Certified Procurement Professional (CPP) Practice Exam
Question 1: In procurement, which term best describes the complete set of activities from identifying
needs to payment?
A. Supply Chain Management
B. Procure-to-Pay Process
C. Strategic Sourcing
D. Contract Lifecycle Management
Answer: B
Explanation: The Procure-to-Pay (P2P) process covers all steps from identifying a need to processing
payment.
Question 2: Which model centralizes decision making and purchasing authority within an
organization?
A. Decentralized procurement
B. Centralized procurement
C. Hybrid procurement
D. Outsourced procurement
Answer: B
Explanation: In centralized procurement, purchasing decisions are made from a central unit, allowing for
consistent policies and bulk purchasing benefits.
Question 3: What is the primary purpose of supplier segmentation?
A. To determine the geographical location of suppliers
B. To group suppliers based on strategic value and risk
C. To set uniform pricing across all suppliers
D. To restrict supplier diversity
Answer: B
Explanation: Supplier segmentation groups suppliers by their strategic importance and risk exposure,
helping organizations tailor management strategies.
Question 4: Which of the following is a key performance indicator (KPI) in procurement?
A. Market share growth
B. Cycle time reduction
C. Employee satisfaction
D. Brand awareness
Answer: B
Explanation: Cycle time reduction measures the time taken for procurement processes and is a common
KPI for efficiency.
Question 5: What does the term “Total Cost of Ownership” (TCO) primarily include?
A. Purchase price only
B. All costs related to the acquisition, operation, and disposal of a product
C. Delivery costs only
D. Financing costs only
Answer: B
,Explanation: TCO includes not only the purchase price but also the costs incurred during operation,
maintenance, and eventual disposal.
Question 6: Which process involves inviting suppliers to submit bids based on defined requirements?
A. Strategic sourcing
B. Request for Quotation (RFQ)
C. Supplier Relationship Management
D. Contract Management
Answer: B
Explanation: An RFQ is a process where suppliers are invited to bid on specific products or services
based on a detailed set of requirements.
Question 7: In a procurement strategy, aligning procurement goals with overall organizational
objectives is important because:
A. It reduces the need for supplier diversity
B. It ensures that procurement contributes to business success
C. It eliminates the need for performance metrics
D. It focuses solely on cost reduction
Answer: B
Explanation: Alignment ensures that procurement activities support the broader goals and add value to
the organization.
Question 8: What is the main objective of strategic sourcing?
A. To shorten the purchasing process
B. To continuously assess and improve the supplier base for long-term benefits
C. To centralize financial management
D. To develop marketing strategies
Answer: B
Explanation: Strategic sourcing aims to build a robust supplier network that offers long-term value, cost
savings, and competitive advantage.
Question 9: Which of the following best describes category management in procurement?
A. Grouping suppliers by geographic region
B. Organizing procurement activities around similar types of products or services
C. Allocating budgets evenly across departments
D. Implementing a single supplier for all needs
Answer: B
Explanation: Category management involves grouping products or services to develop strategies specific
to each category for better efficiency.
Question 10: In supplier evaluation, what does a high TCO indicate?
A. Low overall value
B. Lower risk
C. More comprehensive cost implications
D. High quality of service
Answer: C
,Explanation: A high Total Cost of Ownership means that besides the purchase price, there are significant
additional costs over the product’s life cycle.
Question 11: Which document outlines the terms, conditions, and expectations between a buyer and
a supplier?
A. Service Level Agreement
B. Purchase Order
C. Contract
D. Invoice
Answer: C
Explanation: A contract details all the agreed terms and conditions between the parties involved in a
procurement transaction.
Question 12: What is a key benefit of automating the Procure-to-Pay process?
A. Increased manual oversight
B. Reduced cycle times and enhanced accuracy
C. Increased paperwork
D. Decentralized purchasing
Answer: B
Explanation: Automation streamlines the process, reducing human error and cycle times while
improving overall efficiency.
Question 13: Which legal area is most critical to understand for procurement contracts?
A. Employment Law
B. Intellectual Property Law
C. Contract Law
D. Antitrust Law
Answer: C
Explanation: Contract law governs the formation, interpretation, and enforcement of contracts, making
it essential for procurement professionals.
Question 14: What is the purpose of a Request for Information (RFI) in procurement?
