CIPS L5M2 - Managing Supply Chain Risk

Explanation

The correct answer is 4 - the policy is 'comply or explain' - basically say which code you follow, or explain (publicly) why you're not following one. See p. 145 for more information on this

Explanation

The correct answers are reputational risks and geopolitical risks. This is according to p. 77 of the study guide. Although I personally feel this is a bit presumptive, painting all 'low-cost' countries with the same brush (are all 'low-cost countries' politically unstable and allow dodgy things that will affect your reputation?, this is what the textbook says ...

Explanation

Actions to mitigate one risk, may create another risk. This is a direct quote from p. 132

Explanation

Contingency plans won't increase your profit, but they will do the other three things. This is from p.109-110 of the study guide

Explanation

Lack of personnel is an internal risk- the others are external risks. Internal and external risks is a known topic for the exam so see p.116-117 for more information

Explanation

The correct answers are as follows:

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Explanation

The correct answers are as follows:

Table Description automatically generated with low confidence

Explanation

2 'increase security of supply risks as there is less buffer stock held on site' is the correct answer. With Lean manufacturing there is little or no buffer stock held. This means that if a supplier doesn't deliver on time, the whole manufacturing process will have to come to a stop until new supplies arrive. A risk of Lean Manufacturing is that you become too reliant on suppliers, and if there is a scarcity of resources or an issue with the supply chain, you are more exposed. See p.26-27 for more information on Security of Supply Risks.

Explanation

1 2 and 3 are factors which can lead to a supplier becoming insolvent. 4- increased market share is a good thing, as it indicates the supplier is doing better than their rivals. A high financial ratio is also a good thing as it shows they have more assets than debt - so this is not a sign of insolvency. See p.24 for 'Supplier Risks'

Explanation

A black swan event is an unusual occurrence - something that is rare. See p.124