CPSM EXAM 1 SOURCING PROCESS
OVERVIEW 2025 QUESTIONS AND
ANSWERS
Recognition of Need - ANS Identifying that a product or service is required.
Specification of Need - ANS Detailing technical and performance requirements, quality,
quantity, and delivery timing.
Searching for Potential Sources - ANS Identifying suppliers who could fulfill the need.
Analyze Suppliers' Proposals and Capabilities - ANS Evaluating supplier bids and their ability
to meet specifications.
Negotiation with and Selection of Supplier - ANS Selecting the best-value supplier and
negotiating contract terms.
Administration of the Contract - ANS Managing the agreement and ensuring compliance.
Evaluation of Performance and Feedback - ANS Reviewing supplier performance and sharing
feedback.
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@COPYRIGHT SIRJOEL 2025/2026
, Disposal of Excess, Scrap, or Surplus - ANS Managing remaining inventory or materials at the
end of use.
Internal Stakeholders - ANS Internal customers (e.g., business units, departments), top
management, finance, operations, engineering, legal, and others impacted by sourcing
decisions.
External Stakeholders - ANS Suppliers and potential suppliers, end customers, logistics
providers, governments (due to regulations), trade unions, community members, and other
supply chain partners.
Needs - ANS Essential attributes that the good or service must have to fulfill the
organization's requirements (e.g., minimum technical specs, required quality level).
Wants - ANS Desirable features or performance attributes that are not mandatory but add
value (e.g., advanced features, brand preferences).
Budget - ANS Ensures spending stays within financial limits and sourcing must deliver value
without exceeding allocated costs.
Operational - ANS Addresses delivery timing, packaging, inventory levels, and risk mitigation,
aligning with day-to-day functional requirements of the organization.
Strategic - ANS Supports long-term goals of the organization, business units, and the supply
function, aligning internal stakeholder demands with strategic sourcing priorities.
Direct Materials - ANS Materials that are directly used in the production of goods.
Indirect Materials (MRO) - ANS Materials used in maintenance, repair, and operations that
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are not part of the final product.
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@COPYRIGHT SIRJOEL 2025/2026
, Capital Expenditures - ANS Funds used by a company to acquire or upgrade physical assets
such as property, industrial buildings, or equipment.
Operating Expense - ANS The ongoing cost for running a product, business, or system.
Corporation - ANS A legal entity that exists independently of its creators which has many
rights given to individuals, can enter into contracts, buy and sell.
Disposal - ANS The process of removing something from a location, typically the removal of
scrap, surplus, excess, obsolete and waste items from an organization's premises.
Influence - ANS The capability to affect actions, behaviors or opinions, often without overt or
apparent action on the part of the influencer.
Objectives - ANS General statements about expected outcomes; targets set by management.
Solicitation - ANS A request to suppliers to make submission to a purchasing organization.
Critical Document - ANS Statement of Work (SOW).
Public Sector - ANS Invitation for Proposal (IFP).
Negotiated Procurement - ANS Request for Proposal (RFP) or Quotation (RFQ).
Surplus - ANS An amount of an asset that remains beyond what is needed.
Step 1: Recognition of Need - ANS Involves identifying what product or service is required by
3
internal stakeholders; ensures alignment with business goals and allows early supply
Page
management involvement.
@COPYRIGHT SIRJOEL 2025/2026
OVERVIEW 2025 QUESTIONS AND
ANSWERS
Recognition of Need - ANS Identifying that a product or service is required.
Specification of Need - ANS Detailing technical and performance requirements, quality,
quantity, and delivery timing.
Searching for Potential Sources - ANS Identifying suppliers who could fulfill the need.
Analyze Suppliers' Proposals and Capabilities - ANS Evaluating supplier bids and their ability
to meet specifications.
Negotiation with and Selection of Supplier - ANS Selecting the best-value supplier and
negotiating contract terms.
Administration of the Contract - ANS Managing the agreement and ensuring compliance.
Evaluation of Performance and Feedback - ANS Reviewing supplier performance and sharing
feedback.
1
Page
@COPYRIGHT SIRJOEL 2025/2026
, Disposal of Excess, Scrap, or Surplus - ANS Managing remaining inventory or materials at the
end of use.
Internal Stakeholders - ANS Internal customers (e.g., business units, departments), top
management, finance, operations, engineering, legal, and others impacted by sourcing
decisions.
External Stakeholders - ANS Suppliers and potential suppliers, end customers, logistics
providers, governments (due to regulations), trade unions, community members, and other
supply chain partners.
Needs - ANS Essential attributes that the good or service must have to fulfill the
organization's requirements (e.g., minimum technical specs, required quality level).
Wants - ANS Desirable features or performance attributes that are not mandatory but add
value (e.g., advanced features, brand preferences).
Budget - ANS Ensures spending stays within financial limits and sourcing must deliver value
without exceeding allocated costs.
Operational - ANS Addresses delivery timing, packaging, inventory levels, and risk mitigation,
aligning with day-to-day functional requirements of the organization.
Strategic - ANS Supports long-term goals of the organization, business units, and the supply
function, aligning internal stakeholder demands with strategic sourcing priorities.
Direct Materials - ANS Materials that are directly used in the production of goods.
Indirect Materials (MRO) - ANS Materials used in maintenance, repair, and operations that
2
are not part of the final product.
Page
@COPYRIGHT SIRJOEL 2025/2026
, Capital Expenditures - ANS Funds used by a company to acquire or upgrade physical assets
such as property, industrial buildings, or equipment.
Operating Expense - ANS The ongoing cost for running a product, business, or system.
Corporation - ANS A legal entity that exists independently of its creators which has many
rights given to individuals, can enter into contracts, buy and sell.
Disposal - ANS The process of removing something from a location, typically the removal of
scrap, surplus, excess, obsolete and waste items from an organization's premises.
Influence - ANS The capability to affect actions, behaviors or opinions, often without overt or
apparent action on the part of the influencer.
Objectives - ANS General statements about expected outcomes; targets set by management.
Solicitation - ANS A request to suppliers to make submission to a purchasing organization.
Critical Document - ANS Statement of Work (SOW).
Public Sector - ANS Invitation for Proposal (IFP).
Negotiated Procurement - ANS Request for Proposal (RFP) or Quotation (RFQ).
Surplus - ANS An amount of an asset that remains beyond what is needed.
Step 1: Recognition of Need - ANS Involves identifying what product or service is required by
3
internal stakeholders; ensures alignment with business goals and allows early supply
Page
management involvement.
@COPYRIGHT SIRJOEL 2025/2026
