INTRODUCTION TO PROCUREMENT QUESTIONS

1. Which of the following terms below is not directly associated with procurement?
A. Purchasing C. Materials management
B. Supply chain D. Human resources
2. Value for money is about considering:
A. Just the price C. Only the quality
B. All associated costs D. Some of the overhead
3. Performing a task competently with the least amount of waste and in shortest amount of time is a definition of:
A. Effectiveness C. Excellence
B. Efficiency D. Entrepreneurialism
4. CAPEX and OPEX are types of:
A. Budgets C. Supply chains
B. Specifications D. Departmental structure
5. TCO stand for:
A. Total cost of organisation C. Total cost of ownership
B. Total cost of operation D. Total cost of opportunity
6. Value for money can be presented by the 3Es. What are the three E’s?
A. Efficiency, economy, effectiveness
B. Efficiency, efficacy, effectiveness
C. Economy, effectiveness, elementary
D. Economy, efficacy, efficiency
7. The decision as to whether an organisation manufactures its own products or outsources the requirement is
referred to as:
A. The make-or-buy decision C. The make-or-source decision
B. The make-or-supply decision D. The make-or-procure decision
8. Services are referred to as what type of procurement?
A. Tangible C. Intangible
B. Fixed D. Quality
9. SCM stands for:
A. Supply chain maintenance C. Supply chain methods
B. Supply chain manufacturing D. Supply chain management
10. Which of the following is the correct sequence in the downstream retail supply chain?
A. Retailer / Producer / Wholesaler / Consumer
B. Producer / Wholesaler / Retailer / Consumer
C. Consumer / Producer / Retailer / Wholesaler
D. Wholesaler / Retailer / Producer / Consumer

KCM 1
 11. Customers and consumers are:
A. Always the same C. Never the same
B. Sometimes the same D. Completely unrelated
12. Which type of specification could take the form of a recipe for a chemical formula?
A. Performance C. Operational
B. Conformance D. Quality
13. RFQ stands for:
A. Request for quotation C. Request for quantity
B. Request for quality D. Request for query
14. Ray Carter’s 10 Cs can be used for:
A. Assessing quality C. Assessing quotations
B. Assessing requisitions D. Assessing lead times
15. Managing resources, including people and processes and efficiently distributing relevant information is a
definition of:
A. Administration C. Accounting
B. Purchasing D. Promoting
16. Complete the team work model: forming, storming, norming:
A. Adjusting C. Disbanding
B. Performing D. Warning
17. What document should be requested from a suppler if an invoice shows too many products have been for
against the delivery note
A. An additional invoice C. A requisition
B. A proof of delivery D. A credit note
18. Which code should procurement professionals follow at all times?
A. CIPS Code of ethics C. CIPS Code of procurement
B. CIPS Code of conduct D. Code of sustainability
19. What is bonded labour an example of?
A. Modern-day slavery C. Modern-day ethics
B. Modern-day good practice D. Modern –day procurement
20. The policies and principles by which an organisation is controlled is referred to as:
A. Corporate branding C. Corporate governance
B. Corporate identity D. Corporate hospitality
21. The top level purchaser in a tiered system can have some influence on which of the following?
A. Only the first tier in the supply chain
B. Only the logistics element of the supply chain
C. Only the first and second tiers of the supply chain
D. All levels in the supply chain

KCM 2
 22. Complete the following sentence. Buyers can ensure that customer quality requirements for services are met
throughout the supply chain by using…..
A. Service standardization C. After- sales services
B. Shared service centers D. Service level agreements
23. Reviewing supplier’s code of ethics, CSR policies and corporate governance is part of
A. Supplier rationalization C. Supplier favoritism
B. Supplier standardization D. Supplier evaluation
24. Which of the following might be defined as ‘obtaining goods or services by buying, leasing, hiring or
borrowing’?
A. Purchasing C. Procurement
B. Sourcing D. Acquisition
25. Which of the following might procurement identify as a possible reason for excess costs in the supply chain?
A. Supplier competition C. Availability of substitutes
B. Over-specification D. JIT supply strategy
26. Which of the following is a definition of the ‘supply chain’?
A. The use of transport, warehouse, physical handling and inventory management
B. The network of organisations involved in the creation and delivery of products and services to the end
user
C. The total process of establishing needs to fulfillment of an order and payment of the supplier
D. The responsibilities of staff and how these link to create a high quality service to customers
27. From the buyer’s perspective, the aim of effective supply chains is to achieve which of the following?
A. Highly satisfied suppliers C. Continuous staff development
B. Added value for customers D. New sub-contracting opportunities
28. Which of the following describes the position in the supply chain of an end user in relation to a manufacturer?
A. Upstream C. Internal
B. Intermediate D. Downstream
29. Which of the following defines the term ‘supplier management’?
A. The management of integrated business processes across a supply chain
B. The management of the relationships between a buying firm and its immediate suppliers in the supply
chain
C. The management of the interactions and linkages that make up a total supply chain
D. The building of collaborative relationships in a supply chain to add value for the end customer
30. Which of the following is a benefit of tiering within an organisation’s supply chains?
A. Fewer and improved commercial relationships
B. Increased size of the supplier base
C. Larger number of transactions for buyers to handle
D. Allows any suppler to compete for business

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 31. Which of the following describes a key post-award activity?
A. The sourcing process C. Placing the contract order
B. Contract management D. Writing SLAs and KPIs
32. A definition of buying or obtaining goods and services which are paid for is…..
A. Logistics C. Purchasing
B. Contracting D. Procurement
33. Where would the supply chain for a motor vehicle begin?
A. With the motor vehicle manufacturer C. With the first tier supplier
B. With the raw material supplier D. With the component supplier
34. Which of the following describes routine suppliers of an organisation?
A. High-cost impact and low-risk impact implications
B. High-cost impact and high risk implications
C. Low cost impact and low risk implications
D. Low cost impact and high risk implications
35. Which of the following describes the position of suppliers in the supply chain?
A. Upstream C. Downstream
B. Over-stream D. Below-stream
36. In team development, the stage at which members start to assert themselves and test out roles is known as
which of the following?
A. Preforming C. Forming
B. Storming D. Norming
37. Which of the following is a definition of the term ‘customer’?
A. A supplier of goods C. A supplier of services
B. An organisation or person that buys from a supplier D. A producer of raw materials
38. Which of the following defines a retailer?
A. A provider of goods and services C. A re-seller of only services
B. A producer of raw materials D. A producer of finished goods
39. Which of the following describes the characteristics of strategic suppliers?
A. High-cost impact and low-risk impact implications
B. High-cost impact and high risk implications
C. Low cost impact and low risk implications
D. Low cost impact and high risk implications
40. Which of the following can be defined as the ‘network of organisations involved in the creation and delivery
of products and services to the end user?
A. The customer delivery matrix C. The supply chain
B. The logistics system D. The distribution strategy

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 41. Which of the following is useful to provide assurance to the purchaser about quality and delivery performance
standards within a contract?
A. Service level agreement C. The five rights
B. Supply chain management D. Relationship management
42. Which of the following is physical distribution responsible for?
A. Flow of goods into production C. Flow of finished goods into stock
B. Flow of goods to the final customer D. Flow of goods upstream
43. Which of the following is a potential benefit to organisations when they ‘offshore’ their service functions?
A. Quality of services to customers may be reduced
B. Local suppliers will be protected from competition
C. Lower wage costs may be reduce costs of providing the service
D. Risk in the supply chain may be increased due to geographical distance
44. Which of the following is a driver for tiering an organisation’s supply base?
A. The org wishes to introduce new products for new markets
B. The org wishes to seek cost savings by buying from overseas sources
C. The org wishes to increase comp between the suppliers that it uses
D. The org wishes to develop long term relationships with key suppliers
45. Which of the following describe the nature of bottleneck suppliers of an organisation?
A. High-cost impact and low-risk impact implications
B. High-cost impact and high risk implications
C. Low cost impact and low risk implications
D. Low cost impact and high risk implications
46. Which of the following explains the role of second-tier suppliers in an org’s supply chain?
A. They supply goods and services to the org’s first tier suppliers
B. They supply goods and services directly to the org
C. They are suppliers that are not currently used by the org
D. They supply components to the org but not finished assemblies
47. Which of the following defines the term ‘consumer’ in a supply chain?
A. An organisation or person that buys from a supplier
B. The organisation or person that uses the final product
C. An organisation or person that produces a product
D. An organisation or person that buys and sells to others
48. Items that are used in the short term operations of a business and they enable the organisation to achieve the
day to day activities are referred to as which of the following?
A. Revenue purchases C. Capital purchases
B. Sourced purchases D. Valued purchases

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 49. Where would the supply chain for a motor vehicle begin?
A. With the motor vehicle manufacturer C. With the first tier supplier
B. With the raw material suppler D. With the component supplier
50. An implied term in a contract is….
A. Clearly stated and recognized in the contract between the supplier and buyer
B. An example of common law
C. A term that should be viewed in isolation
D. A vital term that can result in termination of a contract if breached
51. Once a high value contract has been awarded, the supplier should undertake which of the following actions?
A. The specification should be written and issued
B. Contract terms should be drafted and agreed
C. Competence to fulfill the contract must be confirmed
D. The upstream supply chain should be managed
52. Which of the following is materials management responsible for?
A. Flow of goods into production C. Flow of finished goods into stock
B. Flow of goods to the final customer D. Flow of goods upstream
53. Which of the following describes leverage suppliers?
A. High-cost impact and low-risk impact implications
B. High-cost impact and high risk implications
C. Low cost impact and low risk implications
D. Low cost impact and high risk implications
54. The contract manager within a buying organisation is responsible for which of the following?
A. Sourcing new suppliers C. Monitoring agreed performance
B. Negotiating revised prices D. Developing the specification
55. Which of the following processes aims to ensure parties in a supply agreement meet their obligation?
A. Contract management C. Materials handling
B. Supplier selection D. Competitive bidding
56. The purchasing of durable items that brings a long term value to an organisation is referred to as which of the
following?
A. Revenue purchases C. Capital purchases
B. Sourced purchases D. Valued purchases
57. Quality control manager in the organisation is responsible for which of the following activities?
A. Responsible for developing and maintaining supplier relationships
B. Responsible for looking after the inventory that comes into an organisation
C. Responsible for conducting checks on products coming into the warehouse to make sure they are fit
for purpose and are capable of doing what it is designed to do
D. Responsible for arranging the arrival and departure of goods into and out of an organisation

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 58. What type of purchase is an asset usually associated with?
A. A capital purchase C. A bargain purchase
B. An operational purchase D. An online purchase
59. Which of the following characteristics distinguishes services from goods?
A. A specification cannot be produced
B. A contract cannot be made for services
C. Consistency of quality is likely to be variable
D. Physical presence exists
60. Complete the sentence: products which are classified as direct supplies’…
A. Form part of the organisation’s end product
B. Are used to support the organisation generally
C. Include stationery and other head office items
D. Are also known as MRO supplies
61. Which of the following explains why services are described as inseparable?
A. Services cannot be stored for consumption at a future date
B. Services are produced and consumed simultaneously
C. Services lack physical substance and cannot be touched
D. Services delivers by people are difficulty to standardize
62. A manufacturer’s wholesaler could be described as which of the following?
A. Intermediary C. Internal customer
B. End consumer D. Subcontractor
63. Capital equipment can be defined as ……..
A. Goods used to repair and maintain machinery
B. Items which will always reduce in value over time
C. Services which are critical to running the organisation
D. Items which will become assets of the organisation
64. Which of the following contracts requires close expediting?
A. Low value routine items
B. Parts which are widely available form a range of suppliers
C. A critical component on which safety stocks are low
D. Items for which a large stock is already held
65. For a retail organisation, direct supplies are products for onward sale to which of the following?
A. Customers C. Wholesalers
B. Logistics providers D. Freight forwarders
66. TWL Banking Group is in which industry sector?
A. Production C. Tertiary
B. Secondary D. Primary

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 67. Products that an organisation uses for internal purposes, such as stationery are known as which types of
supplies?
A. Direct C. Capital
B. Indirect D. Services
68. Which of the following is a characteristic of a first-tier supplier to an organisation?
A. It has no direct commercial relationship with the organisation
B. It will supply the organisation based on a series of one-off transactional purchases
C. It must have the management capabilities to manage second tier suppliers efficiently
D. It supplies the organisation through a series of distributors or wholesalers
69. Products that an organisation uses for internal purpose such as stationery are known as which type of supplies?
A. Direct C. Capital
B. Indirect D. Services
70. Which of the following products would be categorized as an indirect supply?
A. Raw materials C. Capital equipment
B. Pens and paper D. Shirts for resale
71. Which of the following is a benefit of using a shared service department rather than outsourcing?
A. Confidentiality issues are avoided
B. Work is delegated to an external provider
C. There is no cost to the organisation
D. All delivery risks are avoided
72. The ‘make or buy’ decision relates to which of the following?
A. How many suppliers to use C. Where suppliers are located
B. What size of suppliers to use D. When to use suppliers
73. The most successful outsourcing contracts feature which of the following?
A. Many suppliers
B. Infrequent communication
C. Clear performance measures
D. Short-term contracts
74. Outsourcing creates which of the following results from the buyer’s perspective?
A. An increase in internal resource expertise
B. A higher level of control over the service
C. A higher dependency on the supplier
D. A reduction in supplier resources
75. An organisation that grows trees used in the production of pulp for the paper industry is an example from
which sector?
A. Primary C. Tertiary
B. Retail D. Secondary

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 76. Which of the following can occur as a direct consequence of outsourcing?
A. In-house knowledge is improved
B. Internal staff numbers will increase
C. Assets are removed from the balance sheet
D. Competitors will exit the market
77. Which of the following statements is correct?
A. By standardizing equipment, the cost of spare parts and cost of holding different parts is reduced
B. Obtaining multiple supplier quotes prior to placing an order is known as value analysis
C. Cost transparency involves a buyer revealing a suppliers’ price to other suppliers
D. Outsourcing means the transfer of a contract to a new supplier at the end of the contract period
78. Which of the following represents a benefit of outsourcing the logistics function?
A. Zero risk attached to supply activities
B. Guaranteed on time deliveries
C. Management information not required
D. Increased flexibility if demand varies
79. Which of the following is a common reason why outsourcing contracts might fail?
A. Lack of clearly defined KPIs and SLAs
B. Inability to identify a supplier
C. Failure to agree terms and conditions
D. Pricing has not been agreed by procurement
80. Traditionally, companies have outsources which of the following types of activities?
A. Threshold C. Strategic
B. Critical D. Non-core
81. Which of the following is a pre-award stage of the sourcing process?
A. Producing specifications C. Receiving deliveries from suppliers
B. Expediting deliveries D. Payment of supplier
82. TPP Manufacturing Group is unhappy with the service it has received from its outsourced logistics supplier.
It is now bringing the function back in-house. This is known as which of the following?
A. Insourcing C. Sub-contracting
B. Reverse engineering D. Direct marketing
83. Which of the following is a characteristic of primary industry?
A. It transforms raw materials into components C. It has no choice of location
B. It is only involved in delivering services D. It does not make a profit
84. Services providers are placed in which of the following industry sector
A. Retail C. Primary
B. Tertiary D. Secondary

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 85. Which of the following describes the term ‘value for money’?
A. The achievement of lowest cost of product or materials available in the market
B. The evaluation of offers received form at least three different suppliers
C. The research undertaken to establish the best quality products available
D. The most appropriate balance of costs and quality that meet customer requirements
86. Which of the following is a disadvantage of outsourcing an organization’s critical services?
A. Reduced levels of stakeholder engagement
B. Increased staff numbers are required
C. Loss of in-house expertise
D. Increased fixed costs for the purchasing organisation
87. In the purchasing department, which of the following is responsible for finding, researching, evaluating and
engaging suppliers to obtain the most competitive price for an identified need?
A. Sourcing manager C. Purchase order administrators
B. Inventory control D. Quality control
88. Which of the following is a distinctive feature of procurement in the retail sector?
A. Goods are purchased and sold to customers without making a profit
B. Goods are extracted from a natural source then sold to manufacturers
C. Goods are bought and the resold with little or no work done to them
D. Goods are acquired to use in the production process before resale
89. Amax Mining Corporation specializes in mineral extraction. It operates within which of the following?
A. Secondary industry C. Primary industry
B. Tertiary industry D. Services industry
90. What is the output of a manufacturing company?
A. High-quality services C. Tangible products to sell to customers
B. Public accountability and audits D. A well-educated workforce
91. The ‘optimum combination of whole life cost and required quality’ necessary to meet customers’ requirements
is a definition of which of the following terms?
A. Value analysis C. Value for money
B. Total cost of acquisition D. Comparative excellence
92. Which of the following statements is true? An external customer….
A. Is a department in the supplier’s org
B. Had a contract with its suppliers
C. Generally has no choice of supplier
D. Will produce goods 4 the supplier
93. Which of the following is a measure of purchasing effectiveness?
A. Impact on profitability C. Type of organizational structure
B. Cost of placing an order D. Speed of transaction processing

KCM 10
 94. Which of the following is used by procurement to contribute to sustainable consumption?
A. Cost reduction C. Global sourcing
B. Ethical sourcing D. Contract management
95. Which of the following terms is used to describe the purchasing activity that involves the identification,
appraisal and selection of suppliers?
A. Standardization C. Sourcing
B. Sustainability D. Servicing
96. The person is responsible for everything that may happen within the purchasing department and is in charge
of the overall procurement strategy is referred to as which of the following?
A. Procurement and supply C. Director Sourcing manager
B. Supplier relationship manager D. Quality control
97. Which of the following is a characteristic of external customers? External customers:
A. Have no legal contract with suppliers
B. Are less important than internal customers
C. Have a choice of suppliers in the market
D. Are part of the buyer’s organisation
98. Which of the following forms of globalization allows firms to sell their products worldwide with little
modification?
A. Economic globalization C. Outsourced globalization
B. Sustainable globalization D. Market globalization
99. Which of the following is a cost factor that acts as a driver for globalization in an industry?
A. The need to make products and services available to customers worldwide
B. The need to achieve economies of scale
C. The need to implement e-sourcing throughout the supply chain
D. The need to meet objectives for ethical trading
100. If a purchase pattern is: Day 1 identify need, Day 2 prepare specification, Day 10 select supplier, Day 12
issue electronic purchase order, Day 17 goods dispatched, Day 19 delivery received, Day 21 invoice received,
which of the following represents the external lead time?
A. 19 days C. 12 days
B. 7 days D. 9 days
101. In the drivers for globalisation, which of the following would be a factor influenced by government?
A. Improvement in technology C. Sourcing efficiencies
B. Trade policies D. Economies of scale
102. Complete the following sentence. ‘When evaluating supplier’s quotations, the buyer will take into account
the supplier’s delivery …..time’.
A. Lag C. Loss
B. Lead D. Logistics

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 103. Why might some people oppose globalization?
A. It increases employment in developed countries
B. It encourages exploitation of labour in developing countries
C. It enables small businesses to compete with large organisations
D. It creates and emphasizes cultural differences
104. Supplier management looks at the relationship between buyer and supplier, but what does supply chain
management look at?
A. The interaction and linkages between orgs in a supply chain
B. Only the relationship between buyer and the customer
C. Only the interactions between the buyer and internal stakeholders
D. The electronic linkages formed by intranets and extranets
105. Which of the following would be a technology factor in the drive for globalization?
A. Wider use of the internet and email C. Availability of standard parts
B. Increased competition D. Customer demand for wider variety
106. Which type of ‘driver’ for globalization would describe the need to achieve economies of scale for an
organisation?
A. Technology C. Market
B. Government D. Cost
107. Why would an original equipment manufacturer choose to adopt tiering of its suppliers?
A. To increase its number of customers
B. To increase its number of suppliers
C. To develop a few key long term supplier relationships
D. To increase the variety of components used
108. Which of the following would be a benefit of adopting a supply chain approach in the business?
A. Access to new technology
B. A need to reduce control in the system
C. Increased complexity of communication
D. Longer lead times
109. An actual cost that is higher than budget cost, results in which of the following?
A. Positive difference C. Standard pricing
B. Favorable gap D. Adverse variance
110. Which of the following is used to balance the cost of acquiring stock against the cost of holding stock?
A. Economic order quantity C. Just in time
B. Demand forecasting analysis D. Bill of materials
111. Which of the following is a criterion used to appraise potential suppliers?
A. Centralized purchasing C. Contract documentation
B. Cost-plus pricing D. Cultural compatibility

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 112. Which of the following statements is true?
A. Purchase price and total acquisition cost are the same
B. Total cost of acquisition is always higher than the purchase price
C. Total cost of acquisition does not include the purchase price
D. Total cost of acquisition is higher than purchase price
113. Which of the following provides a summary of the ‘total cost of ownership’ of a product?
A. Cost of supplier sourcing, cost of appraisal, supplier price, installation cost, finance cost
B. Original purchase price, less eventual costs associated with disposal
C. Supplier price, cost of acquisition, cost of operation and maintenance, cost or income from disposal
D. The total payments on hire or leasing contract for the period covered plus the cost of installation
114. Which of the following explains the difference between a buyer’s efficiency and effectiveness?
A. Efficiency is about how well a buyer performs. Effectiveness deals with speed, administrative costs
and use of resources
B. Efficiency is made up of measurable elements. Effectiveness cannot be monitored and measured
C. Efficiency deals with buyer work relating to supplier performance. Effectiveness deals with buyer
performance
D. Efficiency deals with speed, administrative costs and use of resources. Effectiveness deals with how
well tasks are performed
115. Which of the following is a recognized reason for ‘pre-qualification questionnaires’?
A. To agree prices and terms and conditions of contract with a supplier
B. To agree a delivery schedule and key performance indicators with potential suppliers
C. To find out the list price and availability of products from a supplier
D. To find out the suitability, capacity and capability of potential suppliers
116. How can the lead buyer approach be described?
A. The head of the purchasing function carries out all procurement
B. Individual buyers manage the procurement of specific categories
C. Defined purchasing responsibilities are delegated to user departments
D. The management of the supplier performance by a member of the purchasing function
117. The type of procurement structure that is best for achieving economies of scale is…..
A. Decentralized C. CLAN
B. Hybrid D. Centralized
118. Which of the following is recommended good practice when a buyer is preparing to negotiate with a supplier
in another country?
A. Assuming that technical standards will be the same in both countries
B. Expecting that the other party will speak the buyer’s language
C. Presuming that the other party will be prepared to accept the buyer’s currency
D. Studying the culture of the other country in advance

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 119. An advantage of centralizing the procurement function is that it allows procurement staff to do what?
A. Give users greater freedom in the selection of suppliers
B. Provide quicker response to local user needs
C. Standardize procurement procedures and specifications
D. Develop greater knowledge of locally based suppliers
120. Which of the following is a challenge for procurement staff when buying from the tertiary sector?
A. Highly detailed specifications C. Intangibility of services
B. Fluctuating crop prices D. Availability of storage space
121. Which of the following are the traditional FIVE rights of purchasing?
A. Quality Quantity Place Terms Price
B. Source Quantity Place Time Price
C. Quality Quantity Place Time Price
D. Specification, Quantity Place Time Price
122. Complete the following sentence: The total time taken to process a requirement from identification of need
to issue of purchasing order is called…
A. Total lead time C. Compliance lead time
B. Internal lead time D. External lead time
123. Which of the following defines ‘internal lead time’?
A. The time between identification of need and delivery from the supplier
B. The time between order receipt and dispatch of the goods
C. The time between order receipt and delivery of the goods
D. The time between identification of need and the issue of a purchase order
124. Which of the following is a measure of purchasing efficiency?
A. Quality of customer service
B. Achieving objectives within budget
C. Quality of supplier relationships
D. Cost of placing an order
125. Which of the following reasons explains why an organisation might need to use suppliers?
A. The organisation itself cannot supply everything it requires
B. The suppliers competencies for producing the goods are low
C. The organisation needs to increase the total cost of ownership
D. The suppliers cannot maximize profits without delivering goods
126. Which of the following statements is true in regard to direct purchases?
A. In many manufacturing organisations it is a low proportion of the total external spend
B. Direct purchases are only made when required without holding stocks
C. Direct purchases do not need to be stocked as they are readily available
D. In many manufacturing organisations, it is high proportion of external spend

