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CPSM Questions

QUESTIONS

1. A sourcing specialist at a global organization has been experiencing extended lead times for security components sourced from Asia. Although the products are shipped on a timely basis, due to their nature, they are being held in customs for extended time periods. Given this situation, which of the following would be the BEST approach for minimizing total lead time?

(A) Working with a customs broker to minimize clearance time
(B) Initiating the use of smart seals on future shipments
(C) Exploring point-of-destination shipment alternatives
(D) Paying expedited customs fees to reduce total cost of ownership

2. A supply manager who receives information from a supplier that is clearly labeled as confidential should do which of the following?

I. Use discretion in divulging the information to competing suppliers
II. Divulge the information to competing suppliers if it is likely to produce a result favorable to the buyer’s company
(A) I only
(B) II only
(C) Both I and II
(D) Neither I nor II

3. A buyer for a large gourmet specialty company has been tasked with identifying any situation that could raise prices or create bottlenecks. The goal is to ensure a reliable, cost-effective flow of ingredients for final blending into products at the company plant. The buyer has been analyzing supplier fluctuations in available capacity. Which of the following is MOST likely to cause supply problems for the company?

(A) A supplier’s recently expanded production facility has been underutilized
(B) Favorable growing conditions have yielded unusually high harvests
(C) A supplier’s second-largest plant is up for sale as part of corporate streamlining
(D) A buyer can schedule deliveries for the producer’s off-peak season

ANSWERS

1. Option B is correct because smart seals (also known as smart box technology) guarantee that shipments have not been tampered with after inspection at the origin port. This can reduce the number of inbound containers that must be inspected by customs. A customs broker (Option A) can help by ensuring documentation and classifications are in order, but may not have as great an effect on the problem described as would smart seals. Changing shipment alternatives (Option C) will not resolve customs questions (and note that shipments are already described as timely). Payment of expedited customs fees (Option D) may be warranted in special situations where critical components are needed immediately, but is not a cost-effective long-term solution.

Bibliographic Key: #1A: International, 1-C-3, “Develop and maintain documentation regarding cross-border transactions.” #2: Chapter 10, “International Sourcing”

2. Option D is correct because disclosing the information in any way (either I or II) not only endangers any relationship of trust between the buying organization and supplier, but also may violate non-disclosure agreements and risk liability for the supply manager’s organization.

Bibliographic Key: #1A: Social Responsibility, 1-D-1, “Develop and act upon a code of business conduct for the supply management function and external suppliers.” #2: Chapter 9, “Sustainability and Social Responsibility,” Chapter 5, “Contracting”

3. Option C is correct. A producer that has reduced capacity dramatically (selling plant versus shutting down a line) will have less ability to respond to increased demand and is thus less likely to offer pricing breaks. Option A is not correct. Having greater production capacity available but unused offers incentives for the producer to increase orders. Option B is not correct. Ample supplies of raw materials eliminate a potential capacity bottleneck and may also keep prices from rising significantly. Option D is not correct, because scheduling deliveries around the producer’s seasonality does not address the specialty company’s needs.

Bibliographic Key: #1A: Sourcing, 1-E-3, “Plan and communicate sourcing and supply strategies based on forecasting data.” #2: Chapter 2, “Developing Sourcing Strategies”

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