CIPS L4M6 SUPPLIER RELATIONSHIP EXAM
STUDY GUIDE CERTIFICATION PAPER 2026
FULL ANSWERS GRADED A+
⩥ 1.1 Differentiate between types of relationships in supply chains.
Answer: Internal and external relationships
Relationship Spectrum
The relationship Life cycle.
⩥ Supplier relationship management (SRM). Answer: Process for
identifying all interactions with key suppliers and then managing them
in a way that increases the value and risk mitigation for both parties.
⩥ Internal supplier IS. Answer: Part of the same company, referred to as
'in house'. Decision to stay in house is often a strategic decision linked to
'make or buy'. Products are generally core to the organisation. By
keeping in house there can be the greater degree of control needed with
such products.
⩥ Advantages of 'Make' / using an Internal supplier.. Answer: 1) Greater
control and continuity of supply 2) Stable relationship between internal
colleagues with shared organisation processes, values and culture. 3)
Potential lower costs with no external supplier margin. 4) Intellectual
property (IP) is protected from passing to competitors.
,⩥ Disadvantages of using an internal supplier. Answer: 1) If price isn't
externally benchmarked its difficult to know if IS is offering value for
money 2) Ensuring IS maintains standards. 3) Investment in equipment,
machinery required - is there a good return on investment or could the
capital be used more effectively.
⩥ Barriers to 'Make'. Answer: 1) High costs of production if volumes are
low 2) Legislative barriers e.g. permits required. 3) Lack of technical
expertise or resource to meet the need.
⩥ External Supplier. Answer: Outside firms hired to fulfill a company's
needs. Selecting, having a contract and managing an external supplier
are the three main reasons for the existence of the procurement
department.
⩥ Advantages of External Suppliers. Answer: 1) Often an expert in their
field. 2) Can drive innovation and introduce new technologies. 3) Take
advantage of economies of scale - if supplier is producing the same for
multiple customers. 4) Frees up internal resources to focus on other
activities creating value. 5) ES can produce small lots which would be
prohibitive internally.
⩥ Disadvantages of external suppliers. Answer: 1) Dependency on the
supplier 2) Risk of reputational damage if supplier is for eg unethical. 3)
Logistic risk and costs. 4) Risk of relationship issues.
,⩥ The relationship spectrum. Answer: Identify where efforts need to be
focused that will be beneficial for the business. Adversarial > Arms
Length > Transactional > Closer tactical > Single sourced > Outsourced
> Strategic alliance > Partnership > Co destiny.
⩥ The relationship spectrum - mnemonic. Answer: Amazing Annie Tried
Cooking Some Onions Sadly Peeling Cried.
⩥ Pareto Principle (80/20 rule) - Use to Focus efforts. Answer: 80% of
effects come from 20% of the causes. In an organisation 80% of spend
will be with around 20% of its supplier base. This is where focus of
suplier relationships should be.
⩥ Relationship Life cycle. Answer: Qualification > Segmentation and
risk mgt > Performance mgt > Develoment and innovation.
⩥ 1) Relationship life cycle- Qualification. Answer: Buyer searches the
market > list of suitable suppliers > on boarding process - undertake
supplier qualification and selecting activities. CARTERS 10Cs used for
selection criteria.
⩥ 2) Relationship life cycle- Segmentation and risk mgt. Answer:
Products segmented and classified to ensure that correct relationship is
developed with each supplier.
, ⩥ 3) Relationship Life cycle- Performance mgt. Answer: Examples of
KPIs - 1) Safety - near miss incidents 2) Quality - stock accuracy,
shrinkage, stock loss/ damage. 3) Delivery - % of products with a defect,
% of products delivered on time, compliance to paperwork, good receipt
discrepancies. 4) Cost to budget. 5) Morale - attendance/ absence 6)
environment - co2 emissions.
⩥ 3) Relationship life cycle - Development and innovation. Answer:
Supplier development may take place with strategic suppliers to improve
their processes. Reasons and benefits 1) performance issues 2) buying
org needs to make improvements e.g. reducing waste 3) buyer wants
supplier to adopt new technologies e.g. ordering system 4) buyer wants
to develop new products and services.
⩥ 1.2 Appraise Portfolio analysis techniques to assess relationships in
supply chains.. Answer: Matrices to identify supply, supplier and
purchaser positioning.
Developing value adding relationships with strategic suppliers
Developing action plans.
⩥ Three portfolio analysis techniques (models/matrices) for the
development of sourcing and supplier relationship strategies.. Answer:
Supply positioning (the Kraljic model)
Supplier preferencing model
Market management matrix
STUDY GUIDE CERTIFICATION PAPER 2026
FULL ANSWERS GRADED A+
⩥ 1.1 Differentiate between types of relationships in supply chains.
Answer: Internal and external relationships
Relationship Spectrum
The relationship Life cycle.
⩥ Supplier relationship management (SRM). Answer: Process for
identifying all interactions with key suppliers and then managing them
in a way that increases the value and risk mitigation for both parties.
⩥ Internal supplier IS. Answer: Part of the same company, referred to as
'in house'. Decision to stay in house is often a strategic decision linked to
'make or buy'. Products are generally core to the organisation. By
keeping in house there can be the greater degree of control needed with
such products.
⩥ Advantages of 'Make' / using an Internal supplier.. Answer: 1) Greater
control and continuity of supply 2) Stable relationship between internal
colleagues with shared organisation processes, values and culture. 3)
Potential lower costs with no external supplier margin. 4) Intellectual
property (IP) is protected from passing to competitors.
,⩥ Disadvantages of using an internal supplier. Answer: 1) If price isn't
externally benchmarked its difficult to know if IS is offering value for
money 2) Ensuring IS maintains standards. 3) Investment in equipment,
machinery required - is there a good return on investment or could the
capital be used more effectively.
⩥ Barriers to 'Make'. Answer: 1) High costs of production if volumes are
low 2) Legislative barriers e.g. permits required. 3) Lack of technical
expertise or resource to meet the need.
⩥ External Supplier. Answer: Outside firms hired to fulfill a company's
needs. Selecting, having a contract and managing an external supplier
are the three main reasons for the existence of the procurement
department.
⩥ Advantages of External Suppliers. Answer: 1) Often an expert in their
field. 2) Can drive innovation and introduce new technologies. 3) Take
advantage of economies of scale - if supplier is producing the same for
multiple customers. 4) Frees up internal resources to focus on other
activities creating value. 5) ES can produce small lots which would be
prohibitive internally.
⩥ Disadvantages of external suppliers. Answer: 1) Dependency on the
supplier 2) Risk of reputational damage if supplier is for eg unethical. 3)
Logistic risk and costs. 4) Risk of relationship issues.
,⩥ The relationship spectrum. Answer: Identify where efforts need to be
focused that will be beneficial for the business. Adversarial > Arms
Length > Transactional > Closer tactical > Single sourced > Outsourced
> Strategic alliance > Partnership > Co destiny.
⩥ The relationship spectrum - mnemonic. Answer: Amazing Annie Tried
Cooking Some Onions Sadly Peeling Cried.
⩥ Pareto Principle (80/20 rule) - Use to Focus efforts. Answer: 80% of
effects come from 20% of the causes. In an organisation 80% of spend
will be with around 20% of its supplier base. This is where focus of
suplier relationships should be.
⩥ Relationship Life cycle. Answer: Qualification > Segmentation and
risk mgt > Performance mgt > Develoment and innovation.
⩥ 1) Relationship life cycle- Qualification. Answer: Buyer searches the
market > list of suitable suppliers > on boarding process - undertake
supplier qualification and selecting activities. CARTERS 10Cs used for
selection criteria.
⩥ 2) Relationship life cycle- Segmentation and risk mgt. Answer:
Products segmented and classified to ensure that correct relationship is
developed with each supplier.
, ⩥ 3) Relationship Life cycle- Performance mgt. Answer: Examples of
KPIs - 1) Safety - near miss incidents 2) Quality - stock accuracy,
shrinkage, stock loss/ damage. 3) Delivery - % of products with a defect,
% of products delivered on time, compliance to paperwork, good receipt
discrepancies. 4) Cost to budget. 5) Morale - attendance/ absence 6)
environment - co2 emissions.
⩥ 3) Relationship life cycle - Development and innovation. Answer:
Supplier development may take place with strategic suppliers to improve
their processes. Reasons and benefits 1) performance issues 2) buying
org needs to make improvements e.g. reducing waste 3) buyer wants
supplier to adopt new technologies e.g. ordering system 4) buyer wants
to develop new products and services.
⩥ 1.2 Appraise Portfolio analysis techniques to assess relationships in
supply chains.. Answer: Matrices to identify supply, supplier and
purchaser positioning.
Developing value adding relationships with strategic suppliers
Developing action plans.
⩥ Three portfolio analysis techniques (models/matrices) for the
development of sourcing and supplier relationship strategies.. Answer:
Supply positioning (the Kraljic model)
Supplier preferencing model
Market management matrix
