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CIPS Ethical and Responsible Sourcing Sample Questions (Q225-Q230):

NEW QUESTION # 225
An organisation within the European Union (EU) wants to import an item from outside of the EU. Which of the following is a valid shipping document?

A. Bill of lading document
B. Goods inward document
C. Purchase order document
D. Single transit document

Answer: A

Explanation:
A Bill of Lading is a critical shipping document in international trade, serving as a receipt for shipped goods and a contract between the shipper and carrier. It is essential for customs clearance and is recognized as a valid document for importing goods into the EU.
Exact Extract from Study Guide:
"The Bill of Lading (B/L) is a document issued by the shipping company to the operating shipper, which acknowledges that the goods have been received on board."

NEW QUESTION # 226
A buyer of bakery and cereal products has tracked wheat prices. Severe weather has reduced wheat supply globally, but demand remains high. How can this research help the buyer?

A. The buyer will find it difficult to negotiate a lower price for wheat-based ingredients
B. The price for wheat-based produce will not be affected as demand is still high
C. The buyer will be in a strong bargaining position to reduce prices
D. Bakery produce is likely to be at a lower price as there is less wheat flour available

Answer: A

Explanation:
Global shortages combined with steady or high demand create upward price pressure. This reduces the buyer' s bargaining power, making it difficult to negotiate lower prices. Instead, suppliers are justified in raising prices to reflect scarcity. Options A and C are contradictory to economic principles, while B ignores the impact of shortages on pricing. Responsible sourcing requires buyers to anticipate such conditions using market intelligence and mitigate risks through forward contracts, alternative sourcing, or hedging strategies, rather than relying on negotiation leverage during shortages.
Reference: CIPS L4M4 Study Guide (v2), LO: "Implications" - commodity volatility and negotiation power.

NEW QUESTION # 227
Which of the following are examples of secondary data? Select TWO

A. commissioned market research
B. economic indices
C. comparison websites
D. networking
E. trade fairs and exhibitions

Answer: B,C

Explanation:
economic indices and comparison websites are secondary sources of data. The other three are examples of primary sources of data.
Primary= you get the data yourself
Secondary = you find the data from somewhere else

NEW QUESTION # 228
Which of the following financial documents would show whether a supplier has sufficient funds to pay their subcontractors in the short term?

A. ESG policy
B. profit and loss account
C. balance sheet
D. cash flow statement

Answer: D

Explanation:
A cash flow statement shows the money coming in and out. This would therefore show whether a supplier has enough money coming in, to be able to pay some of it out to a subcontractor.
P&L and Balance Sheets look more broadly at finances, rather than saying what's physically in the bank at a specific given time.
Do learn the difference between these three financial documents for the exam.
Balance Sheet: Explanation, Components, and Examples (investopedia.com) Profit and Loss Statement Meaning, Importance, Types, and Examples (investopedia.com) Cash Flow Statement: How to Read and Understand It (investopedia.com)

NEW QUESTION # 229
Which of the following would be a valid reason to make a product inhouse, rather than buy it from a supplier?

A. less inventory
B. threat of substitutions
C. killset of supplier is higher
D. improved quality control

Answer: D

Explanation:
One of the biggest advantages to making an item over buying it is 'improved quality control'.
When you make the product yourself, you can set the quality parameters you require and aren't re-stricted to, or dependant on, what the supplier does. The other options are incorrect- making stuff inhouse would mean you hold more inventory. If the supplier has a higher skillset than you, you would outsource. Threat of substitutions wouldn't impact this decision.
For a list of pros and cons relating to the 'make or buy' decision see p.5. This is a hot topic for the exam.

NEW QUESTION # 230
......

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