CPSM Supply Management Integration 4 — Questions and Answers
Question 1: In supply management integration, 'make-or-buy' analysis PRIMARILY considers:
- Only the direct labor cost of internal production
- Core competency, total cost, capacity, risk, and strategic fit of producing versus procuring (Correct answer)
- The preference of the production department
- Only available supplier quotes
Correct answer: Core competency, total cost, capacity, risk, and strategic fit of producing versus procuring
Make-or-buy decisions require a multi-factor analysis including cost, strategic alignment, core competency, capacity, and supply risk.
Question 2: A supply management team is implementing supplier-managed inventory (SMI). Which internal function MUST be closely integrated for this to succeed?
- Legal department only
- Operations and IT to share real-time consumption and inventory data with the supplier (Correct answer)
- Human resources for staffing adjustments
- Marketing for promotional scheduling
Correct answer: Operations and IT to share real-time consumption and inventory data with the supplier
SMI requires that operations consumption data and inventory levels flow electronically to the supplier so they can replenish proactively.
Question 3: Which approach BEST integrates supply management with an organization's sustainability goals?
- Measuring only Scope 1 emissions from company facilities
- Extending sustainability criteria into supplier selection, evaluation, and development programs (Correct answer)
- Purchasing carbon offsets without supplier engagement
- Reporting sustainability metrics annually without setting supplier targets
Correct answer: Extending sustainability criteria into supplier selection, evaluation, and development programs
Integrating sustainability into supplier selection and development programs embeds environmental and social criteria throughout the supply chain.
Question 4: Which risk integration practice BEST prepares an organization for supply chain disruptions?
- Relying on a single low-cost supplier for all critical materials
- Maintaining a risk register with identified supply risks, owners, and mitigation plans updated regularly (Correct answer)
- Keeping supply risks confidential from senior leadership
- Using only reactive measures after disruptions occur
Correct answer: Maintaining a risk register with identified supply risks, owners, and mitigation plans updated regularly
A living risk register with assigned owners and mitigation plans ensures proactive, cross-functional management of supply chain risks.
Question 5: When integrating supply management with legal, which activity is MOST critical during contract negotiations?
- Legal drafting the technical specifications
- Ensuring contract terms reflect both commercial intent and legal enforceability (Correct answer)
- Legal selecting the preferred supplier
- Procurement reviewing case law independently
Correct answer: Ensuring contract terms reflect both commercial intent and legal enforceability
Effective supply-legal integration ensures that what procurement negotiates commercially is accurately and legally enforceable in the final contract.
Question 6: Supply management's integration with accounts payable MOST directly improves:
- Product design quality
- Invoice accuracy, payment timing, and working capital management (Correct answer)
- Customer satisfaction scores
- Warehouse layout efficiency
Correct answer: Invoice accuracy, payment timing, and working capital management
Close integration between procurement and AP ensures invoices match purchase orders, payments are timed to optimize working capital, and disputes are resolved quickly.
Question 7: A company's procurement team is asked to support a merger and acquisition (M&A) initiative. Which supply management task is MOST relevant?
- Designing the acquired company's products
- Conducting supply chain due diligence on the target company's supplier base and contracts (Correct answer)
- Managing post-merger employee benefits
- Setting the acquisition purchase price
Correct answer: Conducting supply chain due diligence on the target company's supplier base and contracts
Supply chain due diligence assesses the quality, risk, and contractual obligations of the target's supplier relationships, which materially affect deal value.
CPSM Supply Management Integration 4
In supply management integration, 'make-or-buy' analysis PRIMARILY considers: