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CPSM® Update

3 Questions, 3 Answers

November/December 2011, eSide Supply Management Vol. 4, No. 6

In every edition, eSide offers three sample questions — and answers — from the CPSM®, CSM™ and Bridge Exam 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: A supply manager for XYZ Corp. is planning for negotiations with Supplier A, a provider of software critical for use on XYZ's production line. XYZ likes the software, but was recently alerted by Supplier A that they are dropping support for the version XYZ uses. The supply manager learns that an upgrade is cost prohibitive for XYZ.

Prior to negotiations, the supply manager asks the IT department to detail its requirements for support of the software, and to assign an IT employee to attend the negotiations. The day before the negotiation, the IT employee calls the supply manager and states that he is unable to attend due to a scheduling conflict. He further states that he is confident the supply manager can represent the IT department's needs in the negotiations.

Given this scenario, which of the following should the supply manager do?

(A) Follow the advice of the IT employee and represent IT in the negotiations
(B) Escalate the issue to the IT director, ensuring that they send a representative
(C) Conduct the negotiations with the agreement that support issues will be dealt with at a later time
(D) Postpone the negotiations until an IT representative becomes available

Question #2: In time series analysis, all of the following components are essential for providing relevant data EXCEPT

(A) trends
(B) cycles
(C) sequences
(D) seasonality

Question #3: From an executive-level management perspective, which of the following has been the PRIMARY motivating factor in embracing Six Sigma?

(A) Bottom-line results
(B) Customer focus
(C) Defect reductions
(D) Market share growth
3 Answers

Question #1: Option B is correct because IT representation is very important to all aspects of this negotiation. The day's notice of possible unavailability of the planned team member gives the IT director time to either resolve the scheduling conflict with the IT employee or designate another representative. If there must be a substitution, the supply manager should bring that person up to speed and possibly arrange a caucus with other team members. Postponing negotiations (Option D) may be necessary if there's no other choice, but this risks losing valuable momentum and could weaken XYZ's position. Conducting the negotiations without IT (Option A) puts XYZ at a technical disadvantage and may result in an agreement that does not meet IT's requirements. Proceeding with negotiations but deferring agreement on support issues (Option C) fails to address one of the main concerns about XYZ's future software needs.

References: CPSM® and CSM™ Study Guide, 1st Edition (Book 1 — Foundation of Supply Management), pages 18-19; ISM Professional Series (Book 1 — Foundation of Supply Management), page 166.

Question #2: Option C is correct because trends (Option A), cycles (Option B), seasonality (Option D) and randomness (not sequences) are the four components of a time series, which is a plot of a series of values where the only independent variable is time. Examples of time series methods include moving average, exponential smoothing, a decomposition models.

References: CPSM® and CSM™ Study Guide, 1st Edition (Book 2 — Effective Supply Management), page 25; ISM Professional Series (Book 2 — Effective Supply Management Performance), page 148; The Supply Management Handbook (7th Edition), pages 611-616.

Question #3: Option A is correct because Six Sigma's bottom-line results — potential impact on annual savings and contribution to operating income — are of interest throughout upper management. Enhanced customer focus (Option B) and/or growth in market share (Option D) may be facilitated by improvements in the manufacturing process, but are part of the broader picture reflected in bottom-line results. Defect reductions (Option C) are the focus of Six Sigma, which seeks to produce no more than three defects per million products. Note: Sigma is a measure of variation, in this case within a manufacturing process. Defect reductions are of most direct interest to manufacturing operations rather than to executive-level management.

References: The Supply Management Handbook (7th Edition), pages 574-575.

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

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