CPSM Exam 1 study guide
CPSM Exam 1 · Work through your exam, one topic at a time.
The Certified Professional in Supply Management (CPSM) is a professional credential administered by the Institute for Supply Management, an association established in 1915. Employers in manufacturing, healthcare, government, technology, and professional services recognize it as evidence of standardized supply management competence. The CPSM Exam 1 study guide has 4 sections and about 1,283 words.
01Sourcing Strategies and Supply Base Management
Start with spend analysis: the Pareto rule (80/20) tells you where money and risk concentrate. The Kraljic matrix plots profit/spend impact against supply risk and yields four strategies: non-critical (low/low - simplify, catalog buying, e-procurement), leverage (high impact, low risk - competitive bidding, volume consolidation, reverse auctions), bottleneck (low impact, high risk - secure supply, dual sourcing, buffer stock, long-term agreements) and strategic (high/high - partnership, joint development, early supplier involvement, multi-year contracts).
309 words, about 2 min02Procurement Processes and Contract Management
Procurement runs as a cycle: identify need and specification, then source (RFI for market information, RFQ for well-defined goods, RFP when you buy a solution and want proposals), evaluate against weighted criteria, negotiate, award, issue the purchase order, receive, match PO/receipt/invoice, and pay. Keep the RFQ/RFP distinction straight: an RFQ asks for price against a fixed specification; an RFP asks how the supplier will meet a need.
316 words, about 2 min03Cost Analysis, Price Determination, and Total Cost of Ownership
Price analysis compares a proposed price to the market - other quotes, historical prices, published indices, catalog prices - without opening the supplier's books. Cost analysis breaks the price into elements (material, labor, overhead, G&A, profit) and tests each for reasonableness; use it when competition is thin, the item is new, or the amount is large.
311 words, about 2 min04Supplier Evaluation, Quality Assurance, and Ethical and Legal Standards
Qualify suppliers on capability, capacity, financial health, quality system, technical fit, service and risk. Use a weighted scorecard so criteria weights reflect business priorities, and document the evidence behind each score.
347 words, about 2 min