“9BD9935N9N0000 PUL EE CULE UUEULE YE OUUOUUUULULUUDNODVOOF 69.9 sv! CPSM® Study Guide Exam 1: Foundation of Supply Management Ve Editor: Robert B. Handfield, Ph.D. goo” Staff Editors: Holly LaCroix Johnso Karen: P. Collins; GPSM, ‘C Christina Foster; SPHR : ISM Certified Professional 62011 Ab ight mace: PSMT ett tor Soil Mangarent™ Sa Caren decPsme STUDY GUIDE (Soot SAYA igh sere » SDD0 bODDIDWO eccoacc coc r¢poo D900n a YVIWVOUDWVVOOCO POVUYULUL WELL CECULUULELL EL Table of Contents Purpose of the Study Guide... Exam 1 Contributors. . Introduction ....+.. Definition of Supply Management ieee Purpose of the Examination... e Definition of a Supply Management Pr Professional. Content of the Examination... Important Characteristics of the Examin How the Exam Was Constructed ‘Scoring, Equating and Scaling .. Types of Questions in the Exam... Exam Process Levels... Technical Properties of the Exam .. Writing/Reviewing Exam Questions..........2.. Distributions of Questions within the Exam... : Overview of Exam 1: Foundation of Supply Management Overview of Exam 2: Effective Supply Management Performance . Overview of Exam 3: Leadership in Supply Management... Bridge Exami Distributions of Questions within the Bridge Exam . Overview of Bridge Examination eee Contracting and Negotiation Task Act Prepare solicitations for competitive bids. quotations and proposals with pertinent specifications, terms and conditions. ...........ssseeeeeee0-1 Task 1A2 Prepare for and develop strategies and tactics for negotiations, including definition of roles and responsibilities of team members. ........666600000-45 Task 1-03 Lead/eondvet/support negotiations with sup dosired results. : : Task 1-A-4 Manage the preparation and/or issuance of contracts/purchase orders/agreements. . Task LAS ‘Administer contracts/purchase orders from award to completion or termination. ......6eeeeeeeee vee 67 PSM STUDY GUIDE Eat EM ALA ReCost and Finance Task 1-8-1 Prepare and/or administer a supply management department budget.................83 Task 1-8-2 Develop a cost management program strategies for purchases. Tesk 1-8-3 Identify savings potential and opportunities and strategies for specific categories through spend analysis. Se epee eee ee AOD Task 1-8-4 Perform cost/benefit analyses on acquisitions. +105 Task 1-8-5 Develop financing and leveraging strategies for purchases. 127 International Task 1-C-1 Identity and assess international markets to source goods and services. . . . 137 Task 1-C-2 Develop international sources of materials and services.. 149 Task 1-6-3 Develop and maintain documentation regarding cross-border transactions. Social Responsibility Task 1-D-4 Develop and act upon a code of business conduct for the supply management function and external suppliers... .-.. ceseeeeeeeees 167 Task 1-0-2 Establish and monitor environmentally responsible and compliant programs throughout the supply chain and life cycle........... Task 1-0-3 Implomest, eitor and promote organizational and supply chain safety policies and procedures. ae 177 cee 187 Sourcing Task 1-E+1 Analyze potential sources of goods or ServiceS... 66.6.6 6eeceseeeeseeeeeeeeeee es 197 Task 1-6-2 Evaluate competitive offerings to determine the overall best offer for a product/service. Task 1E3 Plan ane cormmurinate sourcing end supply etrtegiee based on forecasted data See ae 229 213 iv ‘PSM STUDY GUIDE E201 ISA Rh esas oO 8 oO oO o oO oO oO oO a oODoD.OS9N0DDO WOUOVIOOOS oO PWEEEEULLVUE CELL UUUYUUUU ‘Supplier Relationship Management Task Ft ‘dentify opportunities and benefits for rationalizing supply base. ...... Task 1-F-2 Develop/manage effective relationships with suppliers. ............ veces BBB Task 1-F-3 Develop/implement a supplier diversity program. ee Task 1-F-4 Develop new supplier qualification plans and reports to assure components, materials and suppliers meet specified requirements (regulatory, safety, celiability, quality). ...........