A. To finalize a contract
B. To gather preliminary data about suppliers’ capabilities
C. To negotiate pricing
D. To initiate payment processing
Answer: B
Explanation: An RFI is used to collect information from potential suppliers, helping to determine who
may qualify for further stages.
Question 15: Which factor is essential when assessing supplier risk?
A. Supplier’s location only
B. Financial stability and performance history
C. Number of employees
D. Social media presence
Answer: B
, Explanation: Assessing financial stability and performance history helps determine the supplier’s ability
to meet contractual obligations reliably.
Question 16: What does supplier diversity aim to achieve?
A. To limit competition
B. To foster innovation and social responsibility by including varied suppliers
C. To centralize procurement processes
D. To focus solely on cost reduction
Answer: B
Explanation: Supplier diversity promotes inclusion and can drive innovation, often resulting in social and
economic benefits.
Question 17: How is the success of negotiation efforts in procurement primarily measured?
A. Number of suppliers engaged
B. Reduction in overall costs and favorable terms
C. Increased paperwork
D. Faster supplier onboarding
Answer: B
Explanation: Effective negotiations should result in cost savings and terms that benefit the organization
while maintaining quality and reliability.
Question 18: Which element is critical to managing procurement risk?
A. Ignoring market trends
B. Establishing risk-sharing contracts
C. Increasing lead times
D. Centralizing all decisions without evaluation
Answer: B
Explanation: Risk-sharing through contracts helps distribute risks between the buyer and supplier,
mitigating potential negative impacts.
Question 19: What is the primary role of procurement governance?
A. To manage supplier diversity exclusively
B. To ensure that procurement practices comply with internal policies and external regulations
C. To solely focus on cost savings
D. To automate all procurement processes
Answer: B
Explanation: Procurement governance sets the framework for ethical, compliant, and efficient practices
in line with organizational standards.
Question 20: Which process involves forecasting future procurement needs and planning accordingly?
A. Inventory management
B. Procurement planning
C. Invoice processing
D. Contract lifecycle management
Answer: B
Explanation: Procurement planning involves forecasting demand, budgeting, and scheduling
procurement activities to meet future needs.
Question 1: In procurement, which term best describes the complete set of activities from identifying
needs to payment?
A. Supply Chain Management
B. Procure-to-Pay Process
C. Strategic Sourcing
D. Contract Lifecycle Management
Answer: B
Explanation: The Procure-to-Pay (P2P) process covers all steps from identifying a need to processing
payment.
Question 2: Which model centralizes decision making and purchasing authority within an
organization?
A. Decentralized procurement
B. Centralized procurement
C. Hybrid procurement
D. Outsourced procurement
Answer: B
Explanation: In centralized procurement, purchasing decisions are made from a central unit, allowing for
consistent policies and bulk purchasing benefits.
Question 3: What is the primary purpose of supplier segmentation?
A. To determine the geographical location of suppliers
B. To group suppliers based on strategic value and risk
C. To set uniform pricing across all suppliers
D. To restrict supplier diversity
Answer: B
Explanation: Supplier segmentation groups suppliers by their strategic importance and risk exposure,
helping organizations tailor management strategies.
Question 4: Which of the following is a key performance indicator (KPI) in procurement?
A. Market share growth
B. Cycle time reduction
C. Employee satisfaction
D. Brand awareness
Answer: B
Explanation: Cycle time reduction measures the time taken for procurement processes and is a common
KPI for efficiency.
Question 5: What does the term “Total Cost of Ownership” (TCO) primarily include?
A. Purchase price only
B. All costs related to the acquisition, operation, and disposal of a product
C. Delivery costs only
D. Financing costs only
Answer: B
,Explanation: TCO includes not only the purchase price but also the costs incurred during operation,
maintenance, and eventual disposal.
Question 6: Which process involves inviting suppliers to submit bids based on defined requirements?
A. Strategic sourcing
B. Request for Quotation (RFQ)
C. Supplier Relationship Management
D. Contract Management
Answer: B
Explanation: An RFQ is a process where suppliers are invited to bid on specific products or services
based on a detailed set of requirements.
