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L4M6 Questions and Answers

Question # 6

A category buyer, managing an outsourcing project, is aware of the commercially sensitive nature of the project and wishes to adopt an accommodating approach to managing conflict amongst key stakeholders. Is this the correct approach?

A.

No, as the category manager has a low concern for others and a low concern for themselves

B.

Yes, as the category manager has a high concern for others and a high concern for themselves

C.

No, as the category manager has a high concern for themselves and low concern for others

D.

Yes, as the category manager has a low concern for themselves but high concern for others

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Question # 7

A medical consumables buyer has adopted a close relationship approach with their suppliers that are considered to be complicated, technical suppliers. Is this the right approach?

A.

Yes, as the items are of high financial risk

B.

No, as there is often a supply risk with items offered

C.

Yes, as all the items supplied are off the shelf

D.

No, as there are only a small number of suppliers in the marketplace

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Question # 8

Which of the following is not a type of tender process used in the Public Sector?

A.

Restricted

B.

Competitive Procedure with Negotiation

C.

Competitive Dialogue

D.

Unrestricted

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Question # 9

National Hospital Trust (NHT) has entered into a partnership relationship with a major facilities management provider. The two organizations have agreed on the approach to undertake regular reviews and audits. The audit approach will include which of the following?

A.

Category management and supplier rationalization

B.

Specification development and management

C.

Lessons learned and continuous improvement

D.

Macro and micro environmental analysis

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Question # 10

Polly Manufacturing is a company which manufactures bicycle parts. It has several factories around the country and is one of the leading suppliers of wheels, bells and pedals. Which of the following is Polly Manufacturing likely to outsource? Select TWO options.

A.

Manufacturing of all bicycle parts

B.

Manufacturing of bells only

C.

Facilities Management

D.

Cleaning

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Question # 11

What is the correct order of the stages of team development?

A.

Forming, storming, norming, performing

B.

Forming, norming, performing, storming

C.

Storming, forming, performing, norming

D.

Storming, forming, norming, performing

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Question # 12

A low-cost fashion retailer based in Europe is looking at adding value in their procurement activities. The retailer buys clothing for re-sale with a very small profit margin applied, relying on volume salesto make profit. Which of the following added-value approaches will be the most critical for the procurement team of the retailer to focus on with their supply chain?

A.

Quality enhancement

B.

Price management

C.

Improving timescales

D.

Reduction of inventory

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Question # 13

Jenny is a procurement manager who works in the public sector. She has been charged with organising a tender to source new Xray machines for a hospital and to ensure that they receive ‘value for money’. Which of the following should Jenny consider when drafting her ITT?

A.

Price only

B.

Equity

C.

Whole life costs

D.

Availability

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Question # 14

Which of the following are typical drivers for a partnership between the buyer and the supplier? Select the THREE that apply.

A.

The buyer has a high spend with the supplier

B.

There are many suppliers in the market

C.

The product is critical for the buyer

D.

The product is a commodity

E.

The product is technically complex

F.

The supplier provides the product to a buyer’s competitor

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Question # 15

Richie has come up with a new idea for sourcing items for the business but feels that it will have mixed reviews within the team. He thinks that some people will be in favour of the idea, and some will beagainst it. He doesn’t think the CEO will have a strong opinion either way. In order to decide whether to put a business case together and present his idea to the CEO- what should Richie do?

A.

Cost Analysis

B.

Make vs Buy Analysis

C.

Force Field Analysis

D.

Value Engineering Analysis

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Question # 16

Which of the following is an advantage for the suppler of entering into a partnership with a buyer?

A.

They may gain an increased volume of business

B.

There is more flexibility when selling the product

C.

The Intellectual Property Rights of the buyer become yours

D.

They no longer have to try as hard to win business.

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Question # 17

In the 1990s a company spent a lot of time and money developing a device that you could carry around that could play CDs. The product spent a long time in development but when it was released the sales figures were very disappointing. This was in part due to the fact another product was released at a similar time which had much more developed technology and could play music without the cumbersome size of a portable CD player. Which of the following did the company not consider when developing the product?

