ISM Exam LEAD Topic 1 Question 22 Discussion

Actual exam question for ISM's LEAD exam

Question #: 22
Topic #: 1

[All LEAD Questions]

DEF Company acquires MNO, Incorporated. The new firm's chief procurement officer (CPO) is tasked with consolidating duplicate components under one supplier for the lowest total cost. The CPO plans to use the firms' combined cognitive procurement system to complete this task. Which of the following will this system MOST likely yield in order to aid the CPO?

AThe demand for the components for both DEF and MNO

BThe price, quality, performance and reliability of the components and the suppliers

CThe level of risk posed by each supplier based on location and disaster recovery plans

DThe financial strength of the suppliers providing the components

Show Suggested Answer

Suggested Answer: C

Risk Assessment Overview: The sole source supplier has a single database location, creating a risk for the supply of an integral component.

Long-term Solution: Reducing the component's uniqueness to allow for alternate sources is a strategic approach. It mitigates the risk associated with dependency on a single supplier and enhances supply chain resilience.

Collaborative Approach: Working with engineering to modify the component design ensures compatibility with multiple suppliers, broadening the supplier base and reducing supply chain vulnerability.

Importance of Alternative Sources: Diversifying the supplier base is crucial in risk management to avoid disruptions caused by supplier-specific issues.

Reference: Supply chain risk management literature, such as 'The Resilient Enterprise' by Yossi Sheffi and guidelines from the Institute for Supply Management (ISM), supports the strategy of reducing dependency on single suppliers through component standardization.

by Stephane at Mar 22, 2025, 11:12 AM

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Rosalia

1 months ago

Wait, what if the CPO just flips a coin? Heads we go with DEF, tails we go with MNO. Boom, problem solved, no need for fancy cognitive systems.

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Tequila

2 months ago

Haha, the financial strength of the suppliers? What, is the CPO going to buy them out if they can't deliver? I think B is the clear winner here.

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Luther

17 days ago

True, all these factors are important for the CPO to consider when consolidating components under one supplier.

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Brandon

29 days ago

I see your point, but I think assessing the level of risk posed by each supplier based on location and disaster recovery plans is also important.

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Hollis

1 months ago

But don't you think knowing the financial strength of the suppliers can also help in making informed decisions?

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Monte

1 months ago

I agree, focusing on the price, quality, performance, and reliability of the components and suppliers is crucial.

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Dorinda

2 months ago

You're both right, but don't forget the level of risk posed by each supplier. The CPO needs to minimize disruption, so disaster recovery plans are important too.

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Donette

2 months ago

Aha! The demand for the components is also crucial. The CPO needs to know the overall demand to ensure the chosen supplier can fulfill it.

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Crista

1 months ago

B: Definitely, knowing the demand is key to ensuring the supplier can fulfill the needs of both companies.

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Ming

2 months ago

A: I think the CPO should consider the demand for the components to make sure the supplier can meet it.

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Noel

2 months ago

I'm not sure, but I think D) The financial strength of the suppliers providing the components could also be important for the CPO.

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Farrah

2 months ago

I agree with Jose. It makes sense for the CPO to consider all those factors when consolidating suppliers.

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Goldie

2 months ago

The cognitive procurement system will most likely provide the price, quality, performance and reliability of the components and the suppliers. That's the key information the CPO needs to consolidate the components under the best supplier.

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