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CPSM Questions

1. GHI, Inc. employs a decentralized supply management organization. The company’s strategic goal is to have 90 percent of spend under uniform supply management processes within five years. To accomplish this, internal customers need to follow supply management department processes and procedures with respect to bidding, sourcing, and contracting. Given this situation, which of the following is the MOST appropriate way to accomplish this goal?

(A) Build a sense of trust and credibility with internal stakeholders by demonstrating the value in adopting supply management processes and procedures

(B) Mandate that the new processes be followed and distribute quarterly status reports as to which units are complying and which are not

(C) Have supply management do the work itself with its own staff and transfer finished solutions to the appropriate business units

(D) Centralize supply management, leverage the corporation’s spend, and roll out new programs across the enterprise


2. While preparing for a new product launch, a supply manager learns that a component will require that the organization’s research and development group and the supplier’s technical staff will need to work together to implement a proprietary technology. The supply manager arranges for an internal team to visit and assist the supplier in developing this component. The supply manager is engaging in:

(A) co-located engineering

(B) development cycle time reduction

(C) reverse marketing

(D) supplier mentorship


3. Which of the following reasons for establishing a supplier diversity program is likely to have the GREATEST benefit to an organization?

(A) Minimizing the threat of economic boycotts

(B) Improving the organization’s position on pass-down provisions

(C) Complying with government contract requirements

(D) Increasing competition among sources



1. Option A is correct because stakeholders must see value in the supply management processes and procedures, to their goals and the company’s goals, in order to adopt them. Once credibility is built for the supply management function, through evidence of value, the stakeholder functions will be more likely to support, promote and follow the supply management processes and procedures. Option B is incorrect because the supply management organization is decentralized, so there is no authority behind the mandates. Option C is incorrect because the intent is to standardize the supply management processes and procedures across all other supply management departments. The other departments could continue their own practices, regardless of the efforts of this one supply management function. Option D is incorrect because, while centralization may be the long-term solution, achieving the buy-in of the other supply management departments would still be necessary to avoid rogue buying and localized efforts to subvert the central processes and procedures. 

Bibliographic Key:

#1C: Leadership, Task 3-A-5, “Develop/implement changes to the organization’s supply management policies as needed.”

#4: Chapter 3, “Creating Alignment”


2. Option A is correct because collocated engineering exists when engineers from the buying and supplying organizations are located together so they pool their skills to develop better solutions and resolve problems or issues as they occur. Development cycle-time reduction (Option B) incorporates the supplier’s ideas and technology (instead of possible duplication of effort by the buying organization) to bring new products or services to the market more quickly. Reverse marketing (Option C) is an aggressive approach to developing supplier relationships, in which the buying organization takes the initiative in making a proposal for a business relationship to a supplier. In supplier mentorship (Option D), the buying organization provides assistance such as training to a supplier.

Bibliographic Key: #1A: Supplier Relationship Management, 1-F-2, “Develop/manage effective relationships with suppliers.” #2: Chapter 7, “Suppler Management and Development”


3. Option D is correct because the strongest business case for a supplier diversity program is often its impact on the total pool of competition available for goods and services. By increasing the potential supplier base, an organization improves its chances to obtain quality goods or services at reasonable cost. Other, more specific benefits may be attracting customers and minimizing boycott threats (Option A), or compliance with government contract requirements (Option C) for those organizations seeking government business, including pass-down provisions (Option B).

Bibliographic Key: #1A: Supplier Relationship Management, 1-F-3, “Develop/implement a supplier diversity program.” #2: Chapter 8, “Supplier Relationship Management”


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