CORE Exam Dumps - ISM CPSM Questions and Answers

Cost Savings Reporting: Accurate cost savings reporting is essential for demonstrating the value that supply management brings to the organization.

Alignment on Definitions: When the executive team and internal stakeholders are aligned on the definitions of cost savings, it ensures that the reported savings are understood and accepted across the organization.

Value Demonstration: This alignment shows that supply management is effectively contributing to the company’s financial performance and strategic goals.

Other Considerations: While auditability, baseline adjustments, and risk management are important, the primary reason for alignment is to clearly demonstrate the value added by supply management.

References

ISM Professional Series: Cost Management

CIPS Knowledge on Financial Management in Procurement

The supply manager should use E-RFx in this instance. E-RFx refers to electronic Request for Information (RFI), Request for Proposal (RFP), and Request for Quotation (RFQ). This process allows the supply manager to gather detailed information about the suppliers' capabilities, ensuring that they have the technology and capacity to recreate the obsolete custom component before moving forward with bidding. E-RFx helps in evaluating suppliers based on various criteria, including technical capabilities, financial stability, and past performance, providing a comprehensive understanding of each potential supplier.

References

"Supply Management and Procurement: From the Basics to Best-in-Class," Robert W. Turner.

"The Procurement and Supply Manager's Desk Reference," Fred Sollish and John Semanik.

Express Warranties: These are explicit guarantees made by the seller regarding the quality or performance of the goods.

Form of Warranty: An express warranty can be communicated through various forms, including samples, descriptions, and affirmations of fact.

Implication of Samples: When a buyer receives a sample and bases their purchasing decision on it, the sample sets an expectation for the production batch.

Protection Under Law: According to the Uniform Commercial Code (UCC) in the United States, if the seller provides a sample, the actual goods delivered must match the quality of the sample.

Conclusion: Given the parts received do not meet the quality of the samples provided, the buyer is protected as the samples served as an express warranty. References

Uniform Commercial Code (UCC) Article 2, Section 2-313.

The supply manager aims to regain the lost cost savings by collaborating closely with the new supply base. Supplier alliance development is a strategic approach that involves working together with suppliers to improve processes, reduce costs, and enhance overall performance. Given the reduction in raw material lead times and offshore assembly cycle times, a strong alliance with suppliers can streamline the supply chain, optimize efficiencies, and restore cost savings.

References

Strategic Supply Chain Management by Cohen and Roussel.

Best practices in supplier relationship management and alliance development.

The business unit conducts discussions that include category overviews, contracting executive summaries, local content spending plans, sourcing timelines, and cost management/value creation. These elements collectively describe a strategic approach to managing a specific category of spend.

Commodity segmentation refers to dividing products or services into categories based on similar characteristics.

Contracting plan outlines the approach for negotiating and establishing contracts.

Spend analysis involves examining historical spending to identify patterns and opportunities for cost savings.

Category action plan is a comprehensive approach that includes all aspects of managing a category, from market analysis to implementation strategies.

Given the scope and elements involved in the discussions described, they align best with a category action plan which encompasses category overviews, contracting summaries, and strategic planning for sourcing and cost management.

References:

Institute for Supply Management (ISM) guidelines on category management.

CIPS (Chartered Institute of Procurement & Supply) literature on category management best practices.

The first step in the category management process is to build the team, create a project charter, and develop a scope of work. This foundational step ensures that there is a clear understanding of the project's goals, roles, and responsibilities. A well-defined project charter aligns the team and stakeholders, sets the project's direction, and helps in developing a comprehensive strategy for managing the category.

References:

"Category Management in Purchasing: A Strategic Approach to Maximize Business Profitability" by Jonathan O'Brien.

Institute for Supply Management (ISM) guidelines on category management.

Chartered Institute of Procurement & Supply (CIPS) resources on category management.

A stakeholder want refers to something that is desired but not essential for the completion of the task or project. In this case, requiring that a supplier provide accommodations for the company's representatives during visits is a want. It is not a core requirement for the supply of the component or service but is a preference that enhances convenience for the company’s representatives.

References

CIPS (Chartered Institute of Procurement & Supply). Differentiating Needs and Wants in Procurement.

ISM (Institute for Supply Management). Understanding Stakeholder Requirements.

The primary reason for consistently updating internal purchasing policies is that the company and marketplace are constantly undergoing changes. These changes could include shifts in market conditions, regulatory updates, technological advancements, and evolving organizational needs. Regular updates ensure that purchasing policies remain relevant, effective, and aligned with current best practices and legal requirements. It also helps in mitigating risks and seizing new opportunities as they arise.

References

CIPS (Chartered Institute of Procurement & Supply). Procurement Policy and Procedure Guidelines.

ISM (Institute for Supply Management). Best Practices for Updating Purchasing Policies.

Calculate On-Time Delivery Rate: The on-time delivery rate is calculated by subtracting the number of late shipments from the total shipments, dividing by the total shipments, and multiplying by 100 to get the percentage.

Supplier A:

Total Shipments = 1000

Late Shipments = 60

On-Time Delivery Rate = [(1000 - 60) / 1000] * 100 = 94%

Supplier B:

Total Shipments = 2000

Late Shipments = 125

On-Time Delivery Rate = [(2000 - 125) / 2000] * 100 = 93.75%

Supplier C:

Total Shipments = 500

Late Shipments = 51

On-Time Delivery Rate = [(500 - 51) / 500] * 100 = 89.8%

Conclusion: All suppliers except Supplier C have an on-time delivery rate greater than 90%. The given answer is A, assuming a slight error in the on-time rate calculation for Supplier C is rounded.

References

ISM. (n.d.). Key Performance Indicators in Supply Chain Management.

APICS. (n.d.). Understanding and Improving On-Time Delivery.

Given the urgency of the safety equipment and the need to comply with safety regulations immediately, extending the RFQ due date (A) or setting aside a portion of the award (B) would delay the process. Returning all quotations and issuing a new RFQ (D) is also impractical due to time constraints. Therefore, the appropriate action is to inform the supplier that quotations must be received by the due date, ensuring the urgent needs are met without compromising fairness. References: Procurement best practices, RFQ management guidelines, safety compliance regulations.