Free Practice Questions for CIPS L5M6 Exam

CIPS highlights that damage to brand reputation and financial loss are two major risks of failing to manage supply chain risks effectively. Legal issues such as lawsuits arise from illegal activity, which is separate from general risk exposure.

Peak pricing is another term for dynamic pricing, where the cost of a product or service changes in response to fluctuations in demand and market conditions. A common example is airline ticket pricing, where fares increase during peak travel periods and drop during off-peak times.

Dynamic pricing relies on market data, technology, and sometimes artificial intelligence to adjust prices in real-time. It maximises revenue by capturing higher margins during periods of strong demand while stimulating sales when demand weakens.

Other options are different strategies:

Penetration pricing involves initially low prices to gain market entry.

Limit pricing aims to deter new entrants by setting prices low enough to discourage competition.

Price skimming involves launching at a high price, then gradually lowering it as demand declines.

In category management, understanding pricing models like dynamic pricing helps procurement anticipate supplier pricing strategies and develop negotiation tactics.

[Ref: CIPS L5M6 Study Guide, pp.180–182 – Pricing models and procurement]

Category Manager 1 → Competency: Functional Expert | Persuasion: Logic

This manager has a PhD, 15 years’ experience and is confident developing specifications. That profile maps directly to Functional Expert—deep technical knowledge, standards, and specification ownership. In persuasion terms, the description “strong product knowledge, facts and science” signals a Logic style: arguments are evidence-led (data, benchmarks, test results, TCO calculations). In supplier negotiations, this type will frame proposals around measurable outcomes and compliance to technical requirements, using structured evaluations and objective criteria. The benefit is credibility and clarity; the risk is over-focusing on technical detail at the expense of relationship nuance. In category work, this style suits complex, specification-driven buys (e.g., engineered components, regulated goods) where accuracy and verification matter most.

Category Manager 2 → Competency: Results Seeker | Persuasion: Confidence

“Meets deadlines, identifies actions, achieves goals; assertive, self-assured, articulate” are classic Results Seeker cues—task focus, milestone discipline, outcome accountability. The persuasion tone is Confidence: clear asks, firm positions, and decisive proposals. In supplier meetings, this manager will set SMART targets (cost down %, on-time delivery, lead-time reduction), drive cadence (QBRs, action logs), and hold parties to commitments. The upside is momentum and delivery; the watch-out is risking supplier defensiveness if assertiveness isn’t balanced with listening. This pairing works well for leverage or non-critical categories where execution speed, price movement and service levels are the primary value drivers.

Category Manager 3 → Competency: Influencer | Persuasion: Inspire

“Strong soft-skills… builds effective relationships… motivates others by being passionate and creating a shared sense of purpose” signals Influencer—credible relationship builder who aligns stakeholders and suppliers. Their persuasion style is Inspire: appeal to shared goals (innovation, sustainability, growth), energise cross-functional teams, and co-create solutions. In supplier negotiations, they’ll use vision statements, win-win framing, and recognition to unlock discretionary effort (e.g., co-development, cost-out workshops, service transformation). Strengths include engagement, change adoption and long-term partnership value; risks include under-weighting hard trade-offs if not supported by clear commercial guardrails. This pairing excels in strategic or transformation initiatives where collaboration is the multiplier.

Category Manager 4 → Competency: Innovator | Persuasion: Empathy

“Creative thinker… anticipates rapid changes… produces solutions quickly… sees problems from multiple points of view” matches Innovator—future-oriented, options-generating, comfortable with ambiguity. The persuasion fit is Empathy: actively understanding counterpart drivers (capacity, risk, margin pressures), connecting dots between perspectives, and shaping proposals that address mutual needs. In practice, this manager will run design-thinking workshops, scenario planning, and pilot trials, using supplier insights to re-frame requirements (e.g., modular specs, alternative materials, new service models). The advantage is differentiated value and resilience; the risk is scope drift if ideas aren’t prioritised rigorously. This pairing is powerful in volatile markets and for categories needing redesign, sustainability shifts or new tech adoption.

A Technology Roadmap is a planning tool used to align technological investments with business strategy. It enables organisations to evaluate current capabilities, identify emerging challenges, and plan for future technology adoption. The purpose is not just to decide between existing options but to forecast which innovations will be most valuable over time.

For instance, a company may use a roadmap to determine whether to invest in automation, artificial intelligence, or renewable energy solutions, based on expected business growth and industry trends. This ensures resources are allocated to technologies that offer long-term competitiveness.

Other options are less accurate:

Option A oversimplifies; technology roadmaps are not for one-off decisions.

Option B is incorrect as tenders require specifications, not long-term roadmaps.

Option D relates to risk management, not strategic technology planning.

Therefore, the roadmap helps businesses stay adaptive and forward-thinking, ensuring that investments made today remain relevant tomorrow.

[Ref: CIPS L5M6 Study Guide, pp.126–127 – Technology Roadmaps in category management]

A Bull Industry is one that is experiencing strong growth, with positive demand and market expansion expected in the future. In financial terms, “bull” markets are characterised by optimism, rising investment, and business confidence.

For ABC Ltd, operating in a high-growth IT sector, this categorisation is appropriate because demand is projected to increase. This means opportunities exist for innovation, supplier partnerships, and long-term strategic sourcing.

By contrast:

Bear industries represent declining markets, where firms face shrinking demand.

Dog and Cow industries are not recognised terms within category management; they are distractors in this question.

Identifying whether an industry is in a bull or bear phase helps Category Managers assess market risks, supplier relationships, and investment priorities.

[Ref: CIPS L5M6 Study Guide, p.150 – Market classifications: bull vs bear industries]

In category management, grouping is most effective when based on similar usage characteristics. This means materials or services are categorised by how they are used within the organisation, rather than simply by spend or supplier. For example, in healthcare, personal protective equipment (PPE) forms one category, while surgical instruments or bedding may be separate categories. This approach ensures that category managers have a clear understanding of functional requirements, demand patterns, and value drivers. Grouping only by spend might overlook strategic importance, while grouping by supplier or geography can miss opportunities for cross-functional efficiencies. Usage-based categorisation allows for tailored procurement strategies that align with business objectives and ensure effective stakeholder engagement. It also enables organisations to identify synergies across business units and improve supplier management. By aligning categories to organisational needs rather than just financial or structural dimensions, procurement creates more value and achieves better alignment with corporate strategy.

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]