A.

threat of substitution

B.

threat of new entrant

C.

rivalry among existing competitors

D.

power of buyers

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Question # 18

Which of the following relationship types are listed on the relationship spectrum?

    Partnership

    Contractual

    Transactional

    Conspiratorial

A.

2 and 3 only

B.

1 and 3 only

C.

1 and 2 only

D.

2 and 4 only

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Question # 19

Joseph works as a category manager for a large electricity supply company. His company is one of six electricity companies in the country. All have a high annual spend on the same specifications of cable. There are only five cable manufacturers capable of supplying the cables. Joseph has established all the suppliers use the same raw materials using the same types of manufacturing lines. Prices tendered by all suppliers are very similar. After paying for the cable, Joseph’s company spends an additional 25% on moving and installing the cable. In order to enable Joseph to gain advantage over the other electricity companies, which type of supplier relationship should he adopt?

A.

Single-sourced

B.

Closer tactical

C.

Transactional

D.

Partnership

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Question # 20

Which of the following are examples of a collaborative partnering relationship? Select TWO that apply.

A.

Adversarial

B.

Transactional

C.

Arm's length

D.

Co-destiny

E.

Strategic alliance

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Question # 21

A supplier wishes to develop a new blood collection system for healthcare but needs to work with a clinical expert to develop the device. Why would a partnership be the best approach?

A.

To keep costs down

B.

It is a technically complicated supply

C.

Because it is a low-risk supply

D.

To gain market share

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Question # 22

A buyer is intending to purchase a new product for their business; however, the market has a large number of suppliers. What would be the most beneficial way for them to initially narrow down the supply options?

A.

Look at lowest-cost suppliers only

B.

Predefine minimum standards suppliers must meet

C.

Go only to companies they have bought other products from

D.

Preselect companies who have the largest market share

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Question # 23

A large construction group has a critical contract with a brick supplier. This represents high-value spend and the contract has a five-year duration. What type of commercial relationship would be the most appropriate?

A.

Partnership

B.

Transactional

C.

Closer Tactical

D.

Outsourcing

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Question # 24

A printing company is seeking to start developing a digital solution for its customers. They will need to outsource this element of the business as it is not an area they have worked in. What would be the most effective way for them to approach the market for a digital partner?

A.

Cost-based review of the market

B.

Review existing suppliers only

C.

Early engagement with the whole market

D.

Pre-define all requirements before approaching the market

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Question # 25

How would a buyer measure value for money from a relationship with a new supplier for goods?

A.

Audit of how suppliers promise

B.

Lowest possible cost

C.

Balance of quality and cost

D.

Quality and volume of goods

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Question # 26

ABC is a company which sources a vital component from a supplier. There are only a few suppliers in the industry and without this component, ABC would not be able to produce their final product. What type of relationship should ABC seek to develop with their supplier?

A.

outsource

B.

strategic alliance

C.

transactional

D.

arms length

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Question # 27

Which of the following are considered part of the '5 Rights of Procurement'? Select THREE.

A.

place

B.

quality

C.

cost

D.

focus

E.

time

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Question # 28

A buying organisation has decided to terminate its partnership with its supplier (FGH). For some time, the supplier has not been proactive in advising when deliveries will be late, which has frustrated the buying organisation. The supply market has historically been limited to a small number of suppliers, but new suppliers have decided that the market is attractive. The buying organisation is now considering setting up a partnership with a new supplier (XYZ) who has recently entered the market. What are the reasons for the buying organisation deciding to terminate its relationship with supplier FGH? Select TWO that apply.

A.

Changes in the composition of the supply market

B.

Levels of supply availability in the market have decreased

C.

The buyer no longer believes in the value of partnership relationships

D.

The supplier has decided that it no longer wishes to keep the buying organisation as a customer

E.

Poor communication by the supplier

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Question # 29

Which of the following relationship types are characterised by low levels of trust? Select TWO options

A.

Adversarial(Correct)

B.

Arm's Length

C.

Outsourced

D.

Single- Sourced

E.

Partnership

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Question # 30

A company is about to invite tenders for a contract to clean external windows at several premises, all at least three storeys high. It is going to do this in two stages. For the first stage, it will issue a pre-qualification questionnaire (PQQ) and, from the replies, select at least five potential suppliers to invite to tender. Which of the following is a selection criterion rather than an award criterion?

