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

1. Smith Industries, a production company, plans to hire an external organization to audit its operations. Which TWO qualifications should be required when selecting an independent third-party auditor?

A) At least 5 years of experience
B) Be approved by a certified body
C) Appropriate professional qualification
D) Have strong communication skills

2. As a procurement manager, you are evaluating the ethical sourcing practices of a company dedicated to improving labor standards across its supply chain. Your task is to match each labor code or standard with the most appropriate supplier relationship model that aligns with its principles.
Company 1: A multinational food corporation collaborates closely with a cocoa supplier in West Africa to establish a transparent supply chain. The company actively supports farmers in adopting sustainable agricultural practices, ensures fair wages, and is deeply committed to eradicating child labor. Their partnership is based on long-term engagement, working together to implement economic empowerment initiatives that benefit both the suppliers and the broader community.
Company 2: A global corporation sources raw materials from multiple international suppliers, ensuring compliance with ILO labor standards through audit reports and annual inspections. The company takes a compliance-driven approach, holding suppliers contractually accountable for adhering to regulations on fair wages, working conditions, and labor rights.
Company 3: A leading apparel brand outsources garment production to factories across several countries. The company has established a voluntary sustainability framework, encouraging suppliers to comply with environmental, human rights, labor, and anti-corruption standards. While participation is not legally binding, suppliers are expected to demonstrate a commitment to ethical and responsible business practices.
Company 4: A cost-driven enterprise prioritizes low-cost procurement, selecting suppliers based on price competitiveness. The company imposes strict penalties on suppliers that fail to meet contractual obligations regarding working hours, wages, and labor conditions, but does not engage with them beyond performance monitoring and enforcement. There is no collaborative effort to improve ethical sourcing or labor standards.
Now, match each company's approach with the most suitable supplier relationship spectrum, identifying how each aligns with global labor codes and ethical sourcing frameworks.

A) ILO MNE Declaration: Transactional
B) ETI (Ethical Trading Initiative): Collaborative

3. Which of the following strategies is primarily designed to lower business costs while also considering social and environmental impacts?

A) Cutting Workforce Salaries
B) Value Engineering
C) Outsourcing
D) Increasing Product Prices

4. Ahmed Electronics is conducting an audit to assess its compliance with regulatory requirements, security protocols, and risk management policies. What type of audit does this represent?

A) 3rd party audit
B) compliance audit
C) external audit
D) benchmarking audit

5. Which scenario best illustrates the inclusion of a community benefits clause in a procurement contract?

A) A supplier is required to adhere to strict environmental standards during project execution
B) A procurement contract mandates penalties for late delivery of goods
C) A construction company agrees to use locally sourced materials to reduce costs
D) A contractor commits to employing a percentage of workers from the local community and offering training programs for skill development

Solutions: