Procurement & Sourcing Flashcards
7 cards from real CPSM practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Procurement & Sourcing flashcards as text
Which sourcing approach is most appropriate when specification requirements are unclear at project outset?
Answer: Performance-based contracting with outcome metrics
Performance-based contracting defines desired outcomes rather than prescriptive specs, giving suppliers flexibility when requirements cannot be fully detailed upfront.
A supplier's Cpk index of 1.33 indicates that the process is:
Answer: Capable and meeting quality specifications with adequate margin
A Cpk of 1.33 (4-sigma) demonstrates the process is centered and capable, with a 99.994% yield rate, exceeding the minimum acceptable threshold of 1.0.
In international procurement, an Incoterms® DDP (Delivered Duty Paid) term means the seller is responsible for:
Answer: All costs and risks including import duties and delivery to buyer's premises
DDP represents maximum seller obligation, covering all transport costs, export and import duties, and delivery to the named destination.
Which metric best measures procurement's contribution to organizational value beyond cost savings?
Answer: Total value delivered, including risk mitigation and innovation
Total value delivered captures procurement's broader contributions such as risk reduction, supplier innovation, and supply chain resilience, beyond simple price savings.
A 'should-cost' model in procurement is used to:
Answer: Estimate what a product or service should cost based on materials, labor, and overhead
Should-cost analysis builds up an independent cost estimate from first principles, giving the buyer a fact-based target for negotiation.
A buyer discovers that a key supplier is also supplying a direct competitor with the same proprietary design. The most critical contractual clause that should have prevented this is:
Answer: Exclusivity clause
An exclusivity clause contractually prevents the supplier from providing the same product, technology, or design to competing buyers.
When evaluating total cost of ownership (TCO) for capital equipment, which cost element is most commonly overlooked?
Answer: End-of-life disposal and decommissioning costs
Disposal and decommissioning costs are frequently excluded from TCO models despite being significant, especially for equipment containing hazardous materials.