L5M6 Exam Dumps - CIPS Level 5 Advanced Diploma in Procurement and Supply Questions and Answers

CIPS highlights that damage to brand reputation and financial loss are two major risks of failing to manage supply chain risks effectively. Legal issues such as lawsuits arise from illegal activity, which is separate from general risk exposure.

The correct answer is Inducement, which is not one of Cialdini’s principles. The seven principles are:

Reciprocity – people return favours.

Commitment/Consistency – people stick with commitments.

Social Proof/Consensus – people follow others.

Authority – people respect expertise.

Liking – people are influenced by those they like.

Scarcity – people value what is limited.

Unity – people are influenced by shared identity.

Cialdini’s framework is widely applied in procurement negotiations and stakeholder management. For instance, demonstrating scarcity can strengthen a supplier’s case for urgency, while using authority enhances credibility during negotiations.

Understanding these principles allows category managers to influence stakeholders and suppliers effectively, building alignment and driving successful outcomes.

[Ref: CIPS L5M6 Study Guide, p.66 – Cialdini’s Principles of Persuasion]

Kaizen translates to “continuous improvement” in Japanese. It is a philosophy that encourages making small, incremental changes that collectively lead to significant performance enhancements over time. Within procurement and category management, Kaizen focuses on ongoing collaboration with suppliers to identify ways to reduce waste, improve quality, and optimise processes. Unlike one-off cost-reduction initiatives, Kaizen is embedded in the organisational culture and requires engagement from all levels of the supply chain. For example, small adjustments in packaging design might reduce material use, leading to cost savings and environmental benefits. This approach fosters long-term supplier partnerships and supports innovation. In competitive markets, organisations that adopt Kaizen are more resilient and adaptable, making it a key concept for category managers to understand.

This is a bottleneck item. According to the Kraljic Matrix, bottleneck items are characterized by high supply risk and low profit impact, which makes them difficult to source. Holding contingency stock is a recommended strategy for such items.

The correct term is Cost Out, a proactive cost management approach where the buyer collaborates with the supplier during the design phase to eliminate unnecessary costs before they arise. This ensures efficiency and value creation throughout the product lifecycle. For example, designing packaging to minimise waste or using standardised components to avoid expensive customisation.

This differs from:

Cost acceptance, where the buyer accepts the supplier’s price without analysis.

Cost engineering, a broader process of optimising costs through design and process evaluation.

Cost down, which typically involves reducing costs after production by analysing processes, renegotiating contracts, or improving efficiency.

Cost Out is especially relevant for strategic or high-value categories where innovation and collaboration with suppliers can generate long-term savings. It is consistent with category management’s emphasis on strategic supplier partnerships.

[Ref: CIPS L5M6 Study Guide, p.80 – Cost Out vs Cost Down strategies]

Francis is not correct. Spend alone does not determine the importance of a category. For example, a high-spend category may include non-critical items, while a lower-spend category may include bottleneck or strategic items essential to operations. The importance of a category is determined by its impact on organisational goals and supply risk, not just spend.

A General Ledger [GL] is the central accounting record used by businesses to prepare financial reports. It categorises all financial transactions into cost codes, allowing managers to track expenditure, revenue, assets, and liabilities.

For category managers, the General Ledger provides visibility into spend categories. This information supports spend analysis and helps in mapping organisational costs against suppliers, categories, and business functions. It differs from line item detail by offering a higher-level financial view.

Other options are misleading:

Option A [tenders] relates to e-procurement platforms, not financial records.

Option C [catalogue] refers to item listings, not ledgers.

Option D [supplier lists] relates to approved supplier databases.

By using GL data, procurement can ensure alignment with finance, strengthening compliance, budgeting, and strategic sourcing decisions.

[Ref: CIPS L5M6 Study Guide, p.135 – Use of General Ledger in procurement analysis]

A Direct Category refers to spend on items that are directly linked to the production of goods or delivery of services. For manufacturers, this includes raw materials, components, and items required in high volumes that form part of the finished product. These categories are critical because supply disruptions or price volatility can have significant impacts on production and customer delivery. Conversely, Indirect Categories refer to goods and services not directly linked to production, such as cleaning services, IT systems, or office supplies. Effective management of direct categories often involves long-term supplier relationships, strategic sourcing, and risk management. Since they directly affect business continuity, procurement strategies must prioritise availability, cost stability, and quality. Category managers often use Kraljic’s Matrix and forecasting tools to design robust sourcing strategies for direct categories.

Peak pricing is another term for dynamic pricing, where the cost of a product or service changes in response to fluctuations in demand and market conditions. A common example is airline ticket pricing, where fares increase during peak travel periods and drop during off-peak times.

Dynamic pricing relies on market data, technology, and sometimes artificial intelligence to adjust prices in real-time. It maximises revenue by capturing higher margins during periods of strong demand while stimulating sales when demand weakens.

Other options are different strategies:

Penetration pricing involves initially low prices to gain market entry.

Limit pricing aims to deter new entrants by setting prices low enough to discourage competition.

Price skimming involves launching at a high price, then gradually lowering it as demand declines.

In category management, understanding pricing models like dynamic pricing helps procurement anticipate supplier pricing strategies and develop negotiation tactics.

[Ref: CIPS L5M6 Study Guide, pp.180–182 – Pricing models and procurement]

The correct answer is Maturity. In the industry lifecycle model, markets evolve through stages: birth, growth, maturity, and decline. Tulipa Ltd initially saw high growth, reflecting the growth stage, where demand is rising, and market share is expanding. However, for the past two years, share has plateaued, suggesting the market has stabilised, which is a key characteristic of the maturity stage.

At maturity, the market is often saturated, with limited opportunities for expansion. Competition becomes more intense, innovation slows, and firms compete largely on efficiency, branding, or incremental improvements. Unlike decline, the market is still viable and profitable, but growth rates are flat.

The study guide also introduces an intermediate stage called shakeout, occurring between growth and maturity, where weaker competitors exit. Tulipa’s situation has passed growth but has not yet entered decline, making maturity the correct classification.

[Ref: CIPS L5M6 Study Guide, p.175 – Industry Lifecycle and Procurement Strategy]