CIPS L4M6 SUPPLIER RELATIONSHIP EXAM
STUDY GUIDE ACTUAL TEST PAPER 2026
QUESTIONS WITH ANSWERS GRADED A+
⩥ Internal supplier. Answer: A supplier that is part of the same company
as its customer. It provides the products or services that co-workers
within the organisation need in order to do their job
⩥ External supplier. Answer: A supplier that is independent of the
organisation and provides products or services to it
⩥ An internal supplier normally produces products and services that are.
Answer: core to the organisation
⩥ Advantages of using an internal supplier. Answer: - Greater control
and continuity of supply
- Relationship is stable and longterm
- Improved quality control
- Potential lower costs as no external supplier margin is added to the cost
- Intellectual property is protected
⩥ Disadvantages of using an internal supplier. Answer: - No guarantee
of value for money
,- supplier has both fixed and variable costs
- As there is no money involved internal supplier may be less motivated
to meet required performance
- Internal supplier needs continual investment, eg new machinery
⩥ It may not be possible for an organisation to produce a product or
service itself due to the following factors. Answer: - High costs of
production if required volumes are low
- Legislative barriers, eg permits/licences are required for some services
- Skill shortages in areas that are key to producing the product or service
⩥ Advantages of using an External supplier. Answer: - Often an expert
in their field
- May be more cost effective and able to offer economies of scale if
producing for other customers
- Frees up internal resources
- External supplier may be more flexible to meet changing levels in
demand
- Useful for when small volumes are required
⩥ Disadvantages of using External suppliers. Answer: - Dependancy on
the supplier, increasing risk
- Damage to buyers reputation if supplier engages in unethical behaviour
- Cost and risk of transportation
,- Risk of relationship issues
⩥ The Relationship Spectrum. Answer: From Competitive Tactical to
Collaborative Strategic
Adversarial
Arm's length
Transactional
Closer Tactical
Single-sourced
Outsourced
Strategic alliance
Partnership
Co-destiny
⩥ Pareto principle. Answer: Also called the 80/20 rule, this states that
80% of the outputs come from 20% of the inputs
⩥ The duration of the relationship/contract will increase if. Answer: a
supplier is of key importance to a buyer, the buyer will want to lock
them into a longer-term agreement in order to secrure the supply and
price
, ⩥ Trust between two parties will increase as. Answer: the two businesses
become more involved in each others activities, trust will develop
between the staff working on the contract
⩥ Communication in terms of both frequency and detail will increase if.
Answer: a requirement has significant importance to a business it will
need to communicate to the supplier regularly to ascertain key
information such as lead times
⩥ Levels of innovation will increase if. Answer: a contract is long-term
the supplier is more likely to want to work with a buyer ti make
improvements that will drive value for both parties
⩥ Characteristics of an Adversarial relationship. Answer: - The outcome
of the deal is more important than managing the relationship over a long
period
- Suppliers providing non-core products or a one off, ie stationary
- Poor communication, lack of trust
⩥ Characteristics of an Arm's-length relationship. Answer: - Supplier
used infrequently, short term.
- Both parties act independently of each other
STUDY GUIDE ACTUAL TEST PAPER 2026
QUESTIONS WITH ANSWERS GRADED A+
⩥ Internal supplier. Answer: A supplier that is part of the same company
as its customer. It provides the products or services that co-workers
within the organisation need in order to do their job
⩥ External supplier. Answer: A supplier that is independent of the
organisation and provides products or services to it
⩥ An internal supplier normally produces products and services that are.
Answer: core to the organisation
⩥ Advantages of using an internal supplier. Answer: - Greater control
and continuity of supply
- Relationship is stable and longterm
- Improved quality control
- Potential lower costs as no external supplier margin is added to the cost
- Intellectual property is protected
⩥ Disadvantages of using an internal supplier. Answer: - No guarantee
of value for money
,- supplier has both fixed and variable costs
- As there is no money involved internal supplier may be less motivated
to meet required performance
- Internal supplier needs continual investment, eg new machinery
⩥ It may not be possible for an organisation to produce a product or
service itself due to the following factors. Answer: - High costs of
production if required volumes are low
- Legislative barriers, eg permits/licences are required for some services
- Skill shortages in areas that are key to producing the product or service
⩥ Advantages of using an External supplier. Answer: - Often an expert
in their field
- May be more cost effective and able to offer economies of scale if
producing for other customers
- Frees up internal resources
- External supplier may be more flexible to meet changing levels in
demand
- Useful for when small volumes are required
⩥ Disadvantages of using External suppliers. Answer: - Dependancy on
the supplier, increasing risk
- Damage to buyers reputation if supplier engages in unethical behaviour
- Cost and risk of transportation
,- Risk of relationship issues
⩥ The Relationship Spectrum. Answer: From Competitive Tactical to
Collaborative Strategic
Adversarial
Arm's length
Transactional
Closer Tactical
Single-sourced
Outsourced
Strategic alliance
Partnership
Co-destiny
⩥ Pareto principle. Answer: Also called the 80/20 rule, this states that
80% of the outputs come from 20% of the inputs
⩥ The duration of the relationship/contract will increase if. Answer: a
supplier is of key importance to a buyer, the buyer will want to lock
them into a longer-term agreement in order to secrure the supply and
price
, ⩥ Trust between two parties will increase as. Answer: the two businesses
become more involved in each others activities, trust will develop
between the staff working on the contract
⩥ Communication in terms of both frequency and detail will increase if.
Answer: a requirement has significant importance to a business it will
need to communicate to the supplier regularly to ascertain key
information such as lead times
⩥ Levels of innovation will increase if. Answer: a contract is long-term
the supplier is more likely to want to work with a buyer ti make
improvements that will drive value for both parties
⩥ Characteristics of an Adversarial relationship. Answer: - The outcome
of the deal is more important than managing the relationship over a long
period
- Suppliers providing non-core products or a one off, ie stationary
- Poor communication, lack of trust
⩥ Characteristics of an Arm's-length relationship. Answer: - Supplier
used infrequently, short term.
- Both parties act independently of each other
