CPSM Procurement & Sourcing 3 — Questions and Answers
Question 1: Which sourcing strategy involves awarding contracts to a single supplier for an entire commodity category?
- Sole sourcing
- Single sourcing (Correct answer)
- Dual sourcing
- Multiple sourcing
Correct answer: Single sourcing
Single sourcing is a deliberate decision to use one supplier for a category, whereas sole sourcing means only one supplier exists in the market.
Question 2: In the context of procurement, what does 'landed cost' include?
- Purchase price only
- Purchase price plus freight, duties, and insurance (Correct answer)
- Purchase price minus supplier discounts
- Total cost of ownership over asset life
Correct answer: Purchase price plus freight, duties, and insurance
Landed cost encompasses all expenses required to deliver goods to the buyer's location, including freight, duties, insurance, and handling fees.
Question 3: A buyer issues a Request for Information (RFI) primarily to:
- Award a contract to the best bidder
- Collect pricing commitments from suppliers
- Gather market intelligence before defining requirements (Correct answer)
- Qualify suppliers for an approved vendor list
Correct answer: Gather market intelligence before defining requirements
An RFI is a non-binding document used to gather information about supplier capabilities and market conditions before formal solicitation.
Question 4: Which negotiation tactic involves making a concession contingent on receiving one in return?
- Anchoring
- Conditional trading (Correct answer)
- Good cop/bad cop
- Nibbling
Correct answer: Conditional trading
Conditional trading links concessions so that giving something is tied to receiving something of value in return, maintaining negotiation balance.
Question 5: What is the primary purpose of a procurement spend analysis?
- To audit supplier financial statements
- To identify opportunities for consolidation and cost savings (Correct answer)
- To determine internal budget allocations
- To benchmark supplier quality performance
Correct answer: To identify opportunities for consolidation and cost savings
Spend analysis categorizes and reviews purchasing data to uncover consolidation opportunities, maverick spend, and cost-reduction levers.
Question 6: Under UCC Article 2, when does title to goods typically pass from seller to buyer?
- When the contract is signed
- When the seller ships the goods
- When the buyer takes physical delivery
- At the time and place the seller completes delivery obligations (Correct answer)
Correct answer: At the time and place the seller completes delivery obligations
Under the UCC, title passes at the time and place the seller completes its delivery obligation as specified in the contract.
Question 7: A procurement team uses a weighted-point evaluation model for supplier selection. What is the main advantage of this approach?
- It eliminates the need for supplier visits
- It provides a structured, objective comparison across multiple criteria (Correct answer)
- It guarantees the lowest purchase price
- It removes negotiation from the sourcing process
Correct answer: It provides a structured, objective comparison across multiple criteria
Weighted-point models assign importance scores to criteria, enabling systematic and defensible comparisons among competing suppliers.
CPSM Procurement & Sourcing 3
Which sourcing strategy involves awarding contracts to a single supplier for an entire commodity category?