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CPSM Questions


1. As a condition of doing business with Company A, Supplier B is required to maintain at a separate warehouse in a different part of the world, containing a minimum of six months’ inventory at all times. This is an example of a(n)

(A) contingency plan
(B) insurance obligation
(C) purchase obligation
(D) warranty obligation

2. A supply manager is tasked with acquiring training services for a group of engineers who will be part of specialized sourcing team charged with driving an aggressive cost-reduction program. Which of the following methods would be MOST appropriate for the supply manager to employ in identifying appropriate training solutions?

(A) SWOT Analysis
(B) Industry benchmarks
(C) Request for information
(D) Porter’s Five Forces

3. An electronics manufacturer’s line includes a DVD player with an unusual indicator panel not used in any other product. The panel is expensive to purchase and hard to install. A cross-functional team has been assigned to minimize costs and problems created by this part. In which of the following ways can a supply manager BEST contribute to this team?

(A) Determining which customers use the feature and how they use it
(B) Conducting user surveys with important customers to ascertain the importance of the feature
(C) Investigating the impact of eliminating the feature with suppliers
(D) Changing inventory management systems to allow just-in-time delivery of the components


1. Option A is correct. Contingency plans include multiple manufacturing plants and developing alternative suppliers. Option B is incorrect. Suppliers should have adequate insurance in order to assure customers that they have adequate financial resources in case of a crisis, but insurance doesn’t guarantee product availability. Option C is incorrect, because a purchase obligation is on the part of the customer, not the supplier. Option D is incorrect, because warranty would require availability of repair parts, but not necessarily mandate multiple sources of the parts, as long as the supplier meets its warranty obligations.

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

2. Option C, a request for information (RFI), is correct. An RFI, as defined, is a solicitation method of obtaining general information about services, products and suppliers. This will allow the supply manager to review suggestions from potential suppliers and focus on the best fit for the organization. Option A is not correct because a SWOT Analysis is a risk assessment. Option B is not correct because industry benchmarks are a standard or point of reference used in judging performance. Option D is not correct because Porter’s Five Forces is used to describe competition.

Bibliographic Key: #1B: Forecasting, 2-A-1, “Perform analysis and provide data on current and future and global/domestic market conditions, benchmarks, and industry trends to management and/or user departments.” #3: Chapter 3, “Product and Service Development”

3. Option C is correct because experience and interaction with suppliers are resources that supply management is positioned to bring to the team. Options A, B and D are incorrect because team members other than supply management would typically have more familiarity with, and responsibility for, these areas.

Bibliographic Key: #1C: Leadership, Task 3-A-8, “Lead or participate in cross-functional and/or multifunctional teams (for example, project management, process improvement, international teams).” #4: Chapter 4, “Gaining Commitment: Motivating and Inspiring People”

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