Latest PDF of CPSM-Exam-2: CPSM exam 2: Effective Supply Management Performance

CPSM exam 2: Effective Supply Management Performance - 2025 Practice Test

CPSM-Exam-2 exam Format | Course Contents | Course Outline | exam Syllabus | exam Objectives

Number of Questions: 165 multiple-choice questions.
Duration: 3 hours (180 minutes).
Passing Score: The passing score is determined by ISM and is based on a scaled scoring system.
Delivery Method: The exam is administered online through a proctored testing platform.

- Strategic Sourcing and Category Management
- Strategic sourcing process and methodologies.
- Category management strategies and implementation.
- supplier segmentation and relationship management.
- Market analysis and benchmarking.
- Total cost of ownership (TCO) analysis.
- Risk management in sourcing.
- Sustainable and ethical sourcing practices.

- Spend analysis.
- RFx (Request for Proposal/Quotation/Information).
- supplier scorecards.
- Kraljic Matrix.
- supplier collaboration.
- Cost modeling.
- Outsourcing vs. insourcing.

- supplier Relationship Management (SRM)
- Developing and maintaining supplier relationships.
- supplier performance evaluation and improvement.
- Contract management and compliance.
- Collaborative innovation with suppliers.
- Conflict resolution and negotiation strategies.
- supplier diversity and inclusion programs.

- Key Performance Indicators (KPIs).
- Service Level Agreements (SLAs).
- supplier risk assessment.
- Relationship mapping.
- supplier development programs.
- Contract lifecycle management.

- Cost and Price Management
- Cost analysis techniques
- activity-based costing
- should-cost modeling
- Price analysis and market-based pricing.
- Cost reduction strategies.
- Value engineering and value analysis.
- Financial acumen in supply management.
- Negotiation tactics for cost savings.

- Direct vs. indirect costs.
- Fixed vs. variable costs.
- Cost avoidance vs. cost savings.
- Break-even analysis.
- Price benchmarking.
- Total landed cost.

- Supply Chain Risk Management
- Identifying and assessing supply chain risks.
- Risk mitigation strategies
- dual sourcing
- inventory buffers
- Business continuity planning.
- Geopolitical and regulatory risks.
- Cybersecurity risks in the supply chain.
- supplier financial health monitoring.

- Risk appetite.
- Risk matrix.
- Force majeure.
- Contingency planning.
- Supply chain resilience.
- supplier audits.

- Performance Measurement and Improvement
- Developing and implementing performance metrics.
- Balanced scorecard approach.
- Continuous improvement methodologies
- Lean
- Six Sigma
- Process mapping and optimization.
- Data-driven decision-making.
- Benchmarking and best practices.

- Key Performance Indicators (KPIs).
- Lead time reduction.
- Cycle time.
- Process efficiency.
- Root cause analysis.
- PDCA (Plan-Do-Check-Act).

- Technology and Analytics in Supply Management
- Role of technology in supply chain management
- ERP
- SRM
- e-procurement
- Data analytics and predictive modeling.
- Artificial Intelligence (AI) and Machine Learning (ML) in supply management.
- Blockchain and its applications in supply chains.
- Digital transformation in procurement.

- Big data.
- Predictive analytics.
- Spend visibility tools.
- Automation (RPA - Robotic Process Automation).
- Digital twins.
- Cloud-based procurement systems.

- Legal and Contractual Considerations
- Contract law basics.
- Key clauses in supply contracts
- indemnification
- termination
- liability
- Intellectual property (IP) considerations.
- Compliance with regulations
- GDPR
- SOX
- Dispute resolution mechanisms.

- Force majeure.
- Liquidated damages.
- Non-disclosure agreements (NDAs).
- Uniform Commercial Code (UCC).
- Incoterms.
- Breach of contract.

- Sustainability and Corporate Social Responsibility (CSR)
- Sustainable sourcing practices.
- Environmental, Social, and Governance (ESG) criteria.
- Circular economy principles.
- Ethical sourcing and labor practices.
- Carbon footprint reduction.
- supplier codes of conduct.

- Life cycle assessment (LCA).
- Carbon neutrality.
- Fair trade.
- Green procurement.
- Social responsibility audits.
- Zero waste initiatives.

- Global Supply Chain Management
- Managing global suppliers and logistics.
- Cross-cultural communication and negotiation.
- Trade compliance and customs regulations.
- Currency exchange and financial risks.
- Global market trends and challenges.

- Incoterms.
- Free trade agreements (FTAs).
- Tariffs and duties.
- Harmonized System (HS) codes.
- Export controls.
- Global sourcing strategies.

- Leadership and Change Management
- Leading cross-functional teams.
- Change management strategies.
- Stakeholder engagement and communication.
- Building a culture of continuous improvement.
- Talent development in supply management.

- Change readiness.
- Stakeholder analysis.
- Emotional intelligence (EQ).
- Transformational leadership.
- Mentorship and coaching.
- Organizational agility.

