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CIPS Category Management Sample Questions (Q40-Q45):

NEW QUESTION # 40
Workshops, safety facilities, and design engineers are indirect costs associated with which industry?

Answer: A

Explanation:
In construction, indirect costs include items like workshops, safety facilities, and design engineers. These are necessary for operations but not directly tied to a single output.
[Ref: CIPS L5M6 Study Guide, p.90 - Indirect cost examples by industry]


NEW QUESTION # 41
What name is given to an item or business which has both low market share and low growth?

Answer: D

Explanation:
In the BCG Growth-Share Matrix, a dog is a business unit or product that has both a low relative market share and a low growth rate. Such items typically generate low or no profits and are often seen as candidates for divestment or discontinuation. Unlike cash cows which generate strong cash flow despite slow growth, or stars which dominate high-growth markets, dogs occupy a weak position in the portfolio. Managing these categories strategically is critical because maintaining them often consumes more resources than the value they return. Organisations need to assess whether retaining these products provides any strategic advantage, such as complementing other offerings, or whether resources should be reallocated. This is why category managers use tools like the BCG Matrix to evaluate the positioning of spend categories and align them with organisational strategy.
Reference: CIPS L5M6 Study Guide, p.117


NEW QUESTION # 42
Servers, hardware and licences are items which may be found in which category of spend?

Answer: B

Explanation:
Items such as servers, hardware, and licences fall under the IT (Information Technology) category of spend. Categories are organised into direct and indirect spend, and IT is a common example of indirect spend
, which includes goods and services that do not directly contribute to production but are essential to operations. IT spend is strategically important as it supports digital transformation, efficiency, and business continuity. Effective management of IT categories involves considering licensing agreements, hardware refresh cycles, cybersecurity, and vendor lock-in risks. Poor IT procurement strategies can lead to high costs, inefficiencies, and security vulnerabilities. Category managers in IT must also keep up with fast- changing technology markets, cloud adoption trends, and vendor consolidation. Recognising IT as a distinct category ensures that procurement strategies address unique risk factors and maximise value.
Reference: CIPS L5M6 Study Guide, p.3


NEW QUESTION # 43
In Category Management, which of the following Models can be used for creating a step-by-step plan for Strategic Sourcing?

Answer: A

Explanation:
Kearney's 7 Step Strategic Sourcing Model provides a structured, step-by-step approach for managing sourcing activities. The steps include profiling the category, assessing the supply market, developing sourcing strategies, and implementing them. This model ensures that sourcing is systematic, evidence-based, and aligned with strategic objectives. Unlike tools such as the Kraljic Matrix, which classifies items by risk and impact, Kearney's model provides an end-to-end process framework for sourcing execution. Similarly, Pareto and Porter's 5 Forces are useful analytical tools but not procedural sourcing frameworks. For category managers, the Kearney Model is valuable because it emphasises cross-functional collaboration, data-driven decision-making, and continuous improvement. Its structured approach reduces risks of ad-hoc decision- making and ensures alignment with organisational goals. This is why it is a central feature of L5M6 study material and often tested in exams.
Reference: CIPS L5M6 Study Guide, p.28-29


NEW QUESTION # 44
Volatile inflation rates are a risk that can affect any business. Which STEEPLED factor would this fall under?

Answer: C

Explanation:
Inflation is directly linked to the Economic factor within STEEPLED. It affects costs, purchasing power, and business profitability.
[Ref: CIPS L5M6 Study Guide, p.109 - STEEPLED analysis factors]


NEW QUESTION # 45
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