ISM Supply Management Core Exam CORE Exam Dumps: Updated Questions & Answers (October 2025)

The primary issue faced by ABC, Inc.'s international sourcing team is the delay in processing contracts due to the need for multiple internal approvals from international suppliers and member firms. The best course of action should streamline the contract execution process, reducing the time taken for internal approvals and facilitating quicker commencement of services by suppliers.

Option A suggests allowing suppliers to start implementing services upon reaching an agreement in principle. This can lead to legal and compliance issues if the formal contract does not reflect the agreed terms or if it is not finalized in time.

Option C proposes hiring additional staff, which could alleviate the workload but may not address the core issue of procedural delays. Additionally, it increases operational costs.

Option D recommends allowing member firms to execute contracts directly, which can lead to inconsistencies and a lack of centralized control over contracts, potentially resulting in quality and compliance issues.

Option B, subscribing to a digital signature service, directly addresses the delay issue by enabling faster execution of contracts through online approvals. Digital signatures are legally binding in many jurisdictions and can streamline the approval process significantly. This approach maintains the quality and consistency of the contracts while reducing the time required for execution.

References:

Institute for Supply Management (ISM) guidelines on contract management.

Research on the benefits of digital signature services in supply chain management.

An operational alliance typically involves a supplier managing specific, low-value items or services for a company. In this scenario, the supplier is responsible for stocking nuts, bolts, and screws, which are low-value items, and performing periodic inventory reviews. This arrangement focuses on operational efficiency and convenience for the maintenance organization, thus fitting the definition of an operational alliance. References:

CIPS Knowledge: Types of Supplier Alliances

APICS Dictionary: Definition of Operational Alliance

Initial Cost Calculation: Initially, the product’s cost includes labor ($10), overhead ($12.50), and materials ($14). Thus, the total cost is $36.50 per unit.

Cost Reduction: Supply management reduces the cost of materials from $14 to $12, decreasing the total cost per unit to $34.50.

Contribution to Profit: The reduction in cost directly translates to an increase in profit per unit. The cost reduction is $2 per unit ($14 - $12).

Profit Calculation: As the selling price remains $36.50, the new profit per unit after cost reduction is the selling price minus the new total cost ($36.50 - $34.50), which results in an increased profit of $2 per unit.

References

ISM Glossary of Key Supply Management Terms

CIPS Cost Management Tools and Techniques

When a supply manager conducts due diligence from cost, cultural, and service perspectives to weigh the benefits and risks of outsourcing, they are primarily engaging in analytical problem solving. This involves:

Project management: Overseeing projects and ensuring they are completed on time and within budget, which is not the primary focus here.

Technical knowledge: Understanding specific technical aspects, which may be part of the analysis but not the primary skill.

Analytical problem solving: Evaluating different facets such as cost, culture, and service to make informed decisions about outsourcing.

Functional interaction: Collaborating across different functions, which is necessary but not the core skill in this context.

Thus, the skills being employed are best described as analytical problem solving.

References:

Supply chain management literature on due diligence and risk analysis.

Analytical methods in decision-making.

The first step in ensuring that any solicitation for services uses up-to-date specifications and attracts good potential sources is to issue a Request for Information (RFI). An RFI allows the firm to gather information about available training packages and potential suppliers. It helps in understanding the market capabilities and the solutions that suppliers can offer. This information can then be used to create a more detailed and accurate Request for Proposal (RFP).

References

CIPS (Chartered Institute of Procurement & Supply). The Use of RFIs in the Procurement Process.

ISM (Institute for Supply Management). Guidelines for Effective RFIs.

Express Warranties: These are explicit guarantees made by the seller regarding the quality or performance of the goods.

Form of Warranty: An express warranty can be communicated through various forms, including samples, descriptions, and affirmations of fact.

Implication of Samples: When a buyer receives a sample and bases their purchasing decision on it, the sample sets an expectation for the production batch.

Protection Under Law: According to the Uniform Commercial Code (UCC) in the United States, if the seller provides a sample, the actual goods delivered must match the quality of the sample.

Conclusion: Given the parts received do not meet the quality of the samples provided, the buyer is protected as the samples served as an express warranty. References

Uniform Commercial Code (UCC) Article 2, Section 2-313.

Exclusive Contract: Supplier X has an exclusive contract with the resort chain to supply bulk peanuts.

Contract Terms: The contract specifies pricing per shipment based on the previous month's average price, less a fixed discount rate.

Other Suppliers: The supply manager finds that other suppliers are offering deeper discounts.

Contract Commitment: The resort chain is legally bound by the signed contract. Attempting to switch suppliers without valid grounds for contract termination could result in breach of contract and liability for damages.

References

ISM. (n.d.). Understanding Contractual Obligations.

CIPS. (n.d.). Managing Exclusive Contracts and Commitments.

Regular performance reviews are crucial for suppliers that have a significant impact on the organization:

Standard: These suppliers typically provide routine products or services, and while performance reviews are important, they may not be the most critical.

Key: Key suppliers are important, but they are usually not as critical as strategic suppliers.

Strategic: Strategic suppliers provide goods or services that are vital to the organization’s long-term success, requiring regular performance reviews to ensure alignment and continuous improvement.

Commodity: Commodity suppliers provide widely available products, making performance reviews less critical compared to strategic suppliers.

Therefore, it is most important to conduct regular performance reviews with strategic suppliers.

References:

Strategic supply chain management literature.

Best practices in supplier performance management.

Authorized Signatures: An agreement should be signed by authorized persons from both the buying firm and the supplier to ensure that the contract is legally binding.

Authority Verification: The supply manager and the salesperson may negotiate the terms, but the signatures should come from individuals with the authority to bind their respective organizations legally.

Risk Mitigation: This ensures that the agreement is enforceable and reduces the risk of any party later claiming that the agreement is invalid due to unauthorized signatures.

Organizational Policy Compliance: This practice ensures compliance with organizational policies regarding contract signing authority.

References:

ISM: "Contract Management and Negotiation Strategies"

CIPS: "Legal Aspects of Procurement and Supply"