KCM 14
 127. The serial number on a requisition:
A. Is optional and may be added only in a few cases
B. Provides a unique identification for user and purchasing
C. Is always made up of both letters and numbers
D. Should be at least 11 characters long
128. Which of the following is best practice when damaged or poor quality goods are identified at inspection
stage?
A. Cancel the contract and return all items until the problem is corrected
B. Scrap the items, deducting any additional costs from any payment due
C. Isolate the parts affected, contact the supplier to agree on how to resolve the problem
D. Deduct the amount involved from the supplier’s invoice when it is presented
129. Which of the following processes describes what occurs when an individual or family member become
indebted to an organisation and has to work to pay of that debt?
A. Bonded labour C. Exploitative labour
B. Formal labour D. Informal labour
130. When a requisition is originated, which of the following should happen in all cases before it is passed to
purchasing?
A. Appropriate terms and conditions need to be provided
B. It must be signed by an authorised individual to whom the budget holder is responsible
C. Supplier details and details of quotes must be completed
D. Previous supplier performance must be documented
131. What will be found in a bill of materials?
A. Invoices for material subcomponents
B. Components and parts required by the end product
C. Stock on hand of each component
D. A detailed list of all materials on order
132. One party in a contract may refuse to pay for goods if:
A. The goods are faulty when received
B. The goods are exactly as specified in the contract
C. The buyer changes his view of the quantity required
D. The buyer thinks after goods are received that the agreed price was too high
133. Which of the following documents is provided by a supplier to provide price and product availability?
A. Requisition C. Specification
B. Quotation D. Invitation to tender
134. Which of the following documents is prepared and provided in the buying organisation
A. Order acknowledgement C. Goods received note
B. Delivery note D. Consignment note

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 135. Speed of transaction processing by purchasing is a measure of:
A. Elasticity C. Efficiency
B. Effectiveness D. Engagement
136. A contract with a supplier must be based on:
A. A clear offer and acceptance C. A seal of approval
B. Detailed terms and conditions D. A written document
137. In which of the following situations will a buyer need to undertake enquiries with a range of potential
suppliers?
A. Where the item is new and is high value
B. Where a ‘call-off contract’ is in operation
C. Where a ‘blanket order’ is in operation
D. Where a system of vendor managed inventory is in use
138. Which of the following documents is provided by a supplier with the goods?
A. Delivery note C. Order acknowledgment
B. Requisition form D. Credit note
139. The following statement “the bid management and decision regarding the winner of a tender should ideally
be undertaken by one staff member’ is …..
A. False, because a single staff member should not have total control over the tender
B. True, because there is no need to involve anyone else in the decision
C. True, because only one staff member is able to understand the bids
D. False, because different staff members will want to ensure they can change he results
140. Which of the following is an example of a ‘conformance specification’?
A. A specification stating the required levels of achievement for the product or service
B. A specification containing key performance indicators
C. A specification that is used only for service contracts
D. A specification which includes requirements to meet stated industry or international standards
141. Which of the following is a commercial document issued by the buyer to the supplier confirming the types
of quantities of the goods which are required?
A. Advice note C. Invoice
B. Purchase order D. Goods received note
142. At which of the following stages is it ‘best practice’ to first issue detailed specifications to a supplier in a
tender process?
A. When sending the invitation to tender documents
B. When placing the order with the successful bidder
C. When requested by a supplier that is bidding
D. At request of the existing supplier, prior to advertising a tender

KCM 16
 143. Which of the following is ‘best practice’ to ensure that new supplier invoices presented are complete?
A. Issue an information pack to all suppliers with details required
B. Ignore an invoice which does not comply with company procedures
C. Deduct an administration charge for information missed
D. Delay payment until the following month
144. Which of the following explains the use of ‘key performance indicators’?
A. Price market research information compared to chosen supplier price to ensure value for money
B. Explanations of delivery times and days that have been agreed between the buyer and supplier
C. Performance measurements included in a contract to check that requirements have been met
D. Quality related dimensions and testing methods to be check by the supplier before supply
145. The document at the start of the formal purchasing process is:
A. The supplier’s invoice C. The purchase order
B. The goods received note D. The purchase requisition
146. Debriefing, following contract award, will enable:
A. The buyer to apportion blame between the successful tendering organisation before contract award
B. The supplier to conduct a process of legal action against the buyer
C. Unsuccessful tenderers to be consulted, to enable improvement for future bidding
D. Successful suppliers to increase their prices prior to the final award of contract
147. Which of the following is correct for the ‘Excerption reporting’ of suppliers performance?
A. Ensure attention is focused on areas that have the most need
B. Should be applied to all aspects of contracts
C. Is only relevant for capital equipment purchases
D. Greatly increases purchasing administration costs
148. Which of the following documents is used for the same purposes as a bill of materials?
A. The supplier’s invoice C. The purchase order
B. The goods received note D. The purchase requisition
149. Before an invoice is paid, to complete a transaction, the Finance Department will match it with the GRN and
which of the following?
A. Purchase order C. Purchase requisition
B. Specification D. Terms and conditions
150. At which of the following stages is vendor rating undertaken?
A. Expediting deliveries C. Payment of suppliers
B. Reviewing outcomes and processes D. Assessing suppliers’ quotations
151. Expediting should be a priority on which types of contracts? Where the components are:
A. Already held by the buying organisation in stock C. Critical to the production process
B. Used infrequently in the manufacturing process D. Supplied by an existing supplier

KCM 17
 152. An issued invoice creates which of the following?
A. A purchase order C. A delivery note
B. An account receivable D. An advice note
153. When awarding contracts following a tender, it is good to do which of the following?
A. Ask all bidders to reduce their bids
B. Advise some bidders who else is being asked to quote
C. Advise all bidders of the award decision
D. Ask bidders to discuss their proposed bids with each other
154. In which of the following situations is the creation of contract specific key performance indicators justified?
A. For a product which has a specification provided by a supplier
B. Where routine low-value purchases are required on a regular basis
C. Where the buyer has no experience of the products to be purchased
D. For a complex, high value, new-buy contract
155. A performance specification includes….
A. Details of the use of the product by the buyer on receipt
B. Drawings showing the construction of the product
C. The chemical composition of the product and its components
D. A list of standards to which the product’s design relates
156. Which of the following explains why an ‘order acknowledgement’ is requested when purchase orders are
issued?
A. To ensure the requisitioner is updated by the budget holder
B. To obtain confirmation that the order has been accepted
C. To allow the invoice to be checked
D. To authorise the purchase and ensure budgets are monitored
157. Which of the following describes the operation of procedure manuals?
A. They should never change
B. They should be flexible enough to allow for updates
C. They should only be stored on paper copies
D. They should only be accessed by senior management
158. Which of the following should the expediter avoid?
A. Direct contact with suppliers
B. Asking for notification of dispatch of goods
C. Reviewing project schedules
D. Micro-managing the supplier
159. Which of the following is defined as the right to exercise power in a particular context?
A. Responsibility C. Accountability
B. Authority D. Expediting

