CIPS L5M6 Exam Dumps

Cialdini's 7 Principles of Persuasion are key behavioural insights relevant to procurement negotiations and stakeholder management. They are:

Reciprocity

Commitment/consistency

Social proof/consent

Authority

Liking

Scarcity

Unity

Options social proof, commitment, and liking are directly part of this framework. These principles are used to influence supplier behaviour, build stakeholder alignment, and negotiate effectively. For example, demonstrating that other organisations have adopted a strategy (social proof) can increase acceptance, while establishing rapport (liking) improves cooperation. Procurement professionals who understand these principles can navigate complex stakeholder environments more effectively.

Direct costs are those directly attributable to the production of goods or services. For BikeFace, raw materials such as rubber (used in tyres) and labour (workers assembling bicycles) are direct costs because they contribute directly to finished products. By contrast, advertising spend and IT systems are indirect costs as they support operations but do not directly form part of the bicycle. Category managers must distinguish between direct and indirect costs to design effective sourcing strategies. Direct categories often warrant closer supplier collaboration and longer-term contracts due to their critical role in production.

This situation represents a Threat within SWOT analysis. SWOT distinguishes between internal and external factors. Strengths and weaknesses are internal to the organisation, while opportunities and threats are external.

Here, the short-term spike in demand is external to Callie's business. It is also potentially harmful because increased competition for raw materials [rubber, metal, etc.] can lead to higher prices, longer lead times, and supply shortages. Therefore, this is categorised as a threat.

It cannot be an opportunity, as the increase in demand benefits suppliers rather than Callie's firm. Nor is it a strength or weakness, as those describe factors within the company such as production capabilities or financial resources.

Using SWOT in category management allows managers to anticipate and mitigate external risks while leveraging internal strengths. Recognising this threat means Callie may develop strategies such as dual sourcing, supplier collaboration, or forward buying to reduce exposure.

[Ref: CIPS L5M6 Study Guide, p.122 -- SWOT analysis in category management]

These tools are most applicable for leverage items, which typically have high spend but low supply risk. Buyers can use cost breakdowns and value analysis to reduce prices and improve cost-efficiency.

Leverage items [low supply risk, high financial impact] are best suited for e-auctions. Buyers can use competitive bidding to drive down prices when multiple suppliers exist.

By contrast:

Bottleneck items [low value, high supply risk] are not suited as choice is limited.

Strategic items require partnership and collaboration, not price-only competition.

Non-critical items don't justify the effort of auctions.

[Ref: CIPS L5M6 Study Guide, p.97 -- Kraljic Portfolio Matrix]