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CIPS Managing Ethical Procurement and Supply (L5M5) Sample Questions (Q53-Q58):
NEW QUESTION # 53
How do Fair Trade organizations protect raw material producers from economic hardship?
Answer: A
Explanation:
Choice B- Fair Trade ensures producers receive a guaranteed minimum price or local living wage for their goods, providing financial security and protection against market fluctuations. This is the correct answer.
Incorrect answer:
Choice A- This is important for community development but does not directly address the immediate economic stability of producers.
Choice C- Although improving working conditions is a key component of Fair Trade, it does not directly protect producers from economic hardships related to pricing or income stability.
Choice D- Labeling products as Fair Trade can help attract ethical consumers, but it doesn't directly protect producers from unstable economic conditions.
Reference:
LO-3.3; Page 295; The World Fair Trade Organization (WFTO) and its principles and Charter of Fair Trade and implications for procurement and supply
NEW QUESTION # 54
An organization has a clear understanding of the service it requires and has precisely outlined the process for how the supplier must deliver it. It aims to use an 'outcome-focused specification.' Is this the appropriate specification approach for the organization?
Answer: C
Explanation:
Correct answer is choice C- No, an outcome-focused specification approach allows the supplier to determine how the service will be delivered.
Incorrect answer:
Choice A- This is wrong as having a clear idea means the buyer can easily use conformance specification for its requirement which will include exact requirements of materials, standards etc.
Choice B- Outcome specifications does provide more freedom of choice to the suppliers but it is not required here as the buying organization knows what it wants in a specific way.
Choice D- An open specification is a specification created and controlled, in an open and fair process, by an association or a standardization body intending to achieve interoperability and interchangeability which is beyond the scope of the syllabus.
Reference:
LO-1.4; Page 118; Specifications
NEW QUESTION # 55
Which of the following is an example where long-term availability of supplies is prioritized over short-term gains?
Answer: D
Explanation:
Choice C- Using a new supplier that is more expensive in the short-term than others in the market, to expand the supply base and to develop capacity in the market is an example of where long-term availability of supplies would be more important than short-term gains. This decision focuses on building relationships and capacity for the future, prioritizing sustainability over immediate cost savings. This is the correct answer.
Incorrect answer:
It is important to consider the broader concept of supply chain management when weighing up short term commercial benefits vs long term availability.
Choice A and B- Lowering quality in every aspect leads to a customer rejects and negative brand publicity. There will be no long term supplies required as customers won't buy the product.
Choice D- Variety reduction involves reducing the number of different solutions used to fulfil the same need. When considering developing a procurement strategy for a new category, it is common to find that there is a variety of different standards and solutions employed across an organization to fulfil broadly the same need. The solution is not sustainable.
Reference:
LO-1.4; Page 114-116; Short term commercial gains and long term availability
NEW QUESTION # 56
EcoWear, a well-known apparel company committed to sustainability, has recently expanded its supply chain but failed to address key ESG issues, leading to the following concerns:
A supplier has been reported for using toxic dyes, causing environmental harm.
Another supplier has poor labor practices, resulting in worker strikes.
If these ESG issues remain unresolved, what are the most likely consequences for EcoWear? Select any TWO.
Answer: C,D
Explanation:
Choice A- Increased Sales is unlikely, as consumers are increasingly aware of ESG issues and may choose to avoid brands that don't align with their values.
Choice B- Legal Benefits is also unlikely, as failing to address ESG issues could actually increase regulatory scrutiny and legal risks.
Option C & D is the answer as per the study guide.
Reference: LO-1.1; Page 53; Impact of breaches of ethical codes or ESG standards on reputation and brand
NEW QUESTION # 57
Which term describes the phenomenon where environmental disruptions in the supply chain cause amplified fluctuations in demand or inventory levels as they move upstream?
Answer: B
Explanation:
sustainability-related disruptions lead to amplified fluctuations in demand or inventory levels throughout the supply chain.
Incorrect answer:
Option A- Greenwashing refers to the practice of companies misleading consumers about the environmental benefits of their products or operations, without making substantial sustainable improvements.
Option B- Bluewashing refers to a company's attempt to improve its reputation by associating itself with the United Nations or other international organizations without genuine commitment to the causes they claim to support.
Option D- Fairwashing refers to companies falsely claiming to support fair trade practices or other ethical standards to improve their public image without implementing those practices authentically.
Reference:
LO-3.2; Page 282; The benefits and challenges of independent standards in securing ESG objectives in ethical and sustainable procurement and supply arrangements
NEW QUESTION # 58
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