CPSM DIAGNOSTIC 2025
PRACTICE EXAM 1
ANSWER ALL QUESTIONS IN THIS SECTION
QUESTION 1
XYZ Company is experiencing eroding margins for one of its key products. The
company decides to commission a
value analysts team to explore ways to reduce the cost of the product without
degrading quality. Which of the
following team compositions would MOST likely meet these objectives?
(A) Cost Accounting, Finance, Marketing, Manufacturing, Product Engineering
(B) Cost Accounting, Finance, Marketing, Procurement, Product Engineering
(C) Cost Accounting, Finance, Manufacturing, Procurement, Product Engineering
(D) Cost Accounting, Manufacturing, Marketing, Procurement, Product
Engineering - ANSWERS-(D) Cost Accounting, Manufacturing, Marketing,
Procurement, Product Engineering
QUESTION 2
A sourcing specialist working on a project improvement team identifies a product
line for which both profit
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, CPSM DIAGNOSTIC 2025
PRACTICE EXAM 1
margins and sales volumes have declined. Although the end product is a staple in
the industry, customers have resisted price increases and have sought alternatives.
The product is also subject to sharp fluctuations in demand due to consumer trends.
Resultant stock outages have led to lost sales. Through value analysis, the team
identifies a ball bearing component that is single sourced from a supplier to the
aerospace industry. The supplier was chosen years back, because of its ability to
provide the precise overall dimensions required for the component. Discussions
with the supplier reveal that 3 weeks of the 6-week lead time for the product are
spent in a precision polishing operation for a smooth surface condition. The
process also accounts for one-third of the product cost.
Product quality and reliability - ANSWERS-(B) Work with the current supplier tor
reconsider the high-polish finish
QUESTION 3
In order to guarantee supply of a com-
ponent that appears in the critical quadrant of the supplier segmentation model, a
supply manager should
(A) join a consortium
(B) issue a long-term contract
(C) use supplier managed inventory
(D) utilize a systems contract - ANSWERS-(B) issue a long-term contract
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, CPSM DIAGNOSTIC 2025
PRACTICE EXAM 1
QUESTION 4
GHI Company's manufacturing process is a high energy user, which the company
has managed by using a
variety of energy sources—fossil-based and renewable and by being careful
stewards of energy for a number of
years. Now, however, GHI's primary competition is reducing the prices of its
products. GHI's only area of potential cost reduction is in non-addressable costs,
which are a high percentage of their COGS. These costs received less attention
than addressable categories in the past because they were considered beyond
control. GHI's supply management decides to reanalyze them to determine if they
can be lowered in any way. Which of the following will MOST likely offer
potential savings?
(A) Local government enacting tax concessions for clean energy initiatives
(B) Licensing fees and requirements remaining stable, with no changes foreseen
(C) Rezoning of the area in which the company's headquarters resides
(D) Decr - ANSWERS-(A) Local government enacting tax concessions for clean
energy initiatives
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, CPSM DIAGNOSTIC 2025
PRACTICE EXAM 1
QUESTION 5
Using a sole sourced supplier with significant transparency of costs between buyer
and seller in order to leverage each firm's comparative advantage is an example of
a strategy for what category of spend?
(A) Critical
(B) Leverage
(C) Strategic
(D) Tactical - ANSWERS-(C) Strategic
QUESTION 6
Which of the following market factors would be plotted on the low end of the
market complexity axis on a spend analysis matrix?
(A) Many suppliers, excess capacity, unique specifications, no substitutes
(B) Standard specifications, possible substitutes, few suppliers, restricted capacity
(C) Many suppliers, excess capacity, standard specifications, possible substitutes
(D) Few suppliers, restricted capacity, unique specifications, no substitutes -
ANSWERS-(C) Many suppliers, excess capacity, standard specifications, possible
substitutes
END OF
PAGE 4
PRACTICE EXAM 1
ANSWER ALL QUESTIONS IN THIS SECTION
QUESTION 1
XYZ Company is experiencing eroding margins for one of its key products. The
company decides to commission a
value analysts team to explore ways to reduce the cost of the product without
degrading quality. Which of the
following team compositions would MOST likely meet these objectives?
(A) Cost Accounting, Finance, Marketing, Manufacturing, Product Engineering
(B) Cost Accounting, Finance, Marketing, Procurement, Product Engineering
(C) Cost Accounting, Finance, Manufacturing, Procurement, Product Engineering
(D) Cost Accounting, Manufacturing, Marketing, Procurement, Product
Engineering - ANSWERS-(D) Cost Accounting, Manufacturing, Marketing,
Procurement, Product Engineering
QUESTION 2
A sourcing specialist working on a project improvement team identifies a product
line for which both profit
END OF
PAGE 1
, CPSM DIAGNOSTIC 2025
PRACTICE EXAM 1
margins and sales volumes have declined. Although the end product is a staple in
the industry, customers have resisted price increases and have sought alternatives.
The product is also subject to sharp fluctuations in demand due to consumer trends.
Resultant stock outages have led to lost sales. Through value analysis, the team
identifies a ball bearing component that is single sourced from a supplier to the
aerospace industry. The supplier was chosen years back, because of its ability to
provide the precise overall dimensions required for the component. Discussions
with the supplier reveal that 3 weeks of the 6-week lead time for the product are
spent in a precision polishing operation for a smooth surface condition. The
process also accounts for one-third of the product cost.
Product quality and reliability - ANSWERS-(B) Work with the current supplier tor
reconsider the high-polish finish
QUESTION 3
In order to guarantee supply of a com-
ponent that appears in the critical quadrant of the supplier segmentation model, a
supply manager should
(A) join a consortium
(B) issue a long-term contract
(C) use supplier managed inventory
(D) utilize a systems contract - ANSWERS-(B) issue a long-term contract
END OF
PAGE 2
, CPSM DIAGNOSTIC 2025
PRACTICE EXAM 1
QUESTION 4
GHI Company's manufacturing process is a high energy user, which the company
has managed by using a
variety of energy sources—fossil-based and renewable and by being careful
stewards of energy for a number of
years. Now, however, GHI's primary competition is reducing the prices of its
products. GHI's only area of potential cost reduction is in non-addressable costs,
which are a high percentage of their COGS. These costs received less attention
than addressable categories in the past because they were considered beyond
control. GHI's supply management decides to reanalyze them to determine if they
can be lowered in any way. Which of the following will MOST likely offer
potential savings?
(A) Local government enacting tax concessions for clean energy initiatives
(B) Licensing fees and requirements remaining stable, with no changes foreseen
(C) Rezoning of the area in which the company's headquarters resides
(D) Decr - ANSWERS-(A) Local government enacting tax concessions for clean
energy initiatives
END OF
PAGE 3
, CPSM DIAGNOSTIC 2025
PRACTICE EXAM 1
QUESTION 5
Using a sole sourced supplier with significant transparency of costs between buyer
and seller in order to leverage each firm's comparative advantage is an example of
a strategy for what category of spend?
(A) Critical
(B) Leverage
(C) Strategic
(D) Tactical - ANSWERS-(C) Strategic
QUESTION 6
Which of the following market factors would be plotted on the low end of the
market complexity axis on a spend analysis matrix?
(A) Many suppliers, excess capacity, unique specifications, no substitutes
(B) Standard specifications, possible substitutes, few suppliers, restricted capacity
(C) Many suppliers, excess capacity, standard specifications, possible substitutes
(D) Few suppliers, restricted capacity, unique specifications, no substitutes -
ANSWERS-(C) Many suppliers, excess capacity, standard specifications, possible
substitutes
END OF
PAGE 4
