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[General] Exam L5M6 Duration | Exam L5M6 Cram

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【General】 Exam L5M6 Duration | Exam L5M6 Cram

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CIPS Category Management Sample Questions (Q23-Q28):NEW QUESTION # 23
ABC Ltd is a manufacturer of hi-tech IT equipment in an industry set to grow substantially over the next 10 years. What type of industry is this?
  • A. Bull industry
  • B. Bear industry
  • C. Cow industry
  • D. Dog industry
Answer: A
Explanation:
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]

NEW QUESTION # 24
A list of direct costs within a manufacturing organisation could be found on which of the following?
  • A. Bill of Materials
  • B. Profit and Loss Account
  • C. SWOT Analysis
  • D. Specification
Answer: A
Explanation:
A Bill of Materials [BoM] lists the components, raw materials, and parts required to produce a product.
These represent direct costs as they directly contribute to the finished item. While labour and overheads may also be direct costs, they are not usually in the BoM.
[Ref: CIPS L5M6 Study Guide, p.83 - Direct vs Indirect Costs]

NEW QUESTION # 25
The sale of ice-cream, bikinis and sunglasses usually follows which demand pattern?
  • A. Stable
  • B. Growth
  • C. Cyclical
  • D. Decline
Answer: C
Explanation:
These items follow a cyclical demand pattern, meaning that sales fluctuate in predictable cycles-typically aligned with seasons or climate conditions. For example, demand peaks in summer and falls sharply in winter. Recognising cyclical patterns allows procurement professionals to plan supply and inventory effectively, avoiding both shortages during peak demand and excess stock during low demand periods. This type of forecasting is particularly important in industries such as fashion, tourism, and consumer goods.
Failing to account for cyclical demand can lead to missed sales opportunities or increased storage costs. In category management, understanding demand cycles ensures efficient resource allocation, supplier scheduling, and financial planning. It also supports collaborative planning with suppliers to ensure capacity aligns with market needs.
Reference: CIPS L5M6 Study Guide, p.143

NEW QUESTION # 26
Francis is a Category Manager within a large agricultural company which has over 10 categories. He believes that the Category with the largest spend (in £) is the most important category to the business. Is he correct?
  • A. Yes - A larger spend signifies that the