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CPSM® Update

3 Questions, 3 Answers

January/February 2010, eSide Supply Management Vol. 3, No. 1

New in 2010, eSide will offer three sample questions — and answers — from the CPSM® Diagnostic Practice Exam to help you prepare to pursue your CPSM® certification. First, answer all three questions; then, scroll down to the "3 Answers" section to find out how you fared.

3 Questions

Question #1: An organization desires to obtain suggested changes or additions to its preliminary specifications from potential suppliers. The BEST course of action would be for this organization to employ:

  1. A prebid conference

  2. Two-step bidding

  3. A presolicitation conference

  4. Informal bidding

Question #2: Which of the following is LEAST likely to contribute to the U.S. federal deficit?

  1. Imports exceeding exports

  2. Foreign tourist spending in the United States exceeding those of U.S. citizens traveling abroad

  3. Foreign earnings in the U.S. exceeding U.S. company earnings abroad

  4. A U.S. economy that is stronger than that of foreign economies

Question #3: An electronics company spends millions to improve production and order-fulfillment times. The company's on-time delivery performance is excellent. However, delivery performance is no longer the key to profitable growth. The supply manager recognizes the need to move to a much lower break-even point. This represents a misalignment with:

  1. Business strategy

  2. Core competencies

  3. Customers' needs

  4. Power position
CPSM<sup>®</sup> Diagnostic Practice Exam
3 Answers

Question #1: Option C is correct because presolicitation conferences are typically used when the buying organization wants to review specifications with potential vendors prior to issuing a solicitation document. Such conferences are also sometimes described as prespecification, since they focus on refining requirements. Prebid (or preproposal) conferences (Option A) are held to clarify already-issued specifications with vendors. Two-step bidding (Option B) refers to the process of evaluating technical responses first, then costs. Informal bids/quotations (Option D) refer to procurements below established monetary thresholds or to responses requested for budgetary purposes.

References: CPSM® Study Guide, 1st Edition, Book 1 – Foundation of Supply Management, pages 7-8; and ISM Professional Series – Book 1 – Foundation of Supply Management, pages 118-119

Question #2: Option B is correct because balance of trade (imports versus exports, Option A), earnings (Option C) and strength of the economy (Option D) have greater impacts on the U.S. economy than does tourism.

Reference: ISM Professional Series – Book 2 – Effective Supply Management Performance, pages 115-116

Question #3: Option A is correct because business strategies define the business in which the organization wants to compete (corporate strategy) or establish specific strategies for a unit within the organization. Core competencies (Option B) are talents, attributes and/or products that form an organization's central identity. Though internal and/or external customers' needs (Option C) are important considerations, they are part of the larger picture of the organization's business strategy. Power position (Option D) is a term used in negotiations or pricing. Power within an organization arises from the ability to contribute to corporate goals and objectives. If the supply manager is concerned about the issue of power, then alignment with corporate goals is an immediate necessity.

References: CPSM® Study Guide, 1st Edition, Book 3 – Leadership in Supply Management, pages 1 – 4; ISM Professional Series – Book 3 – Leadership in Supply Management; pages 59 – 63; and The Supply Management Handbook (7th Edition), pages 24 – 28.

For more information on ISM's professional credentials, visit the Institute's Web site.

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