KCM 18
 160. Which of the following is a recognized reason for ‘pre-qualification questionnaires’?
A. To agree prices and terms and conditions of contract with a supplier
B. To agree a delivery schedule and key performance indicators with potential suppliers
C. To find out the list price and availability of products from a supplier
D. To find out the suitability, capacity and capability of potential suppliers
161. Which of the following best explains the ‘open tendering’ procurement method?
A. More than two previously used suppliers are contacted and compete for the requisition
B. The tender contract to be used does not have a finishing date and will continue forever
C. A tender that has a transparent cost accounting requirement with all costs and profits associated to the
buyer
D. A tender that is widely advertised in order to attract a large range of potential suppliers
162. An express term in a contract is….
A. Clearly stated and recognized in the contract between the supplier and buyer
B. An example of common law
C. A term that should be viewed in isolation
D. A vital term that can result in termination of a contract if breached
163. How might an expediter solve or even avoid problems?
A. Remain focused on the specification
B. Be familiar with the terms and conditions
C. Regular communication with suppliers
D. Identify internal stakeholders
164. What is the purpose of field expediting? To:
A. Help the supplier manufacture the goods C. Inspect the goods on site
B. Conduct primary research on the supplier D. Negotiate price reductions
165. The process through which purchasing departments evaluate the post-contract performance of the supplier
base can be defined as……
A. Vendor appraisal C. Vendor sourcing
B. Vendor management D. Vendor rating
166. What is a key post-award phase activity?
A. The sourcing process C. Placing the contract order
B. Contract management D. Writing SLA and KPIs
167. Which of the following describes a ‘pre-qualified supplier’ in a competitive bidding process?
A. A supplier whose capabilities have already been appraised by the buyer’s organisation
B. A supplier with which the buyer’s organisation has previously done business
C. A supplier that has expressed an interest in doing business with the buyer’s organisation
D. A potential supplier that has a good reputation for supplying high quality products

KCM 19
 168. What is a term used to describe the standard processes to be followed by a buyer when procuring goods and
services?
A. Procedures manual C. Contracts register
B. Inventory control book D. ISO14001 handbook
169. According to Tuckman’s stages of team development, at which stage does the team start to settle down and
agree how to share work?
A. Storming C. Performing
B. Norming D. Forming
170. Which of the following builds cohesion among groups of people at work?
A. Qualitative targets C. Team identity
B. Power imbalance D. Group norms
171. Which of the following describes a team?
A. A group of individuals sharing common goals
B. All parties with an interest in an organisation
C. Staff working for the same organisation
D. An organisation’s approved suppliers
172. One reason for the separation of duties in the purchasing administration is to:
A. Allow the use of multiple complex IT systems in supplier communication
B. Reduce the reliance on paper based systems
C. Try to prevent fraud and errors occurring
D. Provide one person with overall control and responsibility
173. Key performance indicators in a contract:
A. Are only required on service contract for labour
B. Are optional items added by the buyer after negotiations
C. Can be disregarded in most contracts
D. Are how it is identified whether a contract requirement is met
174. Which of the following best explains the ‘open tendering’ procurement method?
A. More than two previously used suppliers are contacted and compete for the requisition
B. The tender contract to be used does not have a finishing date and will continue forever
C. A tender that has a transparent cost accounting requirement with all costs and profits associated to the
buyer
D. A tender that is widely advertised in order to attract a large range of potential suppliers
175. When analyzing tenders it is necessary to…
A. Compare the logo and design of the supplier’s document
B. Check the arithmetic accuracy of each tender
C. Reject all tenders that are difficult to read
D. Send a detailed copy of all supplier tenders received to other suppliers

KCM 20
 176. Which of the following is true if an organisation has an ‘automated purchasing process’?
A. It has eliminated potential fraud
B. It has the best deals with suppliers
C. It has eliminated errors in supplier selection
D. It has potentially more efficient operations
177. In a typical tender process, which of the following is sent from a buying organisation to potential suppliers
before bids are prepared?
A. Tender purchase order C. Invitation to tender
B. Request for tender information D. Tender analysis table
178. A pre-qualification questionnaire (PQQ) is used to:
A. Authorise payment to suppliers
B. Assess the resources and capabilities of a supplier
C. Confirm receipt of goods from the supplier
D. Acknowledge the buyer’s order by the supplier
179. Which of the following is a purpose of an ‘authorisation hierarchy’ within a purchasing department?
A. To match invoices to goods received notes
B. To enter details of invoices received on a computer system
C. To deal with feedback from requisitioners following receipt of goods
D. To add rigour to the purchase process and reduce the risk of fraud
180. Which of the following is defined as the right to exercise power in a particular context?
A. Responsibility C. Accountability
B. Authority D. Expediting
181. Jake has a meeting with a key supplier which is finding it difficult to achieve the required performance
standards. He shows genuine concern because he realizes the targets set were unrealistic. Jake is showing:
A. Empathy C. Authority
B. Sympathy D. Compromise
182. An organisation has some buyers with ‘authority to make purchases up to $10 000 without requiring higher
level approval’. Which of the following statements is correct?
A. The buyers are likely to be more efficient but are fully responsible for their decisions
B. The buyers can purchase from suppliers they choose without having to follow purchasing procedures
C. The buyers can make better buying decisions by not having to gain authorisation
D. The buyers are more likely to ignore the requisitioner when making purchase decisions
183. Which of the following statements is true?
A. An organisation can avoid ethical responsibility when it has a published ethical code
B. A buyer is not responsible for ‘ethical purchasing’
C. Buyers should ensure that suppliers meet required ethical standards before placing a contract
D. Suppliers should be free to operate without the additional cost of ethical responsibility

KCM 21
 184. Which of the following follows ‘best practice’ for dealing with ethics inside an organisation?
A. Establish written standards of conduct, train staff and monitor to ensure compliance
B. Identify poor ethical performance as part of appraisal system, encourage discussions
C. Ensure that all purchases are reviewed by at least two staff prior to contract issue
D. Ensure that the supplier’s name is correctly written on the purchase order
185. Which of the following is an appropriate way of behaving to competitors?
A. No contact should take place as this is unethical
B. A professional relationship is beneficial as it could support market information
C. Customer information can be traded for mutual benefit
D. Sharing pricing information can be beneficial and a joint approach agreed
186. Which of the following is an appropriate means to discuss internal buyer compliance with ethical standards?
A. Trade press articles C. An ethics forum
B. An internet ‘blog’ D. A company newsletter
187. Which of the following would be considered as unethical behavior by a buyer?
A. Obtaining pre-tender supplier information from bidders
B. Expecting information regarding supplier ethics
C. Giving a supplier’s prices to another supplier
D. Expecting to negotiate quantity discounts from suppliers
188. Which of the following explains a ‘conflict of interest ‘situation?
A. Where a buyer has a close personal relationship to a supplier
B. Where the buyer has difficulty in deciding between suppliers
C. Where a buyer wants better prices and better quality
D. Where the buyer receives unfair clams for late service payment
189. Which of the following is covered in CIPS code of ethics?
A. Members must not request quotes from more than four suppliers
B. Members must agree to use international conventions
C. Members must not use information received for personal gain
D. Member can only purchase from suppliers with an ethical policy
190. Which of the following explains the result of unethical behavior of an organisation?
A. The organisation will change the public statements of compliance
B. Short term profit will be followed by loss of customer trust
C. The company will face court proceedings for its actions
D. More suppliers will offer products at a reduced cost to the organisation
191. Which of the following describes cases where employers use their employees to their own advantage and
treat them unfairly?
A. Bonded labour C. Exploitative labour
B. Formal labour D. Informal labour

