CIPS Category Management L5M6 Exam Dumps: Updated Questions & Answers (October 2025)

Risk assessments in procurement often use a likelihood × severity matrix. Risks are scored on scales from 1–5, and the scores are multiplied. A score of 2 indicates a minor risk with low impact and/or low probability. For comparison, risks with scores in the upper range (e.g., 20–25) are considered major risks that demand immediate mitigation. Minor risks, although not ignored, are often monitored rather than heavily resourced. This structured approach ensures procurement teams focus resources on the most significant threats while still maintaining oversight of low-level risks. By categorising risks this way, category managers create clarity for decision-makers and align procurement risk management with enterprise-wide frameworks.

Total Cost of Ownership [TCO] refers to the full cost of acquiring, operating, and maintaining an item over its entire lifecycle—not just the purchase price. For Steve, the relevant elements are:

Purchase Price [A]: The initial acquisition cost.

Maintenance and Downtime [D]: Costs of repairs, spare parts, and losses during equipment downtime.

Training [E]: Expenses incurred in training staff to use new systems or equipment.

By contrast, Location and Supplier Relationship are important considerations but cannot be quantified as direct financial costs in the same way.

The TCO model is often illustrated as the Cost Iceberg, where the purchase price is only the visible tip, while hidden costs [e.g., energy use, repairs, obsolescence, disposal] represent the bulk. Understanding TCO enables procurement to make more informed decisions, ensuring long-term value rather than focusing narrowly on upfront cost.

[Ref: CIPS L5M6 Study Guide, p.9 – TCO and the Cost Iceberg]

The correct answer is CSR [Corporate Social Responsibility]. In modern procurement, tenders are no longer evaluated solely on price and quality. Organisations increasingly consider ethical, environmental, and sustainability performance as part of supplier evaluation. CSR factors include labour practices, carbon footprint, use of sustainable materials, and compliance with ethical trading standards.

Other options represent different procurement tools but are not additional evaluation factors:

TCO [Total Cost of Ownership]: A financial analysis tool, not a tender factor.

ITT [Invitation to Tender]: A formal document, not a factor.

PQQ [Pre-Qualification Questionnaire]: Used for initial supplier screening, not tender evaluation.

Integrating CSR into tenders reflects the wider move towards responsible procurement. It ensures suppliers align with the buyer’s values and long-term risk management priorities.

[Ref: CIPS L5M6 Study Guide, p.39 – CSR considerations in tenders]

The most appropriate relationship type is a Strategic Alliance. The Cost-Out approach involves working closely with suppliers at the design and pre-production stages to eliminate unnecessary costs before they arise. This requires high levels of trust, transparency, and collaboration.

A strategic alliance provides the framework for this partnership, allowing both buyer and supplier to share information, align objectives, and jointly innovate to reduce costs and increase value. For example, suppliers may suggest alternative materials or design modifications that lower costs without compromising quality.

By contrast:

Arm’s length and transactional relationships are too shallow to support cost-out collaboration.

Closer tactical relationships allow more interaction but lack the depth of trust and shared strategy found in alliances.

Strategic alliances are therefore essential where the buyer needs suppliers to contribute their expertise, innovation, and commitment to achieving mutual cost savings and long-term value.

[Ref: CIPS L5M6 Study Guide, p.80 – Cost-out strategies and supplier relationships]

This is a bottleneck item. According to the Kraljic Matrix, bottleneck items are characterized by high supply risk and low profit impact, which makes them difficult to source. Holding contingency stock is a recommended strategy for such items.

In category management, forecasting is a critical tool for anticipating future requirements and managing supply markets. The three types of recognised forecasting are: demand forecasting (predicting organisational needs), supply forecasting (assessing availability and supplier capabilities), and price forecasting (estimating future price movements based on trends and market conditions). “Quantity forecasting” is not recognised as a distinct type, because quantity requirements are inherently part of demand forecasting. By separating demand, supply, and price forecasts, procurement professionals gain a holistic view of market conditions, ensuring they can secure the right goods at the right time and price. Effective forecasting also reduces risk by ensuring that category strategies account for volatility, seasonality, and inflation. Organisations that fail to forecast accurately may face supply shortages, overstocking, or missed opportunities for cost savings.

The most effective approaches are:

Limiting dependence on one supplier [B]: CIPS suggests no more than 30% of spend should be concentrated with a single supplier. This reduces exposure if that supplier becomes insolvent or fails to deliver.

Having contingency plans [D]: Preparing alternative suppliers, safety stock, or emergency logistics ensures continuity in case of failure.

Options A and C are poor practices:

Using fewer suppliers [A]: Increases dependency, making the business more vulnerable.

Using small start-ups exclusively [C]: Increases risk because these firms often lack financial stability.

These strategies align with broader supply risk management principles, which focus on diversification, resilience, and proactive planning. Effective category managers must balance efficiency with risk reduction, ensuring supply continuity without over-consolidating.

[Ref: CIPS L5M6 Study Guide, p.57 – Supplier risk mitigation strategies]

Kaizen translates to “continuous improvement” in Japanese. It is a philosophy that encourages making small, incremental changes that collectively lead to significant performance enhancements over time. Within procurement and category management, Kaizen focuses on ongoing collaboration with suppliers to identify ways to reduce waste, improve quality, and optimise processes. Unlike one-off cost-reduction initiatives, Kaizen is embedded in the organisational culture and requires engagement from all levels of the supply chain. For example, small adjustments in packaging design might reduce material use, leading to cost savings and environmental benefits. This approach fosters long-term supplier partnerships and supports innovation. In competitive markets, organisations that adopt Kaizen are more resilient and adaptable, making it a key concept for category managers to understand.

The Five Rights of Procurement are fundamental principles ensuring procurement delivers value. They are:

Right product – ensuring goods/services meet requirements.

Right quality – ensuring standards are appropriate.

Right time – goods/services are available when needed.

Right place – ensuring delivery is to the correct location.

Right price – balancing cost efficiency with value.

Options B, C, and D reflect these principles. “Right supplier” and “right relationship” are not part of the traditional five rights, though they are important in broader supplier management. By aligning negotiations with the Five Rights, procurement professionals secure both operational efficiency and strategic value. These principles also provide benchmarks against which procurement performance can be measured.

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]