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NEW QUESTION # 64
Which category of spend item would be most suitable to purchase through an e-auction?
Answer: A
Explanation:
Leverage items [low supply risk, high financial impact] are best suited for e-auctions. Buyers can use competitive bidding to drive down prices when multiple suppliers exist.
By contrast:
* Bottleneck items [low value, high supply risk] are not suited as choice is limited.
* Strategic items require partnership and collaboration, not price-only competition.
* Non-critical items don't justify the effort of auctions.
[Ref: CIPS L5M6 Study Guide, p.97 - Kraljic Portfolio Matrix]
NEW QUESTION # 65
According to Porter's Five Forces, supplier power is strong in industries where which of the following is true?
[Select THREE]
Answer: A,B,D
Explanation:
Supplier power is strong when buyers have fewer choices and suppliers have leverage. This occurs where:
* No substitutes are available [A]: Buyers are locked into what suppliers provide, increasing supplier power.
* Supplier's customers are fragmented [B]: When customers are fragmented [many small buyers], they cannot collectively negotiate, so suppliers hold more power.
* Forward integration is possible [D]: Suppliers can bypass buyers and sell directly to the end customer, which gives them negotiating strength.
Options C and E relate more to buyer power:
* Switching costs are low [C]: This reduces supplier power as buyers can easily move.
* Undifferentiated products [E]: This strengthens buyer power since products are interchangeable.
[Ref: CIPS L5M6 Study Guide, p.116 - Porter's Five Forces model]
NEW QUESTION # 66
A 'should cost' analysis and value analysis can be completed on items procured by a buyer. Which of the following categories of spend are these tools most applicable for?
Answer: A
Explanation:
These tools are most applicable for leverage items, which typically have high spend but low supply risk.
Buyers can use cost breakdowns and value analysis to reduce prices and improve cost-efficiency.
Reference: CIPS L5M6 Study Guide, p.103
NEW QUESTION # 67
The sale of ice-cream, bikinis and sunglasses usually follows which demand pattern?
Answer: C
Explanation:
These items follow a cyclical demand pattern, meaning that sales fluctuate in predictable cycles-typically aligned with seasons or climate conditions. For example, demand peaks in summer and falls sharply in winter. Recognising cyclical patterns allows procurement professionals to plan supply and inventory effectively, avoiding both shortages during peak demand and excess stock during low demand periods. This type of forecasting is particularly important in industries such as fashion, tourism, and consumer goods.
Failing to account for cyclical demand can lead to missed sales opportunities or increased storage costs. In category management, understanding demand cycles ensures efficient resource allocation, supplier scheduling, and financial planning. It also supports collaborative planning with suppliers to ensure capacity aligns with market needs.
Reference: CIPS L5M6 Study Guide, p.143
NEW QUESTION # 68
Which of the following are benefits of Category Management? Select THREE.
Answer: B,D,E
Explanation:
Category Management delivers multiple benefits for organisations, including:
* Fewer supplier contracts, achieved by consolidating spend and reducing fragmentation.
* Improved supplier relations, as suppliers are engaged strategically rather than transactionally, enabling stronger collaboration.
* Increased innovation, which arises when procurement works closely with suppliers to develop new solutions and efficiencies.
Other benefits highlighted by CIPS include better pricing, improved terms and conditions, stakeholder satisfaction, enhanced risk management, and improved spend visibility. The incorrect options-"less staff required" and "better use of IT systems"-may result indirectly from streamlined procurement, but they are not primary benefits recognised in the category management framework. The true value of category management lies in shifting procurement from a transactional function to a strategic enabler of value. By grouping spend into categories and applying tailored strategies, organisations achieve economies of scale, better market intelligence, and stronger alignment with business objectives.
Reference: CIPS L5M6 Study Guide, p.6
NEW QUESTION # 69
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