L4M4: Ethical and Responsible Sourcing

What you will learn in L4M4

• Understand options for sourcing from suppliers
• Understand key processes for analyzing potential suppliers
• Understand compliance issues when sourcing
• Understand ethical and responsible sourcing

Free L4M4 study-note previews

• Approaches to Sourcing: Single/Dual/Multiple, Tendering and Negotiation
• The Sourcing Process: Sourcing, Outsourcing and Make-or-Buy

Free L4M4 practice questions

A sample of 5 questions from the L4M4 question bank, with the answer and explanation for each. Try answering before you open the answer.

1. Question 1

   Which organisation provides business credit ratings and D-U-N-S numbers for supplier financial assessment?

   • ACompanies House
   • BThe Financial Conduct Authority
   • CDun & Bradstreet
   • DThe Office for National Statistics
   Show answer and explanation

   Correct answer: C — Dun & Bradstreet

   Dun & Bradstreet (D&B) provides business credit ratings, D-U-N-S numbers (unique business identifiers), and financial risk assessments used extensively in supplier evaluation. Option C is correct. Option A (Companies House) holds company registration records but does not provide credit ratings. Option B (FCA) regulates financial services. Option D (ONS) provides national economic statistics.

2. Question 2

   In a reverse auction used for procurement, how do suppliers compete?

   • ABy bidding increasingly higher prices
   • BBy bidding increasingly lower prices
   • CBy submitting sealed bids that are opened simultaneously
   • DBy negotiating directly with the buyer in private meetings
   Show answer and explanation

   Correct answer: B — By bidding increasingly lower prices

   In a reverse auction (the most common e-auction in procurement), suppliers compete by bidding downward -- each successive bid must be lower than the current best. The buyer benefits from the competitive downward pressure on price. Option B is correct. Option A describes a forward auction (used for selling surplus). Option C describes sealed bidding, not an auction. Option D describes negotiation, not an auction.

3. Question 3

   Since Brexit, which platform replaced OJEU for advertising above-threshold public sector contracts in the UK?

   • AContracts Finder
   • BFind a Tender (FTS)
   • CThe Government Procurement Agreement portal
   • DTED (Tenders Electronic Daily)
   Show answer and explanation

   Correct answer: B — Find a Tender (FTS)

   Find a Tender Service (FTS) replaced the Official Journal of the European Union (OJEU) for advertising above-threshold public sector contract opportunities in the UK after Brexit.

   Why the other options are wrong

   • A: Contracts Finder is for lower-value UK public contracts, not the replacement for OJEU above-threshold notices.
   • C: The GPA is a WTO agreement, not a UK advertising platform.
   • D: TED is the EU system and no longer applies to UK procurements post-Brexit.

4. Question 4

   Under Incoterms 2020, what does EXW (Ex Works) mean for the buyer?

   • AThe seller delivers goods to the buyer's premises and covers all transport costs
   • BThe buyer bears all costs and risks from the seller's premises onward
   • CThe seller is responsible for export clearance and loading
   • DRisk transfers at the port of shipment
   Show answer and explanation

   Correct answer: B — The buyer bears all costs and risks from the seller's premises onward

   EXW (Ex Works) places maximum obligation on the buyer. The seller simply makes goods available at their premises. The buyer is responsible for all transport, insurance, export/import clearance, and bears all risk from that point.

   Why the other options are wrong

   • A: Under EXW, the seller's obligation ends at making goods available at their premises.
   • C: Under EXW, the seller has no obligation to load goods or clear them for export.
   • D: Under EXW, risk transfers at the seller's premises, not at any port.

5. Question 5

   Which Incoterm 2020 places the MAXIMUM obligation on the seller, covering all costs and risks to the buyer's named destination including import duties?

   • AFOB (Free On Board)
   • BCIF (Cost, Insurance, Freight)
   • CDAP (Delivered At Place)
   • DDDP (Delivered Duty Paid)
   Show answer and explanation

   Correct answer: D — DDP (Delivered Duty Paid)

   DDP (Delivered Duty Paid) places maximum obligation on the seller, who bears all costs and risks including export and import clearance, duties, taxes, and transport to the named destination. It is the opposite of EXW.

   Why the other options are wrong

   • A: FOB transfers risk at the port of shipment; the buyer bears all subsequent costs and risks.
   • B: CIF covers freight and insurance but not import duties or inland transport at destination.
   • C: DAP covers delivery but the buyer is responsible for import clearance and duties.

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