- Financial Acumen in Supply Management
- Understanding financial statements
- balance sheet
- income statement
- Budgeting and forecasting.
- Working capital management.
- Capital expenditure (CapEx) vs. operational expenditure (OpEx).
- Financial risk management.

- Return on Investment (ROI).
- Net Present Value (NPV).
- Cash flow analysis.
- Cost of capital.
- Profit margins.
- Economic Value Added (EVA).

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CPSM exam 2
Certified Professional in Supply Management (CPSM)
CPSM exam 2: Effective Supply Management Performance
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Question: 816
A manufacturer in the U.S. is considering entering the Canadian market and is exploring a bilateral trade agreement that eliminates tariffs on certain products. Which of the following agreements would most likely apply?
1. CAFTA
2. TPP
TT
er: C
nation: The USMCA (United States-Mexico-Canada Agreement) is a trade agreement betwee anada, and Mexico that eliminates tariffs on numerous goods, specifically benefiting
acturers looking to enter the Canadian market.
ion: 817
with a net income of $300,000, total assets of $1.5 million, and total liabilities of $600,000 n assets (ROA) of what percentage?
er: B
nation: ROA = Net Income / Total Assets = $300,000 / $1,500,000 = 0.20 or 20%.
ion: 818
ssessing supplier risk, a company evaluates financial stability on a scale of 1 to 10. If Supp
USMCA
3. GA
Answ
Expla n the
U.S., C
manuf
Quest
A firm has a
return o
1. 25%
2. 20%
3. 18%
4. 15%
Answ Expla Quest
When a lier A
scores 8, supplier B scores 5, and supplier C scores 3, what is the average financial stability score of these suppliers?
1. 5.5
2. 6.0
3. 4.5
4. 8.0
Answer: A
Explanation: Average score = (8 + 5 + 3) / 3 = 16 / 3 = 5.33, rounded to 5.5.
Question: 819
In conducting a spend analysis, a company discovers that its spend on office supplies has increased by 25% over the last year, resulting in a total spend of $125,000. What was the spend on office supplies the previous year?
5,000
er: A
nation: Let previous spend be X. Then, X + 0.25X = $125,000. Thus, 1.25X = $125,000, and 000 / 1.25 = $100,000.
ion: 820
pany utilizes the PDCA cycle to Improve its supply chain processes. If the 'Plan' phase invo ying 3 key areas for improvement and the 'Do' phase implements changes resulting in a 15% ion in waste, which of the following is the most effective way to measure the impact during
phase?
viewing historical data nducting employee interviews
alyzing customer satisfaction surveys
mparing waste levels before and after implementation er: D
nation: The 'Check' phase is focused on measuring the effectiveness of changes by comparin nt metrics, in this case, waste levels before and after the implementation.
ion: 821
A. $100,000 B. $90,000 C. $80,000
D. $7
Answ
Expla X =
$125,
Quest
A com lves
identif
reduct the
'Check'
1. Re
2. Co
3. An
4. Co
Answ
Expla g
releva
Quest
A supply chain team is preparing to conduct a benchmarking study against competitors. Which of the following steps should be prioritized to ensure the study yields actionable insights?
1. Select metrics that are easy to collect data for
2. Avoid involving external experts
3. Limit the scope to only financial metrics
4. Identify key performance indicators (KPIs) relevant to the industry Answer: D
Explanation: Identifying key performance indicators (KPIs) relevant to the industry is crucial for ensuring that the benchmarking study provides actionable insights that can lead to meaningful improvements.
Question: 822
In a exact supplier scorecard review, a company noticed that one supplier consistently underperformed in terms of quality metrics. What should be the company's immediate action to address this issue?
1. Terminate the supplier contract
nduct a supplier performance meeting to discuss issues duce payment terms to encourage improvement
er: C
nation: Conducting a performance meeting allows the company to address the underperforma y, understand the supplier's challenges, and collaboratively develop improvement strategies.
ion: 823
ply chain analyst is tasked with improving the lead time. If the current lead time is 25 days, wants to implement a strategy that reduces lead time by 30%, what will be the target lead ti
he reduction?
ays days ays ays
er: B
nation: A 30% reduction in 25 days is 7.5 days (0.30 * 25 = 7.5). Thus, the target lead time is
7.5 days.
ion: 824
Increase the order volume to incentivize better quality
2. Co
3. Re
Answ
Expla nce
directl
Quest
A sup and the
analyst me
after t
1. 18 d
2. 17.5
3. 20 d
4. 22 d
Answ
Expla 25 -
7.5 = 1
Quest
In a exact risk assessment meeting, a company identified a risk scenario involving potential geopolitical tensions affecting supply routes. What is the most effective response strategy for such a risk?
1. Establishing dual sourcing strategies for critical materials
2. Ignoring the risk due to its uncertainty
3. Focusing solely on domestic suppliers
4. Increasing inventory levels without a clear strategy
Explanation: Establishing dual sourcing strategies mitigates the impact of geopolitical tensions by ensuring alternative supply routes are available.
Question: 825
As part of a sustainability initiative, a company is considering implementing a zero-waste policy across its supply chain. What should be the initial step in this process?
1. Set ambitious targets for waste reduction
ablish a communication plan to inform stakeholders nduct a waste audit to identify current waste levels
