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CPSM Exam 1

Certified Professional in Supply Management (CPSM) 2024

CPSM Exam 1: Foundation of Supply Management

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Question: 731

porate sustainability goals?

onduct a sustainability audit of current practices

rioritize suppliers based on their sustainability certifications et sustainability targets for suppliers in contracts ommunicate sustainability goals to all stakeholders involved

anation: Setting sustainability targets in contracts ensures that supplier ccountable for meeting specific sustainability standards, integrating

nizational goals directly into sourcing practices.

stion: 732

ng a company merger, acquisition, or divestiture, what is one of the m

In developing a strategic sourcing plan, what is the most effective way to incor

C
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C

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critical factors to consider in order to maximize the success of the integration process?

Maintaining the existing corporate culture of either organization without change
Developing a comprehensive integration plan that includes cultural integration, communication, and stakeholder engagement
Focusing exclusively on financial synergies while neglecting operational
integration
Rushing the integration process to realize quick financial gains Answer: B

re that both organizations can effectively work together post-merger, cing resistance and enhancing overall performance.

stion: 733

ch of the following statements best reflects a commitment to ethical cing?

rioritizing cost over supplier practices voiding supplier evaluations

onducting thorough due diligence on suppliers ocusing only on domestic suppliers

anation: Thorough due diligence ensures that suppliers adhere to ethic

Explanation: A comprehensive integration plan that addresses cultural integration, communication, and stakeholder engagement is crucial for maximizing the success of mergers and acquisitions. This approach helps to ensu

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A
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F

practices, reinforcing the company’s commitment to responsible sourcing.

Question: 734

A company is considering financing a new inventory system through a vendor

financing option that includes an interest-free period. Which financial metric should the supply manager primarily focus on to evaluate the financial viability of this option?

Payback period
Net present value (NPV)
Return on investment (ROI)

wer: B

anation: Net present value (NPV) will allow the supply manager to as alue of the financing option by considering cash flows over time, cially with an interest-free period that impacts upfront costs.

stion: 735

When attempting to develop criteria for evaluating the performance of a su agement department, which qualitative measure is crucial to include?

mployee feedback and satisfaction levels ompliance with procurement regulations upplier relationship strength
ost reductions achieved
Cost of goods sold (COGS) Ans

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E
C
S
C

Explanation: Employee feedback and satisfaction levels provide valuable insights into the department's internal culture and effectiveness, complementing quantitative measures.

Question: 736

While reviewing a contract for compliance, you notice that the supplier has not met the reporting requirements stipulated in the agreement. What is the appropriate action to take to ensure compliance and accountability?

gnore the reporting requirements if they do not seem critical

ocument the non-compliance and initiate discussions with the supplie ess the issue as per the contract

mmediately impose penalties without discussion

ccept the situation as a minor issue and move forward wer: B

anation: Documenting the non-compliance and initiating discussions w upplier to address the issue as per the contract ensures accountability a pliance. This approach fosters a cooperative relationship while address actual obligations.

stion: 737

ffectively analyze issues raised in supply management audit reports, w

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analytical method should be employed?

Root cause analysis to identify underlying problems
Predictive analytics to foresee future compliance issues
Descriptive analysis of past audit findings
Comparative analysis with industry benchmarks

Explanation: Root cause analysis is vital for identifying the underlying problems, enabling organizations to implement effective corrective actions.

viewing the financial performance of the supply management departm anager discovers that the return on investment (ROI) for certain urement initiatives is lower than expected. What is the best course of n to address this issue?

liminate all low-ROI initiatives ublish a report outlining the findings crease budgets for all initiatives

nalyze the underlying causes of low ROI wer: D

anation: Analyzing the underlying causes of low ROI is essential to rstand whether adjustments can be made to improve performance or if urces should be reallocated.

the m proc actio

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Question: 739

When conducting a supplier performance evaluation, which key performance indicator (KPI) is most indicative of a supplier's reliability?

Cost competitiveness
Order accuracy
Lead time consistency

Explanation: Lead time consistency is critical for evaluating reliability, as it ensures that a supplier can meet delivery schedules consistently.

stion: 740

ch of the following actions is crucial for effectively implementing and toring sustainability initiatives within a supply chain?

stablishing cross-functional teams that include supply chain partners ssigning sustainability responsibilities to a single individual

reating a sustainability report that is only shared externally etting vague sustainability goals without specific metrics

anation: Establishing cross-functional teams that include supply chain ers is crucial for effectively implementing and monitoring sustainabil tives, as it fosters collaboration and shared accountability.

E
A
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S

Question: 741

When evaluating financing strategies for a strategic acquisition, the supply manager must consider the cost of capital. Which of the following would most accurately reflect the true cost of capital for the organization?

Weighted average cost of capital (WACC)
Historical cost of equity
Market value of debt
Average interest rate on loans Answer: A

prehensive view of the organization's cost of financing, considering th ortionate costs of equity and debt.

stion: 742

m is evaluating two different suppliers for a critical component, each ing different payment terms. Supplier A offers a 10% discount for ear ment, while Supplier B offers extended payment terms of 90 days. Whi cial analysis technique should the supply manager use to determine t

reak-even analysis ash flow analysis

omparative advantage analysis otal cost of ownership analysis

Explanation: The weighted average cost of capital (WACC) provides a com e

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B
C
C
T

Explanation: Total cost of ownership analysis considers all costs associated with each supplier option, including discounts and payment terms, allowing for a comprehensive comparison.

