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

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)

Fixed pricingmaintains aconstant pricefor a defined period regardless of market changes, providing stability for both buyer and supplier.

Short cited extract: “Fixed pricing – price remains constant for an agreed duration.” (L5M7 Study Guide, p.188)

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)

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)

Differentiation Strategyinvolves offering products withunique attributesthat customers value and are willing to pay more for, thus achieving competitive advantage.

Short cited term: “differentiation – unique product features at premium price.” (L5M7 Study Guide, p. 177)

Dynamic Pricingadjusts prices in real time to reflectmarket demand and supply conditions, commonly used in commodities.

Short cited term: “dynamic pricing – prices adjust to demand fluctuation.” (L5M7 Study Guide, p. 189)

ThePDCA Cycle—Plan, Do, Check, Act—provides a structured approach tocontinuous quality improvement. It begins with planning, implementing, monitoring, and then acting to refine the process.

Short cited extract: “The PDCA cycle – Plan, Do, Check, Act – underpins continuous improvement.” (L5M7 Study Guide, p.129)

Whenknowledge is low, members workindependently; highertechnological readinesscreates deliberate and structured IT use.

Short cited term: “low knowledge → independent working; high tech readiness → structured IT use.” (L5M7 Study Guide, p. 51)

Six Sigma is adata-driven methodologyaimed ateliminating defectsand reducing variation to improve quality and performance. Short cited terms: “data-driven,” “eliminate defects” (L5M7 Study Guide, p.110).

ASpend Analysisidentifies where money is spent and with which suppliers—vital to determine consolidation opportunities before rationalising the base.

Short cited term: “spend analysis precedes supplier rationalisation.” (L5M7 Study Guide, p. 203)

Quality assurance (QA)isproactive, including activities such assupplier approval/vetting;inspectionis reactive sampling of outputs. Short extract: “QA—proactive systems e.g., supplier approval; inspection—sampling outputs.” (L5M7 Study Guide, p.123)

BPRexamines and redesignsworkflows and processesto remove waste and maximise efficiency and customer value.

Short cited extract: “BPR – radical review of workflows to achieve major efficiency improvements.” (L5M7 Study Guide, p. 111)

The hierarchy extendsbeyond Black Belt, includingMaster Black BeltsandChampions, who provide leadership and strategic direction.

Short cited term: “Master Black Belt and Champion above Black Belt.” (L5M7 Study Guide, p. 153)

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)

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)

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).

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)

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

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)

TheSCQFintegrates factors that promote long-term excellence across the chain:leadership, stakeholder commitment, sustainability, information management, and continuous improvement. These underpin effective quality and performance.

Short cited term: “key features include sustainability, information and continuous improvement.” (L5M7 Study Guide, p. 34)

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)

TheModeis the value thatappears most oftenin a dataset, distinguishing it from themean(average) andmedian(middle value).

Short cited term: “mode = most frequent value.” (L5M7 Study Guide, p. 149)

A downstream supplier influencesmost aspects of qualitybutnot customer perception, which is shaped bymarketing and brand functions.

Short cited term: “except customer perception, influenced by marketing” (L5M7 Study Guide, p. 30).

Porter’sFocus Strategyinvolvestargeting a niche marketto meet unique needs better than competitors.

Short cited term: “focus – targeting a narrow market segment” (L5M7 Study Guide, p. 52).

TheResource-Based View(RBV) argues thatunique internal resources and capabilitiesare the key to sustainable competitive advantage.

Short cited extract: “Competitive advantage stems from internal resources and capabilities.” (L5M7 Study Guide, p.52)

ACost Leaderdetermines the market price standard and can influence both price reductions and increases. Their efficiency allows them to lead pricing trends.

Short cited term: “cost leader sets price standard in market.” (L5M7 Study Guide, p. 179)