Pass the CIPS CIPS Level 4 Diploma in Procurement and Supply L4M6 Questions and answers with CertsForce

Partnership sourcing is ideal for high-spend, high-risk situations where collaboration mitigates risks and maximizes value through innovation, efficiency, and trust.

Explanation

The correct answer is ‘Reduced waste in the supply chain’ – this is not a risk, this is a benefit P.134

Explanation

Supplier relationships can result in value for money in the reduction of waste and in innovation developed as part of collaborative projects. Remember that in CIPS waste doesn’t necessarily mean physical waste (as in stuff you don’t want any more). There are 7 types of waste including waiting, inventory, transportation etc. So when you develop a relationship with a supplier, this can reduce waste (e.g. you may be able to get deliveries quicker by integrating your ordering system with the supplier’s, or you might reduce transportation by agreeing a Consignment stock). Having a good relationship with a supplier isn’t necessarily going to get you a reduction in cost or better payment terms. See p.70 for more details on this- there’s a short list of ways in which good supplier relationships can bring value for money to a business.

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 NO: for this to be true. What is true is the RISK isgreater. The other answers are incorrect; the QUESTION NO: 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'

Effective communication is essential in partnerships to ensure alignment on objectives, progress updates, and issue resolution. Regular communication builds trust and fosters collaboration, leading to successful outcomes.

In the Supplier Preferencing Model:

Core: A buyer with high spend and high attractiveness is viewed as critical by the supplier, encouraging strategic collaboration.

Exploitable: Where buyer spend is high but power is lower, suppliers may exploit the situation by raising prices or setting unfavorable terms.

These are the two scenarios associated with high spend buyers.

Explanation

A product with an ‘inelastic price’ means that consumption doesn’t really depend on how much it costs. So you could increase the price of alcohol and cigarettes and people would tend to still buy them. A product with an elastic price means that a change in price would have a large affect on the number of people who bought the item. See p.95 for more details on price elasticity.

Comprehensive and Detailed Explanation:

In Porter's Five Forces framework, thethreat of substitutesrefers to the availability of products or services that can perform the same function as the industry's product. The supplier's suggestion to use a newly developed plastic component instead of the traditional brass one introduces a substitute product. This alternative can potentially change the dynamics of the market by offering different benefits, such as cost savings or improved performance, thereby affecting competition.

When contracts for services transfer between providers, TUPE regulations (Transfer of Undertakings – Protection of Employment) apply in many jurisdictions. Employees retain their rights and continue employment under the new employer. Thus, employment rights are the key legal concern.

CIPS defines partnerships as collaborative, long-term relationships based on mutual trust, transparency, and shared objectives.

Key partnership characteristics include:

Information sharing

Joint problem-solving

Continuous improvement

Reduced reliance on inspection and adversarial control mechanisms

The other options reflect transactional or traditional relationships, focusing on cost, inspection, or sourcing flexibility rather than collaboration.

L4M6 Reference:

Learning Outcome 3: Understand approaches to managing supplier relationships

Topic: Partnerships vs traditional relationships

CIPS L4M6 Study Guide – Relationship types and behaviours