Question 7: In a procurement strategy, aligning procurement goals with overall organizational
objectives is important because:
A. It reduces the need for supplier diversity
B. It ensures that procurement contributes to business success
C. It eliminates the need for performance metrics
D. It focuses solely on cost reduction
Answer: B
Explanation: Alignment ensures that procurement activities support the broader goals and add value to
the organization.
Question 8: What is the main objective of strategic sourcing?
A. To shorten the purchasing process
B. To continuously assess and improve the supplier base for long-term benefits
C. To centralize financial management
D. To develop marketing strategies
Answer: B
Explanation: Strategic sourcing aims to build a robust supplier network that offers long-term value, cost
savings, and competitive advantage.
Question 9: Which of the following best describes category management in procurement?
A. Grouping suppliers by geographic region
B. Organizing procurement activities around similar types of products or services
C. Allocating budgets evenly across departments
D. Implementing a single supplier for all needs
Answer: B
Explanation: Category management involves grouping products or services to develop strategies specific
to each category for better efficiency.
Question 10: In supplier evaluation, what does a high TCO indicate?
A. Low overall value
B. Lower risk
C. More comprehensive cost implications
D. High quality of service
Answer: C
,Explanation: A high Total Cost of Ownership means that besides the purchase price, there are significant
additional costs over the product’s life cycle.
Question 11: Which document outlines the terms, conditions, and expectations between a buyer and
a supplier?
A. Service Level Agreement
B. Purchase Order
C. Contract
D. Invoice
Answer: C
Explanation: A contract details all the agreed terms and conditions between the parties involved in a
procurement transaction.
Question 12: What is a key benefit of automating the Procure-to-Pay process?
A. Increased manual oversight
B. Reduced cycle times and enhanced accuracy
C. Increased paperwork
D. Decentralized purchasing
Answer: B
Explanation: Automation streamlines the process, reducing human error and cycle times while
improving overall efficiency.
Question 13: Which legal area is most critical to understand for procurement contracts?
A. Employment Law
B. Intellectual Property Law
C. Contract Law
D. Antitrust Law
Answer: C
Explanation: Contract law governs the formation, interpretation, and enforcement of contracts, making
it essential for procurement professionals.
Question 14: What is the purpose of a Request for Information (RFI) in procurement?
A. To finalize a contract
B. To gather preliminary data about suppliers’ capabilities
C. To negotiate pricing
D. To initiate payment processing
Answer: B
Explanation: An RFI is used to collect information from potential suppliers, helping to determine who
may qualify for further stages.
Question 15: Which factor is essential when assessing supplier risk?
A. Supplier’s location only
B. Financial stability and performance history
C. Number of employees
D. Social media presence
Answer: B
, Explanation: Assessing financial stability and performance history helps determine the supplier’s ability
to meet contractual obligations reliably.
Question 16: What does supplier diversity aim to achieve?
A. To limit competition
B. To foster innovation and social responsibility by including varied suppliers
C. To centralize procurement processes
D. To focus solely on cost reduction
Answer: B
Explanation: Supplier diversity promotes inclusion and can drive innovation, often resulting in social and
economic benefits.
Question 17: How is the success of negotiation efforts in procurement primarily measured?
A. Number of suppliers engaged
B. Reduction in overall costs and favorable terms
C. Increased paperwork
D. Faster supplier onboarding
Answer: B
Explanation: Effective negotiations should result in cost savings and terms that benefit the organization
while maintaining quality and reliability.
Question 18: Which element is critical to managing procurement risk?
A. Ignoring market trends
B. Establishing risk-sharing contracts
C. Increasing lead times
D. Centralizing all decisions without evaluation
Answer: B
Explanation: Risk-sharing through contracts helps distribute risks between the buyer and supplier,
mitigating potential negative impacts.
Question 19: What is the primary role of procurement governance?
A. To manage supplier diversity exclusively
B. To ensure that procurement practices comply with internal policies and external regulations
C. To solely focus on cost savings
D. To automate all procurement processes
Answer: B
Explanation: Procurement governance sets the framework for ethical, compliant, and efficient practices
in line with organizational standards.
Question 20: Which process involves forecasting future procurement needs and planning accordingly?
A. Inventory management
B. Procurement planning
C. Invoice processing
D. Contract lifecycle management
Answer: B
Explanation: Procurement planning involves forecasting demand, budgeting, and scheduling
procurement activities to meet future needs.
