CPSM CORE Passing Score

A Pareto analysis chart is used to identify and rank the most important categories based on the principle that 80% of effects come from 20% of causes. By conducting a spend analysis and using a Pareto analysis chart, the supply manager can determine which categories account for the majority of the company's spending. This helps in prioritizing efforts and resources towards the most impactful categories.

References

Juran, J.M. (1989). Juran on Leadership For Quality: An Executive Handbook.

CIPS (Chartered Institute of Procurement & Supply). Spend Analysis and Pareto Principle.

A joint research and development (R&D) team is most beneficial for developing supplier technologies and processes important to the buying organization. By forming a joint R&D team, both the buying organization and the supplier can collaborate closely to innovate and improve technologies and processes that are directly aligned with the organization's strategic goals. This collaboration fosters knowledge sharing, leverages combined expertise, and enhances mutual commitment to achieving advanced technological solutions and process improvements that benefit both parties. References:

Monczka, R., Handfield, R., Giunipero, L., & Patterson, J. (2020). Purchasing and Supply Chain Management. Cengage Learning.

ISM (Institute for Supply Management) resources on supplier collaboration and joint development.

Reaching out to suppliers for innovative ideas on products and services is the best long-term strategy for creating top-line revenue growth and increased sales for both the organization and its key suppliers. Collaborating with suppliers can lead to new product developments, process improvements, and innovative solutions that drive growth and competitive advantage. Identifying low-cost options (Option A) focuses on cost reduction rather than growth. Reviewing SOW standards (Option C) and asking sales and marketing for industry trends (Option D) are useful but not as impactful as direct collaboration with suppliers for innovation.

References:

The Procurement and Supply Manager's Desk Reference by Fred Sollish and John Semanik

Supply Chain Collaboration: How to Implement CPFR and Other Best Collaborative Practices by Ronald K. Ireland and Colleen Crum