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