Certified Professional in Supply Management (CPSM) Practice Exam
Questions And Correct Answers (Verified Answers) Plus Rationales
2026 Q&A | Instant Download Pdf
1. Which of the following is the primary purpose of supply management
within an organization?
A. Improving marketing strategies
B. Ensuring timely availability of goods and services
C. Enhancing employee morale
D. Managing customer loyalty programs
Answer: B
The core objective of supply management is to ensure materials and services
are available when needed to support operations.
2. A spend analysis is primarily used to:
A. Evaluate customer satisfaction
B. Consolidate supplier performance
C. Identify procurement cost-saving opportunities
D. Forecast market share
Answer: C
Spend analysis reveals patterns that help reduce costs and improve sourcing
decisions.
3. A key advantage of centralized procurement is:
A. Faster local decision-making
B. Higher supplier diversity
C. Improved standardization and leverage
D. Greater departmental autonomy
Answer: C
Centralized procurement improves control, reduces duplication, and increases
leverage with suppliers.
4. When developing a sourcing strategy, the first step is typically to:
,A. Issue an RFP
B. Conduct a needs assessment
C. Negotiate pricing
D. Evaluate supplier bids
Answer: B
Understanding business needs guides all subsequent sourcing activities.
5. The most appropriate contract type for high-risk, uncertain projects is:
A. Fixed-price
B. Cost-plus
C. Time-and-materials
D. Lump sum
Answer: B
Cost-plus contracts are suited for uncertain work where the scope cannot be
fully defined.
6. The total cost of ownership (TCO) concept includes:
A. Purchase price only
B. Purchase price and taxes
C. Purchase, operation, and disposal costs
D. Disposal costs only
Answer: C
TCO accounts for the entire lifecycle of the product or service.
7. A KPI used to measure supplier reliability is:
A. Market share
B. On-time delivery rate
C. Employee satisfaction
D. Product color variations
Answer: B
On-time delivery is a key indicator of supplier performance.
, 8. A procurement professional analyzing supplier financial statements is
conducting:
A. Benchmarking
B. Risk assessment
C. Invoice audits
D. Forecasting
Answer: B
Supplier financial reviews are part of risk assessment to ensure supplier
stability.
9. The primary objective of negotiation in supply management is to:
A. Eliminate supplier profit
B. Achieve a fair and reasonable agreement
C. Increase production lead time
D. Reduce supplier relationships
Answer: B
Negotiation seeks mutual value, not one-sided wins.
10. Which document formally authorizes a supplier to begin work?
A. Purchase requisition
B. Statement of work
C. Purchase order
D. Bid tabulation
Answer: C
The PO is the legally binding document that commits funds and authorizes
work.
11. A blanket purchase order is most useful when:
A. Buying custom engineered products
B. Purchasing large one-time capital equipment
C. Buying repetitive, routine items
D. Contracting for construction services
Questions And Correct Answers (Verified Answers) Plus Rationales
2026 Q&A | Instant Download Pdf
1. Which of the following is the primary purpose of supply management
within an organization?
A. Improving marketing strategies
B. Ensuring timely availability of goods and services
C. Enhancing employee morale
D. Managing customer loyalty programs
Answer: B
The core objective of supply management is to ensure materials and services
are available when needed to support operations.
2. A spend analysis is primarily used to:
A. Evaluate customer satisfaction
B. Consolidate supplier performance
C. Identify procurement cost-saving opportunities
D. Forecast market share
Answer: C
Spend analysis reveals patterns that help reduce costs and improve sourcing
decisions.
3. A key advantage of centralized procurement is:
A. Faster local decision-making
B. Higher supplier diversity
C. Improved standardization and leverage
D. Greater departmental autonomy
Answer: C
Centralized procurement improves control, reduces duplication, and increases
leverage with suppliers.
4. When developing a sourcing strategy, the first step is typically to:
,A. Issue an RFP
B. Conduct a needs assessment
C. Negotiate pricing
D. Evaluate supplier bids
Answer: B
Understanding business needs guides all subsequent sourcing activities.
5. The most appropriate contract type for high-risk, uncertain projects is:
A. Fixed-price
B. Cost-plus
C. Time-and-materials
D. Lump sum
Answer: B
Cost-plus contracts are suited for uncertain work where the scope cannot be
fully defined.
6. The total cost of ownership (TCO) concept includes:
A. Purchase price only
B. Purchase price and taxes
C. Purchase, operation, and disposal costs
D. Disposal costs only
Answer: C
TCO accounts for the entire lifecycle of the product or service.
7. A KPI used to measure supplier reliability is:
A. Market share
B. On-time delivery rate
C. Employee satisfaction
D. Product color variations
Answer: B
On-time delivery is a key indicator of supplier performance.
, 8. A procurement professional analyzing supplier financial statements is
conducting:
A. Benchmarking
B. Risk assessment
C. Invoice audits
D. Forecasting
Answer: B
Supplier financial reviews are part of risk assessment to ensure supplier
stability.
9. The primary objective of negotiation in supply management is to:
A. Eliminate supplier profit
B. Achieve a fair and reasonable agreement
C. Increase production lead time
D. Reduce supplier relationships
Answer: B
Negotiation seeks mutual value, not one-sided wins.
10. Which document formally authorizes a supplier to begin work?
A. Purchase requisition
B. Statement of work
C. Purchase order
D. Bid tabulation
Answer: C
The PO is the legally binding document that commits funds and authorizes
work.
11. A blanket purchase order is most useful when:
A. Buying custom engineered products
B. Purchasing large one-time capital equipment
C. Buying repetitive, routine items
D. Contracting for construction services
