CPSM CPSM Risk Management & Compliance 2 — Questions and Answers
Question 1: A supply manager uses a risk heat map to prioritize supply chain risks. What two dimensions does a heat map typically plot?
- Cost impact and supplier size
- Probability of occurrence and severity of impact (Correct answer)
- Lead time and order frequency
- Geographic location and supplier age
Correct answer: Probability of occurrence and severity of impact
A risk heat map plots the likelihood (probability) of a risk occurring against its potential impact (severity), allowing supply managers to visually prioritize which risks require the most attention.
Question 2: Under the US Customs Trade Partnership Against Terrorism (C-TPAT) program, certified companies benefit from:
- Exemption from all import duties
- Reduced border inspections and expedited cargo processing (Correct answer)
- Guaranteed delivery timelines from foreign suppliers
- Waiver of country-of-origin labeling requirements
Correct answer: Reduced border inspections and expedited cargo processing
C-TPAT certification signals that a company meets CBP's supply chain security standards, earning benefits like fewer inspections and priority processing at US border crossings.
Question 3: Supply chain 'resilience' is best defined as:
- The ability to achieve the lowest possible procurement cost
- The capacity to anticipate, prepare for, respond to, and adapt to disruptions (Correct answer)
- Having the maximum number of suppliers for every category
- Maintaining 90-day safety stock for all items
Correct answer: The capacity to anticipate, prepare for, respond to, and adapt to disruptions
Supply chain resilience encompasses the full cycle of disruption management: anticipating risks, preparing mitigation strategies, responding effectively when disruptions occur, and adapting for future events.
Question 4: Which supply chain compliance framework is specifically focused on environmental and social responsibility in global supply chains?
- ISO 9001
- SA8000 (Correct answer)
- ISO 45001
- AS9100
Correct answer: SA8000
SA8000 is an international certification standard based on UN and ILO conventions that addresses labor rights, child labor, forced labor, working conditions, and management systems in global supply chains.
Question 5: A supply manager discovers that a Tier 2 supplier is using child labor. Under a robust supplier code of conduct, what is the most appropriate immediate action?
- Immediately terminate all Tier 1 suppliers
- Notify the Tier 1 supplier and require them to address the issue through a corrective action plan (Correct answer)
- Report directly to the Tier 2 supplier and wait 90 days for resolution
- Ignore it since the Tier 2 supplier is not in direct contract with the buyer
Correct answer: Notify the Tier 1 supplier and require them to address the issue through a corrective action plan
The buyer's most immediate and effective lever is the Tier 1 supplier relationship—requiring them to enforce the code of conduct with their sub-tier suppliers via a formal corrective action plan.
Question 6: What is 'supply chain mapping' and why is it critical for risk management?
- Documenting delivery routes for logistics optimization
- Visualizing the full network of suppliers across all tiers to identify hidden dependencies and vulnerabilities (Correct answer)
- Creating organizational charts for the procurement team
- Mapping warehouse locations for distribution planning
Correct answer: Visualizing the full network of suppliers across all tiers to identify hidden dependencies and vulnerabilities
Supply chain mapping creates a visual representation of every supplier relationship across all tiers, revealing concentration risks, geographic exposures, and single points of failure that are invisible when only Tier 1 is tracked.
CPSM CPSM Risk Management & Compliance 2
A supply manager uses a risk heat map to prioritize supply chain risks.
What two dimensions does a heat map typically plot?