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CIPS Managing Ethical Procurement and Supply (L5M5) Sample Questions:

1. EcoSmart Solutions, a company specializing in sustainable construction materials, intends to make a sustainability claim for their product. They are aware of the ISEAL Alliance's guidelines for valid sustainability claims. Which of the following would be considered a valid sustainability claim according to ISEAL Alliance standards?

A) The product reduces carbon emissions, but the claim is not supported by any third-party audits or verifications
B) The product claims to improve sustainability, but the claims are solely based on anecdotal evidence and not on any recognized environmental criteria or certification
C) The product is marketed as "eco-friendly" based on internal environmental policies without any external certification
D) The product is made using 100% recycled materials, with claims verified by third-party certification from a recognized sustainability standard

2. When developing an ESG policy, which of the following steps should be taken first?

A) Identify the need
B) Consult with stakeholders
C) Gather Information
D) Draft the policy

3. While low-cost country sourcing can provide substantial cost savings for buyers, it also comes with significant risks. Which of the following should be avoided as a potential target for low-cost country sourcing?

A) A country that is remote geographically but with good transportation routes
B) A country with stable tax and tariff structures
C) A country where companies use Just in Time (JIT) method of SCM
D) A country consisting of workers with detailed knowledge of the product

4. A large retail chain, HyperMart, sources products from multiple suppliers, each specializing in different categories such as electronics, clothing, and groceries. To maintain a diverse selection, HyperMart has contracts with multiple suppliers for each product category. At the same time, these suppliers serve various large retailers and are not solely dependent on HyperMart for their sales.
In this scenario, how does the mutual independence between HyperMart and its suppliers illustrate the dynamics of the power dominance model?

A) HyperMart has significant power over suppliers due to its large purchasing volume
B) Both HyperMart and its suppliers operate independently without significant power over each other
C) The dependence of HyperMart on suppliers for critical products increases supplier power
D) Suppliers hold power over HyperMart because they provide unique products that are difficult to substitute

5. Which of the following standard operating procedures do procurement professionals use to prevent fraud within a company?

A) Bypassing formal bidding processes for convenience in purchasing decisions
B) Implementing a whistleblower hotline to report suspicious activities anonymously
C) Allowing a single employee to handle all procurement transactions without oversight
D) Using verbal agreements for procurement contracts to expedite the process

Solutions: