[Jun 12, 2026] CIPS L5M6 Real Exam Questions and Answers FREE

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NEW QUESTION # 42
Salim is using the CIPS Procurement and Supply Cycle to run a tender for a new item. He needs to complete a Make vs Buy assessment. Under which stage of the cycle should this be done?

• A. Develop a high-level specification
• B. Develop strategy/plan
• C. Market engagement
• D. Market/commodity and options

Answer: D

Explanation:
The correct stage is Market/commodity and options [including make vs buy assessment], which is Stage 2 of the CIPS Procurement and Supply Cycle. This stage focuses on analysing the external market, internal requirements, and identifying whether to make a product in-house or source it externally.
A Make vs Buy assessment helps determine whether the organisation has the capacity, skills, and resources to produce the item internally, or whether outsourcing would deliver greater value. Factors such as cost, risk, quality, lead time, and strategic alignment are evaluated.
Other stages differ:
* High-level specification [Stage 1]: Focuses on defining what is needed, not sourcing decisions.
* Develop strategy/plan [Stage 3]: Comes after options are analysed, where the sourcing path is chosen.
* Market engagement [Stage 4]: Involves engaging suppliers, which cannot happen until the Make vs Buy decision is made.
This makes Stage 2 the most accurate point for such an assessment.
[Ref: CIPS L5M6 Study Guide, pp.35-36 - Procurement Cycle, Make vs Buy analysis]

NEW QUESTION # 43
Callie is a Category Manager at a car parts manufacturer. She discovers through a SWOT analysis that many other customers are increasing short-term demand for raw materials. Which category does this fall under?

• A. Opportunities
• B. Threats
• C. Strengths
• D. Weaknesses

Answer: B

Explanation:
This situation represents a Threat within SWOT analysis. SWOT distinguishes between internal and external factors. Strengths and weaknesses are internal to the organisation, while opportunities and threats are external.
Here, the short-term spike in demand is external to Callie's business. It is also potentially harmful because increased competition for raw materials [rubber, metal, etc.] can lead to higher prices, longer lead times, and supply shortages. Therefore, this is categorised as a threat.
It cannot be an opportunity, as the increase in demand benefits suppliers rather than Callie's firm. Nor is it a strength or weakness, as those describe factors within the company such as production capabilities or financial resources.
Using SWOT in category management allows managers to anticipate and mitigate external risks while leveraging internal strengths. Recognising this threat means Callie may develop strategies such as dual sourcing, supplier collaboration, or forward buying to reduce exposure.
[Ref: CIPS L5M6 Study Guide, p.122 - SWOT analysis in category management]

NEW QUESTION # 44
What is a 'black swan' event?

• A. An event that is random or unexpected
• B. An event that brings about a negative outcome
• C. An event that is planned for meticulously in advance
• D. A regularly occurring event

Answer: A

Explanation:
A black swan event is an unexpected and rare occurrence with significant impact. Examples include the 2013 horse meat scandal in the food industry, which was unforeseen and highly disruptive.
Reference: CIPS L5M6 Study Guide, p.104

NEW QUESTION # 45
What name is given to an item or business which has both low market share and low growth?

• A. Cash cow
• B. Star
• C. Question mark
• D. Dog

Answer: D

Explanation:
In the BCG Growth-Share Matrix, a dog is a business unit or product that has both a low relative market share and a low growth rate. Such items typically generate low or no profits and are often seen as candidates for divestment or discontinuation. Unlike cash cows which generate strong cash flow despite slow growth, or stars which dominate high-growth markets, dogs occupy a weak position in the portfolio. Managing these categories strategically is critical because maintaining them often consumes more resources than the value they return. Organisations need to assess whether retaining these products provides any strategic advantage, such as complementing other offerings, or whether resources should be reallocated. This is why category managers use tools like the BCG Matrix to evaluate the positioning of spend categories and align them with organisational strategy.
Reference: CIPS L5M6 Study Guide, p.117

NEW QUESTION # 46
Which of the following form part of Cialdini's 7 Principles of Persuasion? Select THREE.

• A. Social proof
• B. Commitment
• C. Morality
• D. Liking
• E. Power

Answer: A,B,D

Explanation:
Cialdini's 7 Principles of Persuasion are key behavioural insights relevant to procurement negotiations and stakeholder management. They are:
* Reciprocity
* Commitment/consistency
* Social proof/consent
* Authority
* Liking
* Scarcity
* Unity
Options social proof, commitment, and liking are directly part of this framework. These principles are used to influence supplier behaviour, build stakeholder alignment, and negotiate effectively. For example, demonstrating that other organisations have adopted a strategy (social proof) can increase acceptance, while establishing rapport (liking) improves cooperation. Procurement professionals who understand these principles can navigate complex stakeholder environments more effectively.
Reference: CIPS L5M6 Study Guide, p.66

NEW QUESTION # 47
What are the three main enablers of successful Category Management?

• A. People
• B. Technology
• C. Place
• D. Tools
• E. Environment

Answer: A,B,D

Explanation:
The three key enablers are People, Tools, and Technology. Each plays a distinct but interconnected role in making category management effective:
* People: Skilled category managers and cross-functional teams provide the expertise, negotiation skills, and stakeholder engagement needed for success. Without trained professionals, strategies cannot be executed effectively.
* Tools: Analytical frameworks like Kraljic's Matrix, spend analysis, TCO, and risk assessment tools enable informed decision-making. These provide structure and evidence for procurement strategies.
* Technology: Digital platforms such as e-procurement systems, data analytics software, and supplier relationship management [SRM] tools support efficiency, transparency, and scalability.
By contrast, options such as "Place" and "Environment" are not formal enablers within CIPS's framework.
While environmental and cultural context matter, they are not listed as the three foundational enablers.
The study guide emphasises that category management can only be effective when these three enablers work together-skilled people using appropriate tools and supported by the right technology.
[Ref: CIPS L5M6 Study Guide, p.6 - Enablers of Category Management]

NEW QUESTION # 48
Total Cost of Ownership [TCO] is important in Category Management. Steve is sourcing machine parts and IT systems.
Which of the following should Steve consider as part of TCO?

• A. Training
• B. Supplier Relationship
• C. Location of the Items
• D. Maintenance and Downtime
• E. Purchase Price

Answer: A,D,E

Explanation:
Total Cost of Ownership [TCO] refers to the full cost of acquiring, operating, and maintaining an item over its entire lifecycle-not just the purchase price. For Steve, the relevant elements are:
* Purchase Price [A]: The initial acquisition cost.
* Maintenance and Downtime [D]: Costs of repairs, spare parts, and losses during equipment downtime.
* Training [E]: Expenses incurred in training staff to use new systems or equipment.
By contrast, Location and Supplier Relationship are important considerations but cannot be quantified as direct financial costs in the same way.
The TCO model is often illustrated as the Cost Iceberg, where the purchase price is only the visible tip, while hidden costs [e.g., energy use, repairs, obsolescence, disposal] represent the bulk. Understanding TCO enables procurement to make more informed decisions, ensuring long-term value rather than focusing narrowly on upfront cost.
[Ref: CIPS L5M6 Study Guide, p.9 - TCO and the Cost Iceberg]

NEW QUESTION # 49
ABC Ltd is a manufacturer of hi-tech IT equipment in an industry set to grow substantially over the next 10 years. What type of industry is this?

• A. Cow industry
• B. Bear industry
• C. Dog industry
• D. Bull industry

Answer: D

Explanation:
A Bull Industry is one that is experiencing strong growth, with positive demand and market expansion expected in the future. In financial terms, "bull" markets are characterised by optimism, rising investment, and business confidence.
For ABC Ltd, operating in a high-growth IT sector, this categorisation is appropriate because demand is projected to increase. This means opportunities exist for innovation, supplier partnerships, and long-term strategic sourcing.
By contrast:
* Bear industries represent declining markets, where firms face shrinking demand.
* Dog and Cow industries are not recognised terms within category management; they are distractors in this question.
Identifying whether an industry is in a bull or bear phase helps Category Managers assess market risks, supplier relationships, and investment priorities.
[Ref: CIPS L5M6 Study Guide, p.150 - Market classifications: bull vs bear industries]

NEW QUESTION # 50
Which of the following approaches to cost is the least transparent?

• A. Price acceptance
• B. Cost down
• C. Cost out
• D. Price management

Answer: A

Explanation:
Price acceptance is the least transparent approach because the buyer simply accepts the supplier's quoted price without investigating its basis or fairness. There is no visibility into the supplier's cost structure, margins, or pricing methodology.
By contrast:
* Price management involves actively managing pricing discussions.
* Cost down involves collaborative efforts to reduce costs after production.
* Cost out involves eliminating costs before production through design.
[Ref: CIPS L5M6 Study Guide, p.81 - Costing methods]

NEW QUESTION # 51
In which section of a balance sheet would you find the term "goodwill"?

• A. Current assets
• B. Current liabilities
• C. Non-current liabilities
• D. Non-current assets

Answer: D

Explanation:
Goodwill is found under Non-current assets in a balance sheet. Goodwill arises when one company acquires another for a value greater than its tangible assets, reflecting intangible benefits such as brand reputation, customer loyalty, patents, or strong supplier relationships.
For example, if a company is valued at £10 million based on tangible assets but is purchased for £15 million, the £5 million difference is recorded as goodwill. This asset remains on the balance sheet until impaired [e.g., if the acquired brand loses value].
It is not a current asset because it cannot be quickly liquidated within one year. Nor is it a liability [current or non-current] since it represents value, not debt.
For procurement and category managers, goodwill can signal a supplier's market position, brand strength, and long-term stability. It highlights how intangible assets, though harder to measure, play a role in supplier evaluation and business acquisitions.
[Ref: CIPS L5M6 Study Guide, p.183 - Financial terms and balance sheet analysis]

NEW QUESTION # 52
Yvonne is the Lead Negotiator for her Category. She is renewing a contract with an existing supplier and her negotiation technique is based on being passionate and creating a shared sense of purpose. Which negotiation style does she employ?

• A. Confidence
• B. Logic
• C. Empathy
• D. Inspire

Answer: D

Explanation:
The correct answer is Inspire. According to the negotiation styles outlined in the L5M6 study guide, the Inspire style is based on passion, motivation, and creating a sense of shared purpose between buyer and supplier. It focuses on appealing to the values and aspirations of the other party, encouraging collaboration and commitment beyond transactional goals.
Unlike logic [which relies on rational arguments and data] or confidence [which emphasizes authority and assertiveness], inspire creates an emotional connection that fosters trust and long-term cooperation. Empathy is another style that focuses on understanding the other party's position but does not carry the motivational dimension of "inspire." For category managers, using an inspire style can be particularly powerful when renewing contracts with long-term suppliers where collaboration, innovation, and trust are critical to value creation. It demonstrates leadership and ensures both sides are committed to mutually beneficial outcomes.
[Ref: CIPS L5M6 Study Guide, p.67 - Negotiation styles in category management]

NEW QUESTION # 53
In a Sourcing Business Model, stakeholders must answer key questions to determine the right model.
Which are the most important?

• A. What is the most appropriate economic model?
• B. What factors form part of the total cost of ownership?
• C. How much risk does the company wish to take?
• D. What is the most appropriate contractual relationship?

Answer: A,D

Explanation:
In deciding the correct Sourcing Business Model, stakeholders must clarify two fundamental issues:
* The most appropriate contractual relationship [C]: This could be transactional [short-term, cost- focused], relational [long-term collaboration], or investment-based [joint ventures, alliances]. The choice defines how risks and rewards are shared with suppliers.
* The most appropriate economic model [D]: This determines the pricing and performance framework, e.g., transactional [pay-per-unit], output-based, or outcome-based [pay-for-results].
Options A and B are important but secondary considerations. Risk appetite and TCO factors are inputs to decision-making, but the contractual and economic models define the overall sourcing structure.
This reflects the study guide's emphasis that sourcing models should be tailored to category complexity and business objectives. Using the wrong model can undermine supplier relationships and value delivery.
[Ref: CIPS L5M6 Study Guide, p.32 - Key questions in Sourcing Business Models]

NEW QUESTION # 54
BikeFace is a leading manufacturer of bicycles. Which of the following would be considered direct costs for this organisation? Select TWO.

• A. TV advert
• B. Rubber
• C. Labour
• D. IT system for ordering materials

Answer: B,C

Explanation:
Direct costs are those directly attributable to the production of goods or services. For BikeFace, raw materials such as rubber (used in tyres) and labour (workers assembling bicycles) are direct costs because they contribute directly to finished products. By contrast, advertising spend and IT systems are indirect costs as they support operations but do not directly form part of the bicycle. Category managers must distinguish between direct and indirect costs to design effective sourcing strategies. Direct categories often warrant closer supplier collaboration and longer-term contracts due to their critical role in production.
Reference: CIPS L5M6 Study Guide, p.83

NEW QUESTION # 55
A list of direct costs within a manufacturing organisation could be found on which of the following?

• A. Profit and Loss Account
• B. Specification
• C. SWOT Analysis
• D. Bill of Materials

Answer: D

Explanation:
A Bill of Materials [BoM] lists the components, raw materials, and parts required to produce a product.
These represent direct costs as they directly contribute to the finished item. While labour and overheads may also be direct costs, they are not usually in the BoM.
[Ref: CIPS L5M6 Study Guide, p.83 - Direct vs Indirect Costs]

NEW QUESTION # 56
Servers, hardware and licences are items which may be found in which category of spend?

• A. Professional services
• B. IT
• C. Facilities management
• D. Legal

Answer: B

Explanation:
Items such as servers, hardware, and licences fall under the IT (Information Technology) category of spend. Categories are organised into direct and indirect spend, and IT is a common example of indirect spend
, which includes goods and services that do not directly contribute to production but are essential to operations. IT spend is strategically important as it supports digital transformation, efficiency, and business continuity. Effective management of IT categories involves considering licensing agreements, hardware refresh cycles, cybersecurity, and vendor lock-in risks. Poor IT procurement strategies can lead to high costs, inefficiencies, and security vulnerabilities. Category managers in IT must also keep up with fast- changing technology markets, cloud adoption trends, and vendor consolidation. Recognising IT as a distinct category ensures that procurement strategies address unique risk factors and maximise value.
Reference: CIPS L5M6 Study Guide, p.3

NEW QUESTION # 57
A category which includes raw materials required in large quantities and high volumes is often known as what?

• A. Demand Category
• B. Direct Category
• C. House Category
• D. Primary Category

Answer: B

Explanation:
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.
Reference: CIPS L5M6 Study Guide, p.4

NEW QUESTION # 58
Francis is a Category Manager within a large agricultural company which has over 10 categories. He believes that the Category with the largest spend (in £) is the most important category to the business. Is he correct?

• A. Yes - A larger spend signifies that the category is buying larger volumes of items than other categories
• B. No - All categories are equally as important to the business
• C. Yes - Categories with larger budgets buy more important items
• D. No - This fails to address the importance of the item to the organisation's service / product

Answer: D

Explanation:
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.
Reference: CIPS L5M6 Study Guide, p.98

NEW QUESTION # 59
Which of the following parts of a SWOT analysis summarise activities and characteristics which are internal to the business? Select TWO.

• A. Strengths
• B. Opportunities
• C. Weaknesses
• D. Threats

Answer: A,C

Explanation:
A SWOT Analysis distinguishes between internal factors (strengths and weaknesses) and external factors (opportunities and threats). Strengths are internal capabilities, resources, or skills that give the organisation an advantage in the market-such as strong supplier relationships, unique expertise, or cost leadership.
Weaknesses are internal limitations, such as lack of investment, poor technology, or inadequate processes.
These are factors the organisation has direct control over and can improve. On the other hand, opportunities and threats are external influences outside the business's direct control, such as market trends, legislation, or competitor actions. For category management, applying SWOT allows managers to assess the current position of categories and design strategies that build on strengths and address weaknesses. This analysis also ensures that procurement strategies remain aligned with organisational goals and competitive environments. The correct recognition of internal versus external factors is essential to avoid misdiagnosis and wasted effort.
Reference: CIPS L5M6 Study Guide, p.121

NEW QUESTION # 60
In Category Management, which of the following Models can be used for creating a step-by-step plan for Strategic Sourcing?