Question: 743

In the context of sales and operations planning, which of the following best describes a key benefit of integrating feedback loops into the product development process?

reduces the need for cross-functional collaboration

allows for continuous improvement based on customer input delays the product launch to accommodate feedback

anation: Integrating feedback loops facilitates continuous improveme wing the product to evolve based on real customer input, leading to gre et success.

stion: 744

ch of the following best describes a successful strategy for retaining to ly management talent in a competitive market?

roviding a one-time signing bonus

It complicates the decision-making process

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P
Regularly changing job responsibilities to keep work interesting
Offering flexible work arrangements and a positive culture
Avoiding discussions about career advancement opportunities Answer: C

Explanation: Offering flexible work arrangements and fostering a positive

culture contribute to employee satisfaction and retention, especially in competitive job markets.

Question: 745

and product category. What is the most effective method to evaluate t ntial risks associated with each strategy?

eview case studies of similar sourcing strategies in the industry onduct a risk assessment workshop with key stakeholders nalyze historical data on supplier performance

onsult with legal to understand contractual implications wer: B

anation: Conducting a risk assessment workshop with key stakeholder ws for a comprehensive evaluation of potential risks associated with ea cing strategy, fostering a collaborative approach to risk management.

stion: 746

A procurement team is analyzing different sourcing strategies for a high- dem he

R
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C

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When revising business plans and operating policies, which of the following is crucial for ensuring that the revisions are based on accurate and relevant information?

Relying on anecdotal evidence from select employees
Ignoring feedback from operational staff
Making revisions based solely on executive preferences
Conducting comprehensive data analysis and benchmarking against industry

stion: 747

ocurement team is tasked with validating cost savings achieved throu us initiatives over the past year. What is the most reliable method to t onfirm these savings?

elying on supplier invoices for confirmation of savings omparing current costs to budgeted amounts only onducting annual reviews without ongoing monitoring

tilizing a standardized savings tracking template to document all initi wer: D

anation: Utilizing a standardized savings tracking template to docume tives ensures consistency and reliability in tracking and confirming c

Explanation: Conducting comprehensive data analysis and benchmarking against industry standards provides a solid foundation for making informed revisions to business plans and operating policies, ensuring relevance and effectiveness.

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U atives

savings over time, providing a clear reference for validation.

Question: 748

When creating risk mitigation plans, which of the following aspects should be

Stakeholder engagement and communication
Comprehensive risk assessment
The personal preferences of the risk management team

anation: The personal preferences of the risk management team shoul prioritized, as effective risk mitigation must align with organizational ctives rather than individual opinions.

stion: 749

e assessing internal customer requests for new products, you find that requests lack clear justification. What is the most effective method t
yze these requests?

mplement a formal request-for-proposal (RFP) process evelop a standardized template for submitting requests et up a committee to review and prioritize requests
reate a feedback loop to gather insights from internal customers
Cost-benefit analysis of risk responses Answer: C

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Explanation: A standardized template for submitting requests encourages clarity and consistency, helping to ensure that all necessary information is provided for effective analysis and decision-making.

Question: 750

Which forecasting technique is best suited for capturing the impact of sudden economic downturns on supply chain demand?

Causal models
egression analysis ime series forecasting

wer: A

anation: Causal models are specifically designed to capture the onships between variables, making them effective in understanding th ct of sudden economic downturns on supply chain demand.

stion: 751

ch of the following best describes the role of artificial intelligence in ly chain management, particularly in the context of optimizing operati esses?

enhances decision-making through advanced data analysis
Moving averages
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AI
AI automates all supply chain functions
AI solely focuses on reducing costs
AI replaces human judgment entirely Answer: A

Explanation: Artificial Intelligence (AI) enhances decision-making by

analyzing complex datasets to uncover insights and trends that human analysts may overlook. This capability supports more informed and strategic operational decisions in supply chain management.

Question: 752

ecent supplier innovation workshop, several ideas were generated tha potentially improve product quality. What is the best next step for th

urement team to take in order to capitalize on these ideas?

mmediately implement all suggested ideas rioritize the ideas based on feasibility and impact

onduct a survey to gauge supplier interest in the ideas resent the ideas to senior management for approval

anation: Prioritizing the ideas based on feasibility and impact allows t urement team to focus resources on the most promising innovations th eliver significant benefits.

stion: 753

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When monitoring the effectiveness of social responsibility programs, which of the following methods provides the most comprehensive insights?

Periodic surveys of employee satisfaction
Annual reviews of community engagement activities
Regular audits of program metrics and stakeholder feedback
Ad-hoc meetings to discuss program outcomes Answer: C

stion: 754

context of operations planning and scheduling, which of the followi odologies is most effective for ensuring that production aligns with omer demand while optimizing resource utilization?

igid batch production schedules ontinuous production processes ean manufacturing principles

olely focusing on historical production data wer: C

anation: Lean manufacturing principles emphasize efficiency and onsiveness to customer demand, optimizing resource utilization while mizing waste in the production process.

Explanation: Regular audits of program metrics and stakeholder feedback provide comprehensive insights into the effectiveness of social responsibility programs, allowing for data-driven adjustments and improvements.

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Question: 755

A successful supplier diversity program requires:

A focus solely on cost reduction
Commitment from top management
Limiting supplier options
Avoiding public recognition Answer: B

re that values diversity and supports related initiatives throughout the nization.

stion: 756

ecuting a category management plan, a procurement manager discove istorical data is inconsistent and unreliable. What should be the first s

mprove data quality for future decision-making?

mplement a new data management system

rain staff on data collection and management best practices onduct a thorough audit of existing data sources

ollaborate with IT to integrate data across systems wer: C

Explanation: Commitment from top management is essential for fostering a cultu

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C

Explanation: Conducting a thorough audit of existing data sources is essential to identify inconsistencies and establish a baseline for improving data quality, which is crucial for informed decision-making in category management.