KCM 22
 192. Which of the following statements is true?
A. Ethical issues are best addressed by meeting legal requirements
B. Quality standards do not have links to legal requirements
C. Fair trade compliance is a legal requirement
D. Ethical responsibilities of organisations extend to the full supply chain
193. Which of the following policies would help to ensure good governance in procurement?
A. Permitting user departments to place all their own purchase orders with suppliers
B. Defining levels of authority for procurement and other staff
C. Permitting staff to place purchase orders with suppliers in which they have a financial interest
D. Permitting user departments to authorise changes to contracts without reference to procurement
194. Which of the following explains why specific procurement governance controls are necessary?
A. Buyers have influence over high cost and high risk decisions
B. They are required to prove lowest costs are always met
C. Buyers need to avoid personal responsibility for decisions
D. They are required to meet insurance terms and conditions
195. Which of the following is assessed to confirm that a supplier is following ‘fair trade’ principles?
A. Ensuing that products are the least expensive available
B. Ensuring suppliers have ISO9000-type accreditation
C. Ensuring suppliers have proven equal opportunities policies
D. Ensuring the supplier is responsible for any delays in receipt of goods
196. Which of the following describes the term ‘corporate governance’?
A. The reports produced by organisations on an annual basis to comment on compliance with regulations
B. Systems used by organisations to choose suppliers and set purchasing policies
C. The way in which shareholders are involved with major decisions of companies
D. Systems used by organisations to meet ethical and stakeholder responsibilities
197. Allowing non-purchasers to order products is good practice. This statement is….
A. False, because control and authority for all purchases must be held by purchases
B. False, because only purchasing staff have technical knowledge of products
C. True, because time is saved for authorised pre-assessed suppliers and products
D. True, because problems will not be the responsibility of purchasing staff
198. Which of the following is true?
A. Organisations can rely on suppliers to only provide products which comply with legal requirements
B. Organisations are not responsible for product safety if their products are sold in countries with different
laws
C. Organisations are not required to check the specifications bought in
D. Organisations are responsible for product safety no matter what supplier arrangements apply

KCM 23
 199. Which of the following is an example of a mechanism for corporate governance in procurement and supply?
A. Service level agreements for suppliers
B. Stakeholder management communication plan
C. Level of delegated authority
D. Staff training and development plans
200. Which of the following is featured in the code of labour practice under ethical issues?
A. No harsh or inhumane treatment is allowed
B. All international buyers must obtain an ETI certificate
C. All countries must have laws which meet the code requirements
D. No organisation should take advantage of a supplier by delaying payment

KCM 24
Here are the correct answers to the procurement questions:

1. *Which of the following terms below is not directly associated with procurement?*

*D. Human resources*

2. *Value for money is about considering:*

*B. All associated costs*

3. *Performing a task competently with the least amount of waste and in the shortest amount of time is
a definition of:*

*B. Efficiency*

4. *CAPEX and OPEX are types of:*

*A. Budgets*

5. *TCO stands for:*

*C. Total cost of ownership*

6. *Value for money can be presented by the 3Es. What are the three E’s?*

*A. Efficiency, economy, effectiveness*

7. *The decision as to whether an organization manufactures its own products or outsources the
requirement is referred to as:*

*A. The make-or-buy decision*

8. *Services are referred to as what type of procurement?*

*C. Intangible*

9. *SCM stands for:*

 *D. Supply chain management*

10. *Which of the following is the correct sequence in the downstream retail supply chain?*

*B. Producer / Wholesaler / Retailer / Consumer*

Here are the correct answers to the additional procurement questions:

11. *Customers and consumers are:*

*B. Sometimes the same*

12. *Which type of specification could take the form of a recipe for a chemical formula?*

*B. Conformance*

13. *RFQ stands for:*

*A. Request for quotation*

14. *Ray Carter’s 10 Cs can be used for:*

*C. Assessing quotations*

15. *Managing resources, including people and processes, and efficiently distributing relevant
information is a definition of:*

*A. Administration*

16. *Complete the team work model: forming, storming, norming:*

*B. Performing*

17. *What document should be requested from a supplier if an invoice shows too many products have
been charged for against the delivery note?*

*D. A credit note*

18. *Which code should procurement professionals follow at all times?*

*A. CIPS Code of ethics*

19. *What is bonded labor an example of?*

*A. Modern-day slavery*

20. *The policies and principles by which an organization is controlled is referred to as:*

*C. Corporate governance*

21. *The top-level purchaser in a tiered system can have some influence on which of the following?*

*D. All levels in the supply chain*

Here are the answers to the procurement questions:

22. *Complete the following sentence. Buyers can ensure that customer quality requirements for
services are met throughout the supply chain by using…..*

*D. Service level agreements*

23. *Reviewing a supplier’s code of ethics, CSR policies, and corporate governance is part of:*

*D. Supplier evaluation*

24. *Which of the following might be defined as ‘obtaining goods or services by buying, leasing, hiring,
or borrowing’?*

*C. Procurement*

25. *Which of the following might procurement identify as a possible reason for excess costs in the
supply chain?*

*B. Over-specification*

26. *Which of the following is a definition of the ‘supply chain’?*

 *B. The network of organizations involved in the creation and delivery of products and services to the
end user*

27. *From the buyer’s perspective, the aim of effective supply chains is to achieve which of the
following?*

*B. Added value for customers*

28. *Which of the following describes the position in the supply chain of an end user in relation to a
manufacturer?*

*D. Downstream*

29. *Which of the following defines the term ‘supplier management’?*

*B. The management of the relationships between a buying firm and its immediate suppliers in the
supply chain*

30. *Which of the following is a benefit of tiering within an organization’s supply chains?*

*A. Fewer and improved commercial relationships*

Here are the correct answers to the additional procurement questions:

31. *Which of the following describes a key post-award activity?*

*B. Contract management*

32. *A definition of buying or obtaining goods and services which are paid for is…..*

*C. Purchasing*

33. *Where would the supply chain for a motor vehicle begin?*

*B. With the raw material supplier*

34. *Which of the following describes routine suppliers of an organization?*

*C. Low cost impact and low risk implications*

35. *Which of the following describes the position of suppliers in the supply chain?*

*A. Upstream*

36. *In team development, the stage at which members start to assert themselves and test out roles is
known as which of the following?*

*B. Storming*

37. *Which of the following is a definition of the term ‘customer’?*

*B. An organization or person that buys from a supplier*

38. *Which of the following defines a retailer?*

*A. A provider of goods and services*

39. *Which of the following describes the characteristics of strategic suppliers?*

*B. High-cost impact and high-risk implications*

40. *Which of the following can be defined as the ‘network of organizations involved in the creation and
delivery of products and services to the end user?*

*C. The supply chain*

Here are the answers to the additional procurement questions:

41. *Which of the following is useful to provide assurance to the purchaser about quality and delivery
performance standards within a contract?*

*A. Service level agreement*

42. *Which of the following is physical distribution responsible for?*

*B. Flow of goods to the final customer*

43. *Which of the following is a potential benefit to organizations when they ‘offshore’ their service
functions?*

*C. Lower wage costs may reduce costs of providing the service*

44. *Which of the following is a driver for tiering an organization’s supply base?*

*D. The organization wishes to develop long-term relationships with key suppliers*

45. *Which of the following describes the nature of bottleneck suppliers of an organization?*

*D. Low cost impact and high-risk implications*

46. *Which of the following explains the role of second-tier suppliers in an organization’s supply chain?*

*A. They supply goods and services to the organization’s first-tier suppliers*

47. *Which of the following defines the term ‘consumer’ in a supply chain?*

*B. The organization or person that uses the final product*

48. *Items that are used in the short-term operations of a business and they enable the organization to
achieve the day-to-day activities are referred to as which of the following?*

*A. Revenue purchases*

Here are the answers to the latest set of procurement questions:

58. *What type of purchase is an asset usually associated with?*

*A. A capital purchase*

59. *Which of the following characteristics distinguishes services from goods?*

*C. Consistency of quality is likely to be variable*

60. *Complete the sentence: products which are classified as ‘direct supplies’…*

*A. Form part of the organization’s end product*

61. *Which of the following explains why services are described as inseparable?*

*B. Services are produced and consumed simultaneously*

62. *A manufacturer’s wholesaler could be described as which of the following?*

*A. Intermediary*

63. *Capital equipment can be defined as…*

*D. Items which will become assets of the organization*

64. *Which of the following contracts requires close expediting?*

*C. A critical component on which safety stocks are low*

65. *For a retail organization, direct supplies are products for onward sale to which of the following?*

*A. Customers*

66. *TWL Banking Group is in which industry sector?*

*C. Tertiary*

Here are the answers to your latest set of procurement questions:

67. *Products that an organization uses for internal purposes, such as stationery, are known as which
types of supplies?*

*B. Indirect*

68. *Which of the following is a characteristic of a first-tier supplier to an organization?*

*C. It must have the management capabilities to manage second-tier suppliers efficiently*

69. *Products that an organization uses for internal purposes, such as stationery, are known as which
type of supplies?*
 *B. Indirect*