• A. Kearney's 7 Step Model
• B. Kraljic Matrix
• C. Porter's 5 Forces
• D. The Pareto Principle

Answer: A

Explanation:
Kearney's 7 Step Strategic Sourcing Model provides a structured, step-by-step approach for managing sourcing activities. The steps include profiling the category, assessing the supply market, developing sourcing strategies, and implementing them. This model ensures that sourcing is systematic, evidence-based, and aligned with strategic objectives. Unlike tools such as the Kraljic Matrix, which classifies items by risk and impact, Kearney's model provides an end-to-end process framework for sourcing execution. Similarly, Pareto and Porter's 5 Forces are useful analytical tools but not procedural sourcing frameworks. For category managers, the Kearney Model is valuable because it emphasises cross-functional collaboration, data-driven decision-making, and continuous improvement. Its structured approach reduces risks of ad-hoc decision- making and ensures alignment with organisational goals. This is why it is a central feature of L5M6 study material and often tested in exams.
Reference: CIPS L5M6 Study Guide, p.28-29

NEW QUESTION # 61
Category Management and Strategic Sourcing are terms which are interchangeable. Is this statement TRUE?

• A. Yes - Strategic Sourcing is a type of Category Management
• B. No - Category Management is a tactical form of sourcing
• C. No - Category Management is a process most effectively applied when using a recognised framework and supporting tools
• D. Yes - they are synonyms and used interchangeably within most organisations

Answer: C

Explanation:
Although some organisations mistakenly use Category Management and Strategic Sourcing interchangeably, they are not the same. Strategic Sourcing is a philosophy or approach to procurement, while Category Management is a structured process, applied most effectively through recognised frameworks like Kraljic or Kearney's 7-step model. Category Management is strategic, not tactical, and focuses on long- term value creation, supply market management, and alignment with organisational objectives. A direct quote from L5M6 states: "Category Management is a process and is applied most effectively when using a recognised framework and supporting tools." This clarity ensures that organisations do not reduce Category Management to short-term sourcing exercises. Instead, it emphasises cross-functional collaboration, innovation, and market analysis to achieve sustainable value.
Reference: CIPS L5M6 Study Guide, p.49

NEW QUESTION # 62
What is a General Ledger?

• A. A catalogue of products to buy and/or sell
• B. An IT system that prepares information for financial reporting
• C. A list of approved suppliers
• D. An IT system that conducts tenders electronically

Answer: B

Explanation:
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]

NEW QUESTION # 63
Sarah is a Category Manager at a shoe manufacturer. She works with a key supplier of raw materials [leather and rubber] and is using a cost-out approach. Which type of relationship is most suited to this approach?

• A. Arm's length
• B. Strategic alliance
• C. Transactional
• D. Closer tactical

Answer: B

Explanation:
The most appropriate relationship type is a Strategic Alliance. The Cost-Out approach involves working closely with suppliers at the design and pre-production stages to eliminate unnecessary costs before they arise.
This requires high levels of trust, transparency, and collaboration.
A strategic alliance provides the framework for this partnership, allowing both buyer and supplier to share information, align objectives, and jointly innovate to reduce costs and increase value. For example, suppliers may suggest alternative materials or design modifications that lower costs without compromising quality.
By contrast:
* Arm's length and transactional relationships are too shallow to support cost-out collaboration.
* Closer tactical relationships allow more interaction but lack the depth of trust and shared strategy found in alliances.
Strategic alliances are therefore essential where the buyer needs suppliers to contribute their expertise, innovation, and commitment to achieving mutual cost savings and long-term value.
[Ref: CIPS L5M6 Study Guide, p.80 - Cost-out strategies and supplier relationships]

NEW QUESTION # 64
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