CIPS L5M6: Category Management Certification Overview

1. CIPS L5M6 ExamName: Category Management Exam Questions & Answers Sample PDF (Preview content before you buy) Check the full version using the link below. https://pass2certify.com/exam/l5m6 Unlock Full Features: Stay Updated: 90 days of free exam updates Zero Risk: 30-day money-back policy Instant Access: Download right after purchase Always Here: 24/7 customer support team https://pass2certify.com//exam/l5m6 Page 1 of 6

2. Question 1. (Single Select) Which of the following approaches to cost is the least transparent? A: Price management B: Price acceptance C: Cost down D: Cost out Answer: B Explanation: Price acceptance is the least transparent approach because the buyer simply accepts the supplier’s quoted price without investigating its basis or fairness. There is no visibility into the supplier’s cost structure, margins, or pricing methodology. By contrast: Price management involves actively managing pricing discussions. Cost down involves collaborative efforts to reduce costs after production. Cost out involves eliminating costs before production through design. [Ref: CIPS L5M6 Study Guide, p.81 – Costing methods] Question 2. (DRAGDROP) Randoxx Ltd is a manufacturing company which has four main categories of expenditure: Category 1: The market of this category is highly innovative and has rapidly changed over the past five years. There are many suppliers who provide similar products at similar price points. Category 2: This category of spend is for highly specialised products and it is important to Randoxx that the products are carbon neutral. Because of this, there is a reduced number of suppliers who provide products to this category and Randoxx has little influence over the price that they pay. Category 3: This category of spend is for natural resources which are only found in very few parts of the world. Because of this Randoxx imports all of these items from one country abroad and currency fluctuations have a huge impact on the profit margin of this category spend. https://pass2certify.com//exam/l5m6 Page 2 of 6

3. Category 4: This is a highly technical product which has a patent. It is used in the creation of laptops and phones and it would be impossible to make these with a different product. Due to the growing population Randoxx forecasts that demand for this product will increase. Task: Complete the table below by identifying each category’s Porter’s Force driver and STEEPLE factor challenge. Each response should be used only once. Question 3. (Multi Select) According to Porter’s Five Forces, supplier power is strong in industries where which of the following is true? [Select THREE] A: No substitutes are available B: Supplier’s customers are fragmented C: Switching costs are low D: Forward integration is possible E: The product is undifferentiated Answer: A, B, D https://pass2certify.com//exam/l5m6 Page 3 of 6

4. Explanation: Supplier power is strong when buyers have fewer choices and suppliers have leverage. This occurs where: No substitutes are available [A]: Buyers are locked into what suppliers provide, increasing supplier power. Supplier’s customers are fragmented [B]: When customers are fragmented [many small buyers], they cannot collectively negotiate, so suppliers hold more power. Forward integration is possible [D]: Suppliers can bypass buyers and sell directly to the end customer, which gives them negotiating strength. Options C and E relate more to buyer power: Switching costs are low [C]: This reduces supplier power as buyers can easily move. Undifferentiated products [E]: This strengthens buyer power since products are interchangeable. [Ref: CIPS L5M6 Study Guide, p.116 – Porter’s Five Forces model] Question 4. (Single Select) Which category of spend item would be most suitable to purchase through an e-auction? A: Bottleneck B: Leverage C: Strategic D: Non-critical Answer: B Explanation: Leverage items [low supply risk, high financial impact] are best suited for e-auctions. Buyers can use competitive bidding to drive down prices when multiple suppliers exist. By contrast: Bottleneck items [low value, high supply risk] are not suited as choice is limited. Strategic items require partnership and collaboration, not price-only competition. Non-critical items don’t justify the effort of auctions. [Ref: CIPS L5M6 Study Guide, p.97 – Kraljic Portfolio Matrix] Question 5. (Multi Select) https://pass2certify.com//exam/l5m6 Page 4 of 6

5. ABC Ltd wishes to ensure compliance across its supply chain. Which of the following are steps that can be taken to ensure compliance with regulations and standards including CSR? [Select TWO] A: Only work with large suppliers who have a CSR policy B: Make ethics and compliance a priority when qualifying new suppliers C: Communicate the company’s values across the supply chain D: Do not work with suppliers in low-cost countries Answer: B, C Explanation: Making ethics and compliance a priority [B] ensures supplier selection considers regulatory and social responsibility aspects. Communicating values across the supply chain [C] builds alignment and accountability. A and D are incorrect because having a CSR policy doesn’t guarantee practice, and low-cost country sourcing does not automatically mean non-compliance. [Ref: CIPS L5M6 Study Guide, p.107 – Ensuring compliance in supply chains] https://pass2certify.com//exam/l5m6 Page 5 of 6

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