and creating a shortlist of acceptable organisations.
For complex requirements you could use both an open or restrictive tender- the difference between the approaches is about how many bids you're likely to get rather than the complexity of it.

NEW QUESTION # 137
What is the best way to prevent potential issues of conflicts of interest?

A. do not work with suppliers who have relationships with the procurement team
B. create a risk register
C. do not hire family members
D. openly declare potential conflicts

Answer: D

Explanation:
The best way to deal with potential Conflicts of Interest is to openly declare these. Just because you have a relationship with someone doesn't mean this is going to be an issue or lead to fraud, but it is a good idea to keep a written record of these.
It wouldn't be a risk register, because how can you rate someone's risk of doing something dodgy? Risk registers are for objective risks such as Health and Safety.

NEW QUESTION # 138
A supplier operates in a monopolistic market where the threat of entry is low. The product that they offer is key in manufacturing certain types of submarines and there is no known substitute for the product at present.
What type of sourcing relationship is a buyer likely to have with this supplier?

A. dual sourced
B. single sourced
C. sole sourced
D. multiple sourced

Answer: C

Explanation:
This is sole sourcing as there is only one supplier in the marketplace.
Be careful not to confuse single sourcing and sole sourcing. Single sourcing is when a buyer chooses to work with only one supplier (usually to achieve economies of scale), sole sourcing, on the other hand, is when the buyer doesn't have a choice- they work with one supplier because there is only one supplier in the market.
Types of sourcing is a key concept for this exam.

NEW QUESTION # 139
......

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