Pass the CIPS CIPS Level 4 Diploma in Procurement and Supply L4M4 Questions and answers with CertsForce

Explanation

The correct answer is financial stability (this is done by using all of those lovely ratios in chapter 1.3) and capacity and capability (which are part of Carter's 10 Cs).

At PQQ stage you're looking purely at whether the supplier is good or bad (to put it simply). You don't give them details of your requirement yet, so they're not providing a quote / pricing structure / price schedule at this point in time. That would be at the next stage, IF they pass PQQ, when you issue the tender competition.

The Consumer Price Index (CPI) measures the average change over time in the prices paid by consumers for a market basket of goods and services. It reflects price variations in specific geographical locations and tracks the weighted average prices of selected commodities, providing insights into inflation and cost of living.

Exact Extract from Study Guide:

"The Consumer Price Index (CPI) tracks variations in prices for a range of consumer goods and services over time, in a particular geographic location."

Supply market analysis involves identifying competitive pressures and external influences. Porter’s Five Forces assesses supplier power, buyer power, threat of substitutes, new entrants, and rivalry — directly relevant to market dynamics. STEEPLED analysis considers external macro-environmental factors (social, technological, economic, environmental, political, legal, ethical, demographic). By contrast, Porter’s Value Chain analyses internal activities of a single organisation, while the Ishikawa diagram is a root-cause tool for problem-solving, not market analysis. Using the correct tools ensures sourcing decisions account for risks and opportunities at both industry and macro levels.

When evaluating quotations, responsible buyers must look beyond headline price. Lead times (1) affect operational continuity. Add-on costs (2) (e.g., packaging, delivery, handling) can significantly change total cost. Past performance (4) demonstrates reliability and quality, crucial for ethical and sustainable sourcing. Wastage rates (3) may be relevant but are typically assessed in performance monitoring, not initial quotation evaluation. This holistic view aligns with the total cost of ownership (TCO) approach promoted by CIPS, ensuring procurement decisions account for both direct and indirect impacts.

Protectionist measures are policies implemented by governments to protect domestic industries from foreign competition. One common protectionist measure is the imposition of import duties, which are taxes levied on imported goods. These duties make imported products more expensive, encouraging consumers to buy domestic products instead. Buyers sourcing internationally must be aware of such duties as they directly impact the total cost of procurement.

Exact Extract from Study Guide:

"Furthermore, there are many potential cost considerations when importing goods which can include taxes & duties or storage costs. By understanding all key legal, regulatory and organizational requirements prior to sourcing from international suppliers, businesses can ensure compliance while also maximizing cost savings."

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.

Explanation

EBITDA stands for 'earnings before interest, tax, depreciation and amortization'. This is a profitability ratio and would show how profitable a business is.

EBITDA: Definition, Calculation Formulas, History, and Criticisms (investopedia.com)

Explanation

they are stock markets.

What is the FTSE 100 Index? Complete Beginner's Guide (moneycheck.com)

BSE SENSEX – Wikipedia

For urgent, low-value local services, targeted sourcing (e.g., RFQs to pre-vetted suppliers) is more efficient than open advertising that can create excess, low-quality responses and slow down delivery. Responsible practice also considers proportionality and timely risk control.

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.