A.

Risk assessments at the premises

B.

Method statements for previous contracts

C.

Price that will be charged

D.

Environmental impact assessment

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Question # 31

Agile Cars Ltd is creating a ‘lean’ business model which involves receiving deliveries of components only when they are required. Which of the following ‘wastes’ is being removed from the business?

A.

Transportation

B.

Defects

C.

Over-production

D.

Inventory

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Question # 32

Which of the following are considered value-adding primary activities?

    Inbound logistics

    Firm infrastructure

    Technology development

    Marketing and sales

A.

2 and 4 only

B.

3 and 4 only

C.

1 and 2 only

D.

1 and 4 only

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Question # 33

Grey Stone Memorial Hospital is a private medical facility which has an idea for a vaccine to a deadly disease, but does not have the capacity to make the vaccine itself. It is considering partnering with a well-known pharmaceutical company in order to bring the vaccine to market. What is the biggest risk to Grey Stone?

A.

Intellectual Property Rights

B.

Increased Costs

C.

Low quality product

D.

Uninformed stakeholders

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Question # 34

A local government procurement team is undertaking a full review of their current internal working processes. The team of buyers currently have a partnership-style relationship with their routine suppliers. Is this the best relationship style to use?

A.

No, as there are many suppliers available

B.

No, as these are critical items to the buying organization

C.

Yes, as they present a great deal of risk to the organization

D.

Yes, as these are low-value items

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Question # 35

If a stakeholder has high power in a business but isn’t interested in your procurement activity, what should be your management style for dealing with this stakeholder?

A.

Keep them satisfied – they have high power

B.

Keep them informed – they have high power

C.

Manage closely – they’re a key player

D.

Minimum effort is required as they’re not interested- do nothing

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Question # 36

Cigarettes and alcohol are often described as having an ‘inelastic price’. What does this mean?

A.

Changes in price will greatly affect how much of the item is bought

B.

Changes in price will not affect how much of the item is bought

C.

The product is subject to high rates of tax

D.

The product is subject to age restrictions

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Question # 37

Is it correct to suggest that the sole objective of partnership sourcing is to achieve the lowest acquisition cost?

A.

Yes, the concept of 'lowest acquisition cost' focuses on collaboration just like partnership sourcing does

B.

Yes, because the concept of 'lowest acquisition cost' ignores the quoted price and focuses on long-term cost factors

C.

No, because partnership sourcing considers 'lowest acquisition cost' together with aspects of supplier partnerships

D.

No, partnership sourcing is not applicable in one-off capital purchases where the concept of 'lowest acquisition cost' applies

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Question # 38

In the public sector, there are many sources of information that a buyer can use to identify a suitable supplier. Which of the following could be used? Select THREE

A.

Intranet

B.

Tradeshows

C.

OJEU

D.

Internal stakeholders’ knowledge

E.

Procurement Platforms

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Question # 39

Francisco has entered a partnership with Pedro, who is a key supplier, and wants to ensure that the partnership achieves all of Francisco’s goals. As well as qualitative and quantitative KPIs, what other measures could Francisco take to ensure the partnership is a success?

A.

Do frequent appraisals on the supplier

B.

Conduct regular audits

C.

Ensure there is a damages clause in the contract

D.

Threaten the supplier with termination if he underperforms

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Question # 40

When using competitive forces theory, suppliers are powerful in which of the following situations? Select THREE that apply.

A.

There are few substitute products

B.

The product is highly differentiated

C.

There is potential for backward integration

D.

The switching costs are high

E.

The volume purchased is not important

F.

The product is undifferentiated

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Question # 41

Lion Manufacturing is about to enter into a partnership with Penguin Logistics, who will provide delivery to and from Lion Manufacturing's factories and warehouses. In this relationship, what type of negotiation strategy should Lion manufacturing use?

A.

win: win

B.

win: lose with the supplier winning

C.

lose: lose

D.

win: lose with the buyer winning

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Question # 42

Mendelow’s Stakeholder Matrix categorises stakeholders into four groups and provides insight into how these stakeholders should be managed. What is a limitation to using this Matrix to categorise stakeholders?