+ Task 1-5 Conduct supplier performance evaluations......... pees Task 1-F-6 Develop and execute supplier exit strategies. Index... 273 CPSM® STUDY GUIDE v (€70 FAN ighsRsdExam 1: Foundation of Supply Management »DQ00BID000 jalelelelelelelerele)CVVVVOYVYYVVOVVOOCODVDOIIIDOOOOO CeU WELLL LULUUY Purpose of the Study Guide Purpose of the Study Guide The CPSM? Suidy Guide offers an overview of the material covered in the Examination. The information contained in the Guide is meant to provide the exam candidate with an incroduc- tion to the major components covered in the test, and to pravide direction for additional scudy. The Guide is constructed according to the CPSM? Exam Specifications and is divided into three exams: Exam 1, Exam 2 and Exam 3. ‘The CPSM® Study Guide takes a step-by-step approach to the basic material covered in the Exam Specifications and lists the major parts of the exam, followed by the task and the knowledge, skill and ability areas (KSAs) related to each task. ‘While the Study Guide provides a summary of the type of content covered on the exam, the candidate should recognize that the Study Guide is not meant to serve as a substitute for any of the major textbooks in the field of supply management. ISM lists supplemenval study materials including the ISM Profesional Series on its Web site, wwwrism.ws. The ISM Profes- sional Series is a three-book series that covers content included in the Exam. Candidates are serongly urged to use at least one of the major supply management texts in addition to the Study Guide when preparing for the Exam. Reading the Study Guide alone, without any other resources, is not considered to be sufficient preparation for the Exam, Ako, please be aware that the actual exam may contain material that may not be covered in the Study Guide. ‘The CPSM® Study Guide is the work of several talented individuals in the field of supply management, who have graciously offered their time and expertise to this project. The Institute for Supply Management™ (ISM) is grateful for their professionalism and sincere desire to see this project successfitlly completed Exam 1 Contributors — Foundation of Supply Management: ‘Amudhanvel Dhinagaravel, CEO, Beroe Inc Karen Fedele, CPSM, C.P.M., Purchases Group Manager, Procter & Gamble Robert B. Handfield, Ph.D., Bank of America Distinguished University Professor, North Carolina State University, College of Management Marianne M. Jennings, J.D., Department of Management, W. P. Carey School of Business, Arizona State University P. Fraser johnson, Ph.D., Associate Professor, Richard Ivey Business School, The University of Western Ontario Kevin McCormack, DBA, President of DRK Research, Adjunct Professor at North Caro~ Tina State University and the University of Oklahoma Rene G. Rendon, DBA, C.PM., Professor, Naval Postgraduate School CPSM® STUDY GUIDE vit Sr SN aN Ra earnsExam 1: Foundation of Supaly Menegement Staff Contributors Holly LaCroix Johnson, Senior Vice President/Secretary, Institute for Supply Management™ Nora P. Neibergall, CPSM, C-PM. Senior Vice President, Instivate for Supply Management™ Christina Foster, SPHR, Vice President, Certification and Diversity, Institute for Supply ‘Management™ Scott Sturz], CPSM, C.PM.,A.PP, Vice President, Institute for Supply Management™ ‘Terri Tracey, CAE, Vice President, Technology and The Center for Strategic Supply Leadership, Institute for Supply Management™ Andrea Waas, APR, A.PP., Vice President, Institute for Supply Management™ Karen P. Collins, CPSM, C.PM.,A.PP, Manager, Certification, Institute for Supply Management™ Dave Schultz, CPSM, C.PM.,A.PP, Manager, Resource Center, Institute for Supply Management™ ISM also wishes to recognize and thank all of the editors and contributors to the various editions of the C.PM. Study Guide for the excerpts taken from their work. vill (CPSM® STUDY GUIDE 2011 51a Reseed C0093090900565099005990000 eccoaccc pre eee