CPSM^® Update

3 Questions, 3 Answers

September/October 2010, eSide Supply Management Vol. 3, No. 5

In every edition, eSide offers three sample questions — and answers — from the CPSM^® Diagnostic Kit 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: A supply management professional implements a system whereby the potential supplier names are hidden until final contract awards are made. This is an example of ensuring that:

1. Confidential information is protected
2. Diversity initiatives are met
3. Total costs are minimized
4. Collusion will not occur

Question #2: A supply management professional is developing a process to monitor market trends. Information about which of the following is of LEAST importance in this instance?

1. Market capacity
2. Alternate sources
3. Forward buying
4. Supplier profiles

Question #3: A supply management team is preparing to justify to top management a major expenditure on a new automated system to improve requisition processing. The cost will be significant, and time commitments may affect related departments. However, the team has evaluated various options and is convinced that the benefits of this system will make the costs worthwhile. Which of the following is LEAST likely to support their case?

1. Showing how changes will improve performance by meeting customer expectations
2. Aligning results to specific company goals and objectives
3. Outlining previous efforts that have failed, and showing why
4. Projecting costs/benefits over several years to put short payback periods in perspective

3 Answers

Question #1: Option A is correct because keeping bidders' or offerors' names hidden until contract award minimizes the risk that confidential information may be leaked, thus possibly compromising the evaluation process. Danger of collusion (D) is greater before offers are submitted, when suppliers might have opportunity to "rig" their prices or offers. (In some supply management environments, lists of those sent each solicitation are not made available prior to opening date for this reason.) Keeping supplier names confidential until award does not have any specific relationship to costs (Option C), nor does it encourage participation by suppliers who might improve compliance with diversity initiatives (Option B).

References: CPSM^® Study Guide, 1st Edition (Book 1 — Foundation of Supply Management), pages 13-14; ISM Professional Series (Book 1 — Foundation of Supply Management), page 2.

Question #2: Option C is correct because market capacity (Option A), alternate sources (Option B) and profiles of suppliers (Option D) are all key components of any plan to monitor market trends. Forward buying is an activity that the supply manager's company may or may not decide to engage in. That activity would likely be separate or result from the process of monitoring market trends.

Reference: The Supply Management Handbook (7th Edition), pages 140-141.

Question #3: Option C is correct because being prepared with knowledge of previous efforts may help in answering questions, but is less important to presenting recommendations. The other options are more likely to support supply management's recommendation in the following ways: Option A describes potentially positive effects on meeting needs of customers (internal or external). Option B demonstrates understanding and support of organizational goals and objectives. Option D shows costs have been analyzed and determined to be reasonable compared to payback period.

References: CPSM^® Study Guide, 1st Edition (Book 3 — Leadership in Supply Management), page 4; ISM Professional Series (Book 3 — Leadership in Supply Management), pages 63-71.

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

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