CPP Strategic Sourcing & Procurement 2

Question 1

Which sourcing strategy is MOST appropriate when a commodity has many qualified suppliers and low switching costs?

Accepted Answer

Competitive bidding

Answer

Competitive bidding is best when multiple qualified suppliers exist and switching costs are low, maximizing price competition.

Question 2

A procurement team conducts a 'should-cost' analysis. What is the primary purpose of this technique?

Accepted Answer

To model what a product should cost based on materials, labor, and overhead

Answer

Should-cost analysis builds a bottom-up cost model to understand what a product reasonably should cost, strengthening negotiation positions.

Question 3

In strategic sourcing, 'spend analysis' is BEST described as:

Accepted Answer

Collecting, cleansing, and categorizing expenditure data to identify savings opportunities

Answer

Spend analysis involves organizing and analyzing procurement expenditure data to identify consolidation and savings opportunities.

Question 4

Which of the following BEST describes a 'preferred supplier' designation in a strategic sourcing program?

Accepted Answer

A pre-qualified supplier given priority consideration based on performance and strategic fit

Answer

Preferred supplier status is earned through demonstrated performance and strategic alignment, giving that supplier priority in the sourcing process.

Question 5

A company sources 80% of its spend from 20% of its suppliers. This phenomenon is BEST explained by:

Accepted Answer

Pareto's principle (80/20 rule)

Answer

Pareto's principle (80/20 rule) commonly describes the pattern where a small percentage of suppliers account for the majority of spend.

(CPP) Certified Purchasing Professional Practice Test