A.

Nowadays, Stakeholders fall into more than four categories

B.

The Matrix doesn’t consider the power these stakeholders have

C.

The Matrix doesn’t consider whether the stakeholder is for or against the activity

D.

The categories are hard to remember

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Question # 43

The ABC Analysis, also known as the Pareto Analysis, is a technique that can be used by procurement to which purpose?

A.

supplier positioning

B.

cost analysis

C.

relationship spectrum

D.

cost engineering

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Question # 44

A garden centre has recently purchased some lollypop sticks to use as plant labels. The staff have written the name of the plant on the lollypop stick and put it next to the plant. This helps them identify which plant is which. However, after a couple of weeks, the lollypop sticks have become mouldy and the writing has faded. Staff are now struggling to identity their plants. The Manager of the garden centre is considering returning the lollypop sticks and asking for a full refund as they were not fit for purpose. Can the Manager do this?

A.

Yes- the lollypop sticks have gone mouldy- this is unacceptable

B.

Yes- so long as the manager kept the receipt

C.

No- as this was not the lollypop sticks intended purpose

D.

No- the manager cannot prove that the product is faulty

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Question # 45

Hungry Sandwich Co. produces over 5,000 freshly made sandwiches on-site every day. The main ingredient that Hungry Sandwich Co. buys is bread. It is the item they spend the most money on, and they have a long-term partnership agreement with a local bakery to manufacture and supply fresh bread every morning. Using a supplier positioning matrix, which is the appropriate category for bread for Hungry Sandwich Co.?

A.

Non-critical

B.

Bottleneck

C.

Abundant

D.

Strategic

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Question # 46

Pablo has run an open- competition to secure a new contract for a supplier of paper for his Birthday Card making company. He has received 10 submissions from various suppliers and needs to put a team together to evaluate the bids. What type of team should Pablo consider?

A.

A team composed of internal stakeholders

B.

A cross-functional team

C.

A team of procurement experts

D.

A team composed of internal and external stakeholders

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Question # 47

An automotive company has hired Tom as the procurement manager. Tom is to manage a team of two people who have worked in the department for a number of years. Conflict exists between the two members of staff due to an overlap of responsibilities. Which of the following processes would be most appropriate for Tom to use to reduce this conflict?

A.

Tom could avoid mentioning the conflict and hope that it is resolved without action

B.

Tom could hire an additional member of staff to take on some of the duties

C.

Tom could restructure the team so both members do not have to work together

D.

Tom could arrange a meeting and set performance targets for each member

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Question # 48

A partnership approach to a buyer-supplier relationship, as opposed to a traditional adversarial approach, would have which of the following characteristics?

A.

Greater levels of transparency

B.

Increased supplier contractual terms

C.

Specifications designed by the buyer

D.

Shared cost benefits

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Question # 49

Kyle Crant is a procurement director at ATSS Ltd and has introduced a new policy within the procurement function. The policy requires the procurement function to obtain quotations from multiple suppliers if a contract is worth over £10,000. What is the primary aim of this policy?

A.

To ensure value for money is achieved

B.

To allow procurement to select the lowest price

C.

To enable a reduction in competition

D.

To deliver an agile process

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Question # 50

Which circumstances make a buyer more attractive to the supplier?

A.

Where the brand profile is high

B.

When the buyer negotiates longer credit terms

C.

Where the buyer exercises a stringent code of conduct

D.

When the buyer is very procedural in its systems

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Question # 51

A confectionery company has a portfolio of different items to sell. Their most popular product is the chocolate brownie cake, but they have begun to trial sales of cereal bars, granola cereal, and chewing gum. As a high-quality producer in a competitive market, the company requires effective supplier sourcing arrangements. Which ONE of the following product lines would be the most suitable for partnership sourcing?

A.

Chocolate brownie cake

B.

Chewing gum

C.

Cereal bars

D.

Granola cereal

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Question # 52

Gabriel is a procurement manager who wishes to explore a new avenue to procure products for his company. His manager has told him that he should invite internal stakeholders to a meeting to get their feedback. Who should Gabriel invite? Select THREE.

