The correct score is 25, which is the highest possible risk score on a 1–5 scale. This reflects a major

risk with both severity [5] and likelihood [5] rated as high. The risk assessment methodology

multiplies these two factors [5 × 5 = 25] to produce a risk rating.

This scoring system enables supply chain managers to rank risks and prioritise mitigation strategies.

A risk scored at 25 requires urgent attention, such as developing contingency plans, dual sourcing,

increasing safety stock, or renegotiating terms with suppliers.

Lower scores such as 1, 5, or 10 indicate lower overall risk exposure, but in this case, the

combination of long geographical distance, reliance on a low-cost country supplier, and criticality of

the order elevates the risk to the maximum score.

Risk assessment tools like this are central to category management because they support proactive

risk mitigation rather than reactive crisis management.

[Ref: CIPS L5M6 Study Guide, p.56 – Risk assessment scoring and protocols]

The correct response is No – rivalry between existing suppliers is high. Exit barriers refer to the

difficulty suppliers face when attempting to leave a market or industry. These barriers may include

high investment in specialised assets, contractual obligations, redundancy costs, or reputational

damage. When suppliers are unable or unwilling to exit, they remain within the industry regardless

of declining profitability. This forces them to compete aggressively to retain market share, which

increases rivalry among existing firms.

Options A and B are incorrect because the question relates to rivalry, not directly to buyer or supplier

power. Option D is also incorrect because exit barriers do not influence new suppliers entering; they

affect current suppliers trying to leave.

A practical example is the oil and energy industry, where huge capital investments make it very costly

to exit. Companies stay even during downturns, resulting in fierce rivalry.

[Ref: CIPS L5M6 Study Guide, p.114 – Porter’s Five Forces: Exit Barriers and Rivalry]

SIC [Standard Industrial Classification] codes are numerical codes used to classify industries. For

example, 1000 = mining, 1500 = construction. These codes help in categorising spend,

benchmarking, and market analysis but are not intended for memorisation.

[Ref: CIPS L5M6 Study Guide, p.82 – SIC codes]

The correct sequence of Category Strategy Development is:

Create the strategic plan – outlining objectives, tactics, and desired outcomes.

Develop a progress tracking plan – defining performance measures and milestones.

Define resources needed – identifying staff, skills, and financial support required.

Conduct a roadshow – presenting the strategy to stakeholders and gaining buy-in.

This order ensures strategies are clearly defined before resources are committed and that tracking

mechanisms are in place to measure success. The roadshow is critical to gain organisational support

and alignment, ensuring all stakeholders understand the plan and contribute to its implementation.

Mis-sequencing these steps can result in wasted resources, poor engagement, or ineffective

execution. Category managers must follow this structured approach to maintain accountability,

transparency, and long-term success in strategy implementation.

Reference: CIPS L5M6 Study Guide, p.12

CIPS highlights that the review stage of the Procurement Cycle offers the greatest opportunity to add

value. This is because it involves assessing whether objectives have been met, identifying lessons

learned, and capturing continuous improvement opportunities. While specifying requirements and

supplier selection are critical, the review stage ensures that outcomes are measured against

expectations and future strategies are refined. For example, reviewing contract performance may

reveal contract leakage or highlight areas where better supplier engagement could drive innovation.

This feedback loop transforms procurement from a transactional process into a learning system. By

institutionalising review mechanisms, organisations improve their resilience and ensure that

procurement strategies evolve with business needs and market changes.

Reference: CIPS L5M6 Study Guide, p.42