CIPS L5M5 - Managing Ethical Procurement and Supply

Adjudication is a formal ADR method, widely used in construction and supply disputes. The L5M5 study guide (p.237) outlines its key features: it is designed to be faster than court proceedings and legally requires that a decision is reached within 28 days of referral. Decisions made can also be legally binding. Contrary to option A, adjudication is not informal; it follows structured legal processes. Option D is also incorrect, as adjudicator decisions may carry binding authority unless overturned later in arbitration or litigation. The process ensures disputes are resolved promptly, preventing long project delays.

📖 Reference: Managing Ethical Procurement and Supply (L5M5) Study Guide, p.237

Employee resistance to ESG policies typically arises because they may require changes to existing practices and operations. The L5M5 study guide (p.6) notes that employees often resist change, particularly if it disrupts established ways of working. While reduced profits (A) or stakeholder returns (C) may concern senior executives, they are less relevant to employee resistance. ESG policies usually enhance reputation, not create negative publicity (D). Procurement professionals must manage change carefully by engaging employees and suppliers, ensuring they understand the long-term benefits of ESG practices.

📖 Reference: Managing Ethical Procurement and Supply (L5M5) Study Guide, p.6

Effective supplier evaluation must align with ESG policies. The L5M5 study guide (p.80) highlights that procurement should establish performance management frameworks (A), ensure that KPIs reflect ESG objectives (B), and carry out regular risk assessments (D). While certifications such as ISO9001 and SA8000 (C) are valuable, requiring them universally may exclude smaller, ethical suppliers unable to afford certification costs. Option E is unethical and discriminatory, as not all low-cost country suppliers use forced labour. A balanced, risk-based approach ensures ethical compliance while supporting sustainability goals.

📖 Reference: Managing Ethical Procurement and Supply (L5M5) Study Guide, p.80

The ILO (International Labour Organisation) is an agency of the United Nations (UN), not the WTO. The L5M5 study guide (p.249) explains that the ILO promotes labour rights globally, sets international standards, and provides mechanisms for complaints and representation. Its principles include eliminating child labour, eradicating forced labour, and promoting safe and fair working conditions, including maternity protection. By contrast, the WTO (World Trade Organisation) deals with trade rules and disputes, not labour standards. This distinction is essential in procurement, as professionals must understand which bodies regulate trade versus labour practices.

📖 Reference: Managing Ethical Procurement and Supply (L5M5) Study Guide, p.249

When a supplier’s conduct breaches expected standards, the appropriate tools are Root Cause Analysis (to identify why the issue occurred) and a Corrective Action Plan (to detail how the supplier will fix and prevent recurrence). The L5M5 study guide (p.228) emphasises that KPIs should already be established at the start of the contract, and a single conduct issue may not mean performance indicators are being missed. SWOT analysis is not suitable in this scenario, as it is a strategic tool rather than a compliance or corrective measure. Corrective actions ensure continuous improvement and supplier accountability, which are essential for ethical supply chain management.

📖 Reference: Managing Ethical Procurement and Supply (L5M5) Study Guide, p.228

The L5M5 study guide (p.8) outlines the six key components of a CSR plan: CSR Assessment, CSR Strategy and Refinement, Implementation Plan and Activities (C), Commitment to Stakeholder Engagement (D), and Verification and Evaluation of Results (E). An introduction (A) and financial analysis (B) may support a CSR plan but are not listed as key components. Procurement professionals should ensure CSR plans are robust, measurable, and involve stakeholder engagement to gain legitimacy and trust.

📖 Reference: Managing Ethical Procurement and Supply (L5M5) Study Guide, p.8

The L5M5 study guide (p.7) highlights key benefits of sustainability, including increased productivity, reduced waste (A), and gaining competitive advantage (B) in the marketplace. Sustainable practices often improve efficiency, reduce resource consumption, and build stronger reputations, which attract customers and investors. Options C and D are incorrect, as weakened performance and higher spending are not benefits; instead, sustainability enhances resilience and long-term cost savings. Procurement professionals must position sustainability not as a cost burden but as a driver of efficiency, innovation, and brand strength.

📖 Reference: Managing Ethical Procurement and Supply (L5M5) Study Guide, p.7

The L5M5 study guide (p.210) specifies that independent auditors must be approved by a certified body (B) and have sector-specific knowledge (C) to assess compliance effectively. While qualifications (D) may be desirable, there is no universal "auditor qualification," and experience (A) varies by sector. CIPS also stresses the importance of auditor qualities such as independence, objectivity, and integrity. For procurement, selecting the right auditor ensures credible, reliable assurance of supplier compliance with ethical and sustainability requirements.

📖 Reference: Managing Ethical Procurement and Supply (L5M5) Study Guide, p.210

The L5M5 study guide (p.71) explains that the legitimate motive for Low-Cost Country Sourcing (LCCS) is reducing operational expenses by accessing cheaper materials, labour, or manufacturing. However, this must be conducted ethically, balancing cost savings with environmental, social, and legal responsibilities. Options A and B reflect unethical practices, while C is irrelevant. Procurement professionals must carefully evaluate suppliers in low-cost countries to ensure compliance with ethical standards such as labour rights, environmental protection, and anti-bribery legislation. LCCS can create value but must not compromise sustainability or governance.

📖 Reference: Managing Ethical Procurement and Supply (L5M5) Study Guide, p.71