CIPS Exam L4M5 Topic 3 Question 14 Discussion

Actual exam question for CIPS's L4M5 exam

Question #: 14
Topic #: 3

An automotive company purchases high quality steel to produce components. The steel is an important raw material and the contract value is enormous. They sources the steel from oversea and contact some potential suppliers. One of the potential suppliers invites the procurement team to their premise for a new business opportunity. Should the procurement team accept the invitation?

ANo, because negotiating over telephone is enough to collect information on supplier's capability

BYes, because the visit would increase the buyer's bargaining power

CYes, because this is an opportunity to assess the supplier's capacity

DNo, because the travel would incur unnecessary costs

Show Suggested Answer

Suggested Answer: C

In the scenario, the value of contract as well as the importance of purchased item justify the procurement's travel. Visiting a supplier at their HQ or operational facility may facilitate the procurement team in assessing, albeit briefly, the culture of the organisation, how busy they seem and how staff engage with each other. A visit is a good opportunity to assess supplier's capacity.

LO 2, AC 2.2

by Gracia at May 03, 2022, 10:49 PM

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