er: D
nation: Conducting a waste audit provides a baseline understanding of current waste levels an subsequent actions toward achieving zero waste.
ion: 826
pany needs to evaluate the cash flows of a project that will require a $700,000 investment to xpected to provide cash inflows of $200,000 in Year 1, $300,000 in Year 2, and $400,000 If the required rate of return is 7%, what is the NPV?
5,479
0,000
1,000
04,000
er: A
nation: Calculate the present value of each cash flow and subtract the initial investment.
ion: 827
Revise contracts with suppliers to include sustainability clauses
2. Est
3. Co
Answ
Expla d
informs
Quest
A com day
and is e in
Year 3.
A. $7 B. $15 C. $18
D. $2
Answ Expla Quest
During a performance review, a company discovers that its supplier quality ratings have declined over the past quarter. Which of the following actions would best align with a data-driven decision-making approach to address this issue?
1. Analyze defect trends and communicate findings to suppliers
2. Increase the frequency of supplier audits without data analysis
3. Replace suppliers based on suspicion of quality issues
4. Decrease the number of suppliers to focus on fewer sources
Explanation: Analyzing defect trends and communicating findings to suppliers is a data-driven approach that enables targeted improvements and fosters collaboration.
Question: 828
An importer is tasked with classifying a new product for customs clearance. If the product is a combination of a non-functional decorative item and a functional electronic device, which of the following Harmonized System (HS) codes should be prioritized for classification?
code for the non-functional decorative item
code for the product that contributes more to the value
code that relates to the most exact international trade agreements er: C
nation: Classification usually follows the principle of determining the component that gives t its essential character, often tied to value.
ion: 829
pany is interested in improving its supplier engagement on sustainability issues. What is the ve way to facilitate this engagement?
nducting one-off training sessions
ablishing ongoing communication and collaboration channels posing strict requirements without dialogue
miting supplier participation in sustainability initiatives er: B
nation: Ongoing communication and collaboration foster a culture of sustainability and encou ers to engage actively in sustainability efforts.
The code for the functional electronic device
The
The
The Answ
Expla he
product
Quest
A com most
effecti
1. Co
2. Est
3. Im
4. Li
Answ
Expla rage
suppli
Question: 830
In a Lean transformation, a company emphasizes the importance of 'Kaizen'. Which of the following best describes the concept of Kaizen?
1. Large-scale changes implemented infrequently
2. Solely management-driven improvements
3. A focus on eliminating all waste immediately
4. Continuous, incremental improvements involving all employees
Explanation: Kaizen emphasizes continuous, incremental improvements involving all employees, fostering a culture of ongoing enhancement within the organization.
Question: 831
In a exact survey, employees reported feeling unrecognized for their contributions. As an emotionally intelligent leader, what is the most appropriate action to take?
rease employee salaries
plement a recognition program that highlights achievements courage employees to communicate their needs directly
er: C
nation: Implementing a recognition program demonstrates appreciation for contributions, posi ing employee morale and engagement.
ion: 832
tuation where a supplier is unable to fulfill an order due to a sudden regulatory change affect roduction capabilities, which of the following actions should the supplier take to mitigate po
tify the buyer immediately and provide documentation of the change ore the situation until the next order
ntinue production at a loss to meet obligations k a third-party mediator
er: A
nation: The supplier should promptly notify the buyer and provide documentation to demonst gulatory change's impact, which could invoke force majeure protections.
Conduct a team meeting to address the issue
Inc
Im
En
Answ
Expla tively
impact
Quest
In a si ing
their p tential
claims?
1. No
2. Ign
3. Co
4. See Answ
Expla rate
the re
Question: 833
In a scenario where a company relies heavily on a single supplier for critical components, what is the most advisable risk mitigation strategy to implement?
1. Developing a strong relationship with the supplier
2. Implementing stringent supplier performance metrics
3. Increasing the inventory of components from the supplier
4. Diversifying the supplier base to include multiple sources
Explanation: Diversifying the supplier base to include multiple sources is the most advisable strategy to mitigate risks associated with reliance on a single supplier, reducing vulnerability to disruptions.
Question: 834
A company is analyzing its global supply chain for sustainability practices. Which metric would be most relevant in assessing the environmental impact of its logistics operations?
bon emissions produced during transportation erage delivery time for shipments
mber of suppliers engaged in sustainability initiatives er: B
nation: Carbon emissions are a direct measure of the environmental impact of logistics operat them a crucial metric for sustainability assessment.
Total shipping costs incurred over the year
Car
Av
Nu
Answ
Expla ions,
making

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