A.

end-users

B.

legal department

C.

customers

D.

suppliers

E.

employees

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Question # 53

In an oliogopy market, what would a regulator do?

A.

prevent price fixing and collusion

B.

stop the market becoming a monopoly

C.

ensure value for money for buyers

D.

ensure health and safety standards

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Question # 54

A competitive advantage can be gained by doing what?

A.

Increasing your prices

B.

Engaging in market research

C.

Building better relationships with primary stakeholders

D.

Completing formal tenders for all buying requirements

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Question # 55

Which of the following are Intellectual Property Rights that you would you encounter in procurement and supply contracts? Select THREE.

A.

Method Statements

B.

Risk Assessments

C.

Patents

D.

Copywrite

E.

Trademark

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Question # 56

What is value mapping?

A.

Analysing the costs that go into making a product

B.

Creating value through the elimination of waste and operational inefficiencies

C.

Segmenting suppliers based on the value they bring to the company

D.

Make vs Buy decision

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Question # 57

A supplier is working with a buyer who represents a large percentage of his business. Without this particular buyer, the supplier would likely go out of business. There has been a dispute in the last invoice which the buyer is not happy about. What technique should the supplier use when talking to the buyer about this?

A.

Competing- the supplier needs to earn more money as they are struggling financially

B.

Avoiding- the supplier should avoid talking with the buyer as this may result in conflict

C.

Accommodating- the supplier should show a large degree of co-cooperativeness as the buyer is important to their survival

D.

Accepting – the supplier should accept that conflict should sometimes occur in buyer: supplier relationships and work hard to avoid them

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Question # 58

Which of the following would you use to qualify new suppliers? Select THREE.

A.

competency

B.

cash

C.

culture

D.

cooperation

E.

coordination

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Question # 59

Significant differences in corporate cultures can lead to the failure of a partnership relationship between two organisations. Is this statement correct?

A.

Yes, the compatibility of cultures should be considered at the outset

B.

Yes, in a partnership the organisations merge, so the cultures must be the same

C.

No, the organisations can continue to operate separately so this is not an issue

D.

No, it is easy to change corporate culture so the two organisations will align quickly

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Question # 60

A university based in Europe has an objective to increase the number of students coming from the United States of America (USA). The university appoints a consultant with specialist knowledge of the USA market and has issued them with a performance-based specification. Which of the following is a characteristic of a performance specification?

A.

It provides details of how the services must be carried out

B.

It encourages innovation from the supplier

C.

It enables the buyer to detail technical information

D.

It ensures the supplier must conform with the specification

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Question # 61

Which of the following behaviours are you likely to see in a Partnership relationship?

A.

Opportunistic behaviour and strong levels of trust

B.

Strong levels of trust and honest communication

C.

Honest communication and opportunistic behaviour

D.

Secrecy and honest communication

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Question # 62

Kyle Grant is a procurement director at ATSS Ltd and has introduced a new policy within the procurement function. The policy requires the procurement function to obtain quotations from multiple suppliers if a contract is worth over £10,000. What is the primary aim of this policy?

A.

To deliver an agile process

B.

To ensure value for money is achieved

C.

To allow procurement to select the lowest price

D.

To enable a reduction in competition

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Question # 63

In public sector procurement, tenders are advertised with CPV codes, which provide a reference to describe the product or service being tendered. What does CPV stand for?

A.

Condensed Procurement Vocabulary

B.

Common Procurement Vocabulary

C.

Complete Procurement Vocabulary

D.

Clear Procurement Vocabulary

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Question # 64

A large office orders weekly from a stationery supplier. The items are low cost and if the delivery is a day late it does not affect the running of the office. Where would this supplier be positioned in a supplier matrix?

A.

Routine

B.

Leverage

C.

Critical

D.

Bottleneck

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Question # 65

Which one of the following is an advantage of early supplier involvement?

A.

Supplier is responsible for all intellectual property risks

B.

Large investment in supplier communications

C.

Understanding of supplier capabilities

D.

No need for supplier non-disclosure agreements

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