CPSM Supplier Relationship Management 4 — Questions and Answers
Question 1: Which metric is MOST useful for measuring a supplier's delivery reliability over time?
- On-time delivery rate (Correct answer)
- Invoice accuracy rate
- Lead time variability
- Defect escape rate
Correct answer: On-time delivery rate
On-time delivery rate directly measures whether a supplier consistently meets agreed delivery schedules.
Question 2: A buyer discovers that a key supplier is financially distressed. What is the BEST immediate action?
- Terminate the contract immediately
- Conduct a financial risk assessment and develop a contingency plan (Correct answer)
- Increase purchase orders to help stabilize the supplier
- Transfer all business to a backup supplier without notice
Correct answer: Conduct a financial risk assessment and develop a contingency plan
A financial risk assessment combined with a contingency plan allows the buyer to understand exposure and prepare alternatives without disrupting supply.
Question 3: In supplier segmentation, which quadrant of the Kraljic Matrix represents items with high supply risk and low profit impact?
- Leverage items
- Strategic items
- Bottleneck items (Correct answer)
- Non-critical items
Correct answer: Bottleneck items
Bottleneck items have high supply risk but low profit impact, requiring supply security strategies.
Question 4: What is the primary purpose of a Supplier Code of Conduct?
- To set pricing expectations for the supplier
- To define ethical, social, and environmental standards suppliers must meet (Correct answer)
- To establish payment terms and invoice requirements
- To outline the buyer's internal approval process
Correct answer: To define ethical, social, and environmental standards suppliers must meet
A Supplier Code of Conduct communicates the buyer's expectations for ethical behavior, labor practices, and environmental responsibility.
Question 5: Which approach BEST describes 'open book costing' in a supplier relationship?
- The supplier shares all cost breakdowns with the buyer to enable joint cost reduction (Correct answer)
- The buyer publishes its internal budget to the supplier
- Both parties share customer pricing data
- The buyer audits the supplier's financial statements annually
Correct answer: The supplier shares all cost breakdowns with the buyer to enable joint cost reduction
Open book costing involves the supplier transparently sharing cost data so buyer and supplier can collaborate to reduce costs.
Question 6: A supplier consistently delivers high-quality products but frequently misses delivery windows. Which corrective action plan element is MOST critical?
- Requesting a price reduction as compensation
- Analyzing root causes of delivery failures and setting measurable improvement targets (Correct answer)
- Immediately dual-sourcing the item
- Requiring the supplier to carry more safety stock
Correct answer: Analyzing root causes of delivery failures and setting measurable improvement targets
Root cause analysis with measurable targets addresses the systemic delivery issue rather than just symptoms.
Question 7: Which of the following BEST characterizes a transactional supplier relationship?
- Long-term collaboration with shared R&D investments
- Short-term, price-focused interactions with minimal information sharing (Correct answer)
- Joint business planning and aligned strategic goals
- Exclusive supply agreements with guaranteed volumes
Correct answer: Short-term, price-focused interactions with minimal information sharing
Transactional relationships are characterized by arm's-length interactions focused primarily on price with limited collaboration or information exchange.
CPSM Supplier Relationship Management 4
Which metric is MOST useful for measuring a supplier's delivery reliability over time?