70. *Which of the following products would be categorized as an indirect supply?*

*B. Pens and paper*

71. *Which of the following is a benefit of using a shared service department rather than outsourcing?*

*A. Confidentiality issues are avoided*

72. *The ‘make or buy’ decision relates to which of the following?*

*D. When to use suppliers*

73. *The most successful outsourcing contracts feature which of the following?*

*C. Clear performance measures*

74. *Outsourcing creates which of the following results from the buyer’s perspective?*

*C. A higher dependency on the supplier*

75. *An organization that grows trees used in the production of pulp for the paper industry is an example
from which sector?*

*A. Primary*

Here are the answers to your latest set of procurement and supply chain questions:

76. *Which of the following can occur as a direct consequence of outsourcing?*

*C. Assets are removed from the balance sheet*

77. *Which of the following statements is correct?*

*A. By standardizing equipment, the cost of spare parts and cost of holding different parts is reduced*

78. *Which of the following represents a benefit of outsourcing the logistics function?*
 *D. Increased flexibility if demand varies*

79. *Which of the following is a common reason why outsourcing contracts might fail?*

*A. Lack of clearly defined KPIs and SLAs*

80. *Traditionally, companies have outsourced which of the following types of activities?*

*D. Non-core*

81. *Which of the following is a pre-award stage of the sourcing process?*

*A. Producing specifications*

82. *TPP Manufacturing Group is unhappy with the service it has received from its outsourced logistics
supplier. It is now bringing the function back in-house. This is known as which of the following?*

*A. Insourcing*

83. *Which of the following is a characteristic of primary industry?*

*A. It transforms raw materials into components*

84. *Service providers are placed in which of the following industry sectors?*

*B. Tertiary*

Here are the answers to your latest questions:

85. *Which of the following describes the term ‘value for money’?*

*D. The most appropriate balance of costs and quality that meet customer requirements*

86. *Which of the following is a disadvantage of outsourcing an organization’s critical services?*

*C. Loss of in-house expertise*

87. *In the purchasing department, which of the following is responsible for finding, researching,
evaluating, and engaging suppliers to obtain the most competitive price for an identified need?*

*A. Sourcing manager*

88. *Which of the following is a distinctive feature of procurement in the retail sector?*

*C. Goods are bought and then resold with little or no work done to them*

89. *Amax Mining Corporation specializes in mineral extraction. It operates within which of the
following?*

*C. Primary industry*

90. *What is the output of a manufacturing company?*

*C. Tangible products to sell to customers*

91. *The ‘optimum combination of whole life cost and required quality’ necessary to meet customers’
requirements is a definition of which of the following terms?*

*C. Value for money*

92. *Which of the following statements is true? An external customer…*

*B. Had a contract with its suppliers*

93. *Which of the following is a measure of purchasing effectiveness?*

*A. Impact on profitability*

Here are the answers:

94. *Which of the following is used by procurement to contribute to sustainable consumption?*

*B. Ethical sourcing*

95. *Which of the following terms is used to describe the purchasing activity that involves the
identification, appraisal, and selection of suppliers?*
 *C. Sourcing*

96. *The person responsible for everything that may happen within the purchasing department and is in
charge of the overall procurement strategy is referred to as which of the following?*

*C. Director*

97. *Which of the following is a characteristic of external customers? External customers:*

*C. Have a choice of suppliers in the market*

98. *Which of the following forms of globalization allows firms to sell their products worldwide with little
modification?*

*D. Market globalization*

99. *Which of the following is a cost factor that acts as a driver for globalization in an industry?*

*B. The need to achieve economies of scale*

100. *If a purchase pattern is: Day 1 identify need, Day 2 prepare specification, Day 10 select supplier,
Day 12 issue electronic purchase order, Day 17 goods dispatched, Day 19 delivery received, Day 21
invoice received, which of the following represents the external lead time?*

*B. 7 days*

101. *In the drivers for globalization, which of the following would be a factor influenced by
government?*

*B. Trade policies*

102. *Complete the following sentence. ‘When evaluating supplier’s quotations, the buyer will take into
account the supplier’s delivery …..time’.*

*B. Lead*

Here are the answers:

103. *Why might some people oppose globalization?*

 *B. It encourages exploitation of labour in developing countries*

104. *Supplier management looks at the relationship between buyer and supplier, but what does supply
chain management look at?*

*A. The interaction and linkages between organizations in a supply chain*

105. *Which of the following would be a technology factor in the drive for globalization?*

*A. Wider use of the internet and email*

106. *Which type of ‘driver’ for globalization would describe the need to achieve economies of scale for
an organization?*

*D. Cost*

107. *Why would an original equipment manufacturer choose to adopt tiering of its suppliers?*

*C. To develop a few key long-term supplier relationships*

108. *Which of the following would be a benefit of adopting a supply chain approach in the business?*

*A. Access to new technology*

109. *An actual cost that is higher than budget cost, results in which of the following?*

*D. Adverse variance*

110. *Which of the following is used to balance the cost of acquiring stock against the cost of holding
stock?*

*A. Economic order quantity*

111. *Which of the following is a criterion used to appraise potential suppliers?*

*D. Cultural compatibility*

Here are the answers:

112. *Which of the following statements is true?*

*B. Total cost of acquisition is always higher than the purchase price*

113. *Which of the following provides a summary of the ‘total cost of ownership’ of a product?*

*C. Supplier price, cost of acquisition, cost of operation and maintenance, cost or income from
disposal*

114. *Which of the following explains the difference between a buyer’s efficiency and effectiveness?*

*D. Efficiency deals with speed, administrative costs and use of resources. Effectiveness deals with how
well tasks are performed*

115. *Which of the following is a recognized reason for ‘pre-qualification questionnaires’?*

*D. To find out the suitability, capacity and capability of potential suppliers*

116. *How can the lead buyer approach be described?*

*B. Individual buyers manage the procurement of specific categories*

117. *The type of procurement structure that is best for achieving economies of scale is:*

*D. Centralized*

118. *Which of the following is recommended good practice when a buyer is preparing to negotiate with
a supplier in another country?*

*D. Studying the culture of the other country in advance*

Here are the answers:

119. *An advantage of centralizing the procurement function is that it allows procurement staff to do
what?*

*C. Standardize procurement procedures and specifications*

120. *Which of the following is a challenge for procurement staff when buying from the tertiary sector?*
 *C. Intangibility of services*

121. *Which of the following are the traditional FIVE rights of purchasing?*

*C. Quality Quantity Place Time Price*

122. *Complete the following sentence: The total time taken to process a requirement from
identification of need to issue of purchasing order is called…*

*B. Internal lead time*

123. *Which of the following defines ‘internal lead time’?*

*D. The time between identification of need and the issue of a purchase order*

124. *Which of the following is a measure of purchasing efficiency?*

*D. Cost of placing an order*

125. *Which of the following reasons explains why an organisation might need to use suppliers?*

*A. The organisation itself cannot supply everything it requires*

126. *Which of the following statements is true in regard to direct purchases?*

*D. In many manufacturing organisations, it is a high proportion of external spend*

Here are the answers:

127. *The serial number on a requisition:*

*B. Provides a unique identification for user and purchasing*

128. *Which of the following is best practice when damaged or poor quality goods are identified at
inspection stage?*

*C. Isolate the parts affected, contact the supplier to agree on how to resolve the problem*
129. *Which of the following processes describes what occurs when an individual or family member
becomes indebted to an organisation and has to work to pay off that debt?*

*A. Bonded labour*

130. *When a requisition is originated, which of the following should happen in all cases before it is
passed to purchasing?*

*B. It must be signed by an authorised individual to whom the budget holder is responsible*

131. *What will be found in a bill of materials?*

*B. Components and parts required by the end product*

132. *One party in a contract may refuse to pay for goods if:*

*A. The goods are faulty when received*

133. *Which of the following documents is provided by a supplier to provide price and product
availability?*

*B. Quotation*

134. *Which of the following documents is prepared and provided in the buying organisation?*

*C. Goods received note*

Here are the answers:

