CIPS Updated L5M6 Exam Questions and Answers by izaiah

A SWOT Analysis distinguishes between internal factors (strengths and weaknesses) and external factors (opportunities and threats). Strengths are internal capabilities, resources, or skills that give the organisation an advantage in the market—such as strong supplier relationships, unique expertise, or cost leadership. Weaknesses are internal limitations, such as lack of investment, poor technology, or inadequate processes. These are factors the organisation has direct control over and can improve. On the other hand, opportunities and threats are external influences outside the business’s direct control, such as market trends, legislation, or competitor actions. For category management, applying SWOT allows managers to assess the current position of categories and design strategies that build on strengths and address weaknesses. This analysis also ensures that procurement strategies remain aligned with organisational goals and competitive environments. The correct recognition of internal versus external factors is essential to avoid misdiagnosis and wasted effort.

Survival of the fittest in supplier management means driving competition by focusing heavily on price reduction, with minimal emphasis on building long-term relationships. This approach treats suppliers as interchangeable, encouraging them to compete aggressively for contracts.

It can yield short-term cost savings but risks damaging supplier collaboration, innovation, and resilience. It is suitable for commodities or non-strategic items where price is the dominant factor.

Other approaches differ:

Trust-based or partnership models balance price with collaboration.

No-cost modelling focuses on process transparency.

Strategic alliances prioritise innovation and value creation.

Category Managers must carefully choose when to apply “survival of the fittest” as it may undermine long-term supplier stability if used indiscriminately.

[Ref: CIPS L5M6 Study Guide, p.160 – Supplier relationship models]

The first stage of Kearney’s 7 Step Model is profiling the category, where data is gathered about spend, suppliers, and demand. This profiling provides the foundation for preparing future projections and budgets. It ensures that procurement understands not only how much is currently being spent, but also the likely future requirements of the organisation. While finding alternative suppliers and benchmarking may emerge later in the process, the primary outcome of category profiling is reliable information for budgeting and strategic decision-making. This stage links procurement with financial planning and helps build business cases for category strategies. Without accurate data profiling, subsequent sourcing strategies may be flawed.

The most appropriate relationship type is a Strategic Alliance. The Cost-Out approach involves working closely with suppliers at the design and pre-production stages to eliminate unnecessary costs before they arise. This requires high levels of trust, transparency, and collaboration.

A strategic alliance provides the framework for this partnership, allowing both buyer and supplier to share information, align objectives, and jointly innovate to reduce costs and increase value. For example, suppliers may suggest alternative materials or design modifications that lower costs without compromising quality.

By contrast:

Arm’s length and transactional relationships are too shallow to support cost-out collaboration.

Closer tactical relationships allow more interaction but lack the depth of trust and shared strategy found in alliances.

Strategic alliances are therefore essential where the buyer needs suppliers to contribute their expertise, innovation, and commitment to achieving mutual cost savings and long-term value.

[Ref: CIPS L5M6 Study Guide, p.80 – Cost-out strategies and supplier relationships]