CIPS L5M7 Achieving Competitive Advantage Through the Supply Chain (L5M7) Exam Practice Test

Ahierarchical culturevaluesstability, control, and formal structure, with defined authority levels.

Short cited extract: “Hierarchy culture – stability, rules, and control mechanisms.” (L5M7 Study Guide, p. 60)

Added Valuearises whenever the customer perceives extra benefit.Lowering pricescan add value if thesupply chain reduces coststo support it sustainably.

Short cited term: “price reduction is a form of added value if supported by cost efficiencies.” (L5M7 Study Guide, p. 35)

The guide distinguishes a simple chain from a“supply network,”emphasisingmulti-tier interdependencies. Short extract: “supply networks reflect multiple interdependent tiers.” (L5M7 Study Guide, p.4)

Primary datais information collectedfirst-hand, includingsurveys, interviews, and questionnaires. Sandy’s approach aligns with primary data collection methods.

Short cited extract: “Primary data: original research such as questionnaires and interviews.” (L5M7 Study Guide, p.141)

Just-in-Time (JIT)manufacturing produces goodsonly when required, eliminating excess inventory and waste, ensuring smooth, efficient flow.

Short cited term: “make only what is needed, when needed” (L5M7 Study Guide, p. 30).

Competitive advantageis adistinct capabilitythat allows an organisation tooutperform its rivals, whether through cost efficiency, quality, innovation, or service.

Short cited term: “advantage that enables outperforming competitors” (L5M7 Study Guide, p. 2).

Trust in supply chains is built on components includingintegrity,competence,loyalty,openness, andfairness. Short extract: “key trust components: integrity, competence, loyalty, openness, fairness.” (L5M7 Study Guide, Domain 3.4 section)

According toPorter’s Five Forces, new automated competitors represent athreat of new entrants, introducing innovation and market pressure.

Short cited extract: “New entrants increase competition and threaten existing players.” (L5M7 Study Guide, p.56)

ARed Oceanmarket ishighly competitivewith many firms fighting for market share, leading to price wars and reduced margins.

Short cited term: “red ocean = intense competition and saturated market.” (L5M7 Study Guide, p. 179)

ThePareto Principlestates that approximately80% of outcomesarise from20% of causes, applied in supply chain analysis to identify key value contributors.

Short cited extract: “Pareto (80/20) – a small number of causes create the majority of effects.” (L5M7 Study Guide, p.141)

Open-Book Costingfosterstrust and collaborationby ensuring both parties share detailed cost data and maintain open, transparent communication.

Short cited extract: “Open-book costing requires transparency and communication between partners.” (L5M7 Study Guide, p.193)

TheTheory of Swift Even Flowstates that organisational efficiency improves as the flow of materials, information, and cash becomessmooth and consistentthrough the chain.

Short cited term: “balancing demand and inventory to achieve swift, even flow.” (L5M7 Study Guide, p. 37)

Outsourcing can improvequalitywhen a specialist provider performs the activity better than in-house teams.

Short cited extract: “Outsourcing to specialist providers can enhance quality and performance.” (L5M7 Study Guide, p. 94)

The main relationship drivers aretrust, communication, duration, and problem-solving. Finance alone does not define the relationship type.

Short cited extract: “Key relational attributes: trust, communication, duration, joint problem-solving.” (L5M7 Study Guide, p. 80)

Amarket-oriented approachcentres oncustomer needs, designing offerings around satisfaction and experience rather than internal operations.

Short cited extract: “Market-oriented – focus on customer satisfaction and value creation.” (L5M7 Study Guide, p.55)

Agilesupply chains prioritiseflexibility and responsivenessto change, whereasLeanfocuses on waste elimination.

Short cited term: “agile = responsive to demand; lean = waste removal.” (L5M7 Study Guide, p. 155)

Manufacturing objectivesemphasise efficiency throughlong production runs,stable design, andinventory bufferingto ensure continuity of output.

Short cited term: “manufacturing – long runs and inventory buffer.” (L5M7 Study Guide, p. 36)

TQM is aholisticphilosophy requiringorganisation-wideadoption and leadership commitment; partial/isolated adoption undermines results. Short cited terms: “holistic,” “organisation-wide commitment” (L5M7 Study Guide, p.118).

TheKraljic Matrixplotssupply riskagainstprofit (cost) impactto determine supplier strategy (leverage, bottleneck, routine, strategic).

Short cited extract: “Matrix axes – profit impact vs supply risk.” (L5M7 Study Guide, p. 83)

Therelationship spectrumshows thattransactional relationshipsare theleast trust-based, focusing on short-term exchanges with minimal collaboration.

Short cited extract: “Transactional – low trust, short-term, low collaboration.” (L5M7 Study Guide, p.80)

The study guide describes how demand variabilityamplifies upstreamin the chain—commonly termed the“bullwhip effect.”This is introduced when explaining basic supply-chain dynamics and flows. Short extract: “demand changes become amplified upstream (bullwhip effect).” (L5M7 Study Guide, p.4)

Thefive Golden Metricsof supply chain performance are:safety,quality,delivery performance,total cost, andtotal cycle time. They represent universally accepted indicators of operational excellence.

Short cited extract: “Golden Metrics – safety, quality, delivery, total cost, total cycle time.” (L5M7 Study Guide, p.123)

Relationship effectiveness is damaged bymistrustand poorfeedback/communication. Spend level alone is not inherently harmful if expectations are aligned. Short cited terms: “trust,” “communication/feedback” (L5M7 Study Guide, p.93).

In supplier preferencing,nuisancecustomers havelow value/attractivenesswithlimited growth potential. Short cited terms: “nuisance,” “low attractiveness/low value” (L5M7 Study Guide, p.86).

Atightly coupledsupply chain exhibitshigh interdependencebetween members; decisions by one partner affect all others.

Short cited extract: “Tightly coupled = high interdependence between supply-chain partners.” (L5M7 Study Guide, p. 82)

JIT is aLeantechnique to minimise inventory and produce “only what is needed, when needed,” thereby removing waste from processes. Short cited phrase: “only when needed” (L5M7 Study Guide, p.111).