135. *Speed of transaction processing by purchasing is a measure of:*

*C. Efficiency*

136. *A contract with a supplier must be based on:*

*A. A clear offer and acceptance*

137. *In which of the following situations will a buyer need to undertake enquiries with a range of
potential suppliers?*
 *A. Where the item is new and is high value*

138. *Which of the following documents is provided by a supplier with the goods?*

*A. Delivery note*

139. *The following statement “the bid management and decision regarding the winner of a tender
should ideally be undertaken by one staff member” is:*

*A. False, because a single staff member should not have total control over the tender*

140. *Which of the following is an example of a ‘conformance specification’?*

*D. A specification which includes requirements to meet stated industry or international standards*

141. *Which of the following is a commercial document issued by the buyer to the supplier confirming
the types and quantities of the goods which are required?*

*B. Purchase order*

142. *At which of the following stages is it ‘best practice’ to first issue detailed specifications to a
supplier in a tender process?*

*A. When sending the invitation to tender documents*

Here are the answers:

143. *Which of the following is ‘best practice’ to ensure that new supplier invoices presented are
complete?*

*A. Issue an information pack to all suppliers with details required*

144. *Which of the following explains the use of ‘key performance indicators’?*

*C. Performance measurements included in a contract to check that requirements have been met*

145. *The document at the start of the formal purchasing process is:*

*D. The purchase requisition*

146. *Debriefing, following contract award, will enable:*

*C. Unsuccessful tenderers to be consulted, to enable improvement for future bidding*

147. *Which of the following is correct for the ‘Excerption reporting’ of suppliers’ performance?*

*A. Ensure attention is focused on areas that have the most need*

148. *Which of the following documents is used for the same purposes as a bill of materials?*

*D. The purchase requisition*

149. *Before an invoice is paid, to complete a transaction, the Finance Department will match it with the
GRN and which of the following?*

*A. Purchase order*

150. *At which of the following stages is vendor rating undertaken?*

*B. Reviewing outcomes and processes*

151. *Expediting should be a priority on which types of contracts? Where the components are:*

*C. Critical to the production process*

Here are the answers:

152. *An issued invoice creates which of the following?*

*B. An account receivable*

153. *When awarding contracts following a tender, it is good to do which of the following?*

*C. Advise all bidders of the award decision*

154. *In which of the following situations is the creation of contract-specific key performance indicators
justified?*
 *D. For a complex, high value, new-buy contract*

155. *A performance specification includes…*

*A. Details of the use of the product by the buyer on receipt*

156. *Which of the following explains why an ‘order acknowledgement’ is requested when purchase
orders are issued?*

*B. To obtain confirmation that the order has been accepted*

157. *Which of the following describes the operation of procedure manuals?*

*B. They should be flexible enough to allow for updates*

158. *Which of the following should the expediter avoid?*

*D. Micro-managing the supplier*

159. *Which of the following is defined as the right to exercise power in a particular context?*

*B. Authority*

Here are the answers:

160. *Which of the following is a recognized reason for ‘pre-qualification questionnaires’?*

*D. To find out the suitability, capacity and capability of potential suppliers*

161. *Which of the following best explains the ‘open tendering’ procurement method?*

*D. A tender that is widely advertised in order to attract a large range of potential suppliers*

162. *An express term in a contract is…*

*A. Clearly stated and recognized in the contract between the supplier and buyer*

163. *How might an expediter solve or even avoid problems?*

 *C. Regular communication with suppliers*

164. *What is the purpose of field expediting? To:*

*C. Inspect the goods on site*

165. *The process through which purchasing departments evaluate the post-contract performance of
the supplier base can be defined as……*

*D. Vendor rating*

166. *What is a key post-award phase activity?*

*B. Contract management*

167. *Which of the following describes a ‘pre-qualified supplier’ in a competitive bidding process?*

*A. A supplier whose capabilities have already been appraised by the buyer’s organisation*

Here are the correct answers:

168. *What is a term used to describe the standard processes to be followed by a buyer when procuring
goods and services?*

*A. Procedures manual*

169. *According to Tuckman’s stages of team development, at which stage does the team start to settle
down and agree how to share work?*

*B. Norming*

170. *Which of the following builds cohesion among groups of people at work?*

*C. Team identity*

171. *Which of the following describes a team?*

*A. A group of individuals sharing common goals*

172. *One reason for the separation of duties in the purchasing administration is to:*

*C. Try to prevent fraud and errors occurring*

173. *Key performance indicators in a contract:*

*D. Are how it is identified whether a contract requirement is met*

174. *Which of the following best explains the ‘open tendering’ procurement method?*

*D. A tender that is widely advertised in order to attract a large range of potential suppliers*

175. *When analyzing tenders it is necessary to…*

*B. Check the arithmetic accuracy of each tender*

Here are the correct answers:

176. *Which of the following is true if an organisation has an ‘automated purchasing process’?*

*D. It has potentially more efficient operations*

177. *In a typical tender process, which of the following is sent from a buying organisation to potential
suppliers before bids are prepared?*

*C. Invitation to tender*

178. *A pre-qualification questionnaire (PQQ) is used to:*

*B. Assess the resources and capabilities of a supplier*

179. *Which of the following is a purpose of an ‘authorisation hierarchy’ within a purchasing

department?*

*D. To add rigour to the purchase process and reduce the risk of fraud*

180. *Which of the following is defined as the right to exercise power in a particular context?*

*B. Authority*
181. *Jake has a meeting with a key supplier which is finding it difficult to achieve the required
performance standards. He shows genuine concern because he realizes the targets set were unrealistic.
Jake is showing:*

*A. Empathy*

182. *An organisation has some buyers with ‘authority to make purchases up to $10,000 without
requiring higher level approval’. Which of the following statements is correct?*

*A. The buyers are likely to be more efficient but are fully responsible for their decisions*

183. *Which of the following statements is true?*

*C. Buyers should ensure that suppliers meet required ethical standards before placing a contract*

Here are the correct answers:

184. *Which of the following follows ‘best practice’ for dealing with ethics inside an organisation?*

*A. Establish written standards of conduct, train staff and monitor to ensure compliance*

185. *Which of the following is an appropriate way of behaving to competitors?*

*B. A professional relationship is beneficial as it could support market information*

186. *Which of the following is an appropriate means to discuss internal buyer compliance with ethical
standards?*

*C. An ethics forum*

187. *Which of the following would be considered as unethical behavior by a buyer?*

*C. Giving a supplier’s prices to another supplier*

188. *Which of the following explains a ‘conflict of interest’ situation?*

*A. Where a buyer has a close personal relationship to a supplier*

189. *Which of the following is covered in CIPS code of ethics?*

*C. Members must not use information received for personal gain*

190. *Which of the following explains the result of unethical behavior of an organisation?*

*B. Short term profit will be followed by loss of customer trust*

191. *Which of the following describes cases where employers use their employees to their own
advantage and treat them unfairly?*

*C. Exploitative labour*

Here are the correct answers:

192. *Which of the following statements is true?*

*D. Ethical responsibilities of organisations extend to the full supply chain*

193. *Which of the following policies would help to ensure good governance in procurement?*

*B. Defining levels of authority for procurement and other staff*

194. *Which of the following explains why specific procurement governance controls are necessary?*

*A. Buyers have influence over high cost and high risk decisions*

195. *Which of the following is assessed to confirm that a supplier is following ‘fair trade’ principles?*

*C. Ensuring suppliers have proven equal opportunities policies*

196. *Which of the following describes the term ‘corporate governance’?*

*D. Systems used by organisations to meet ethical and stakeholder responsibilities*

197. *Allowing non-purchasers to order products is good practice. This statement is…*

*A. False, because control and authority for all purchases must be held by purchases*
198. *Which of the following is true?*

*D. Organisations are responsible for product safety no matter what supplier arrangements apply*

Here are the answers:

199. *Which of the following is an example of a mechanism for corporate governance in procurement
and supply?*

*C. Level of delegated authority*

200. *Which of the following is featured in the code of labour practice under ethical issues?*

*A. No harsh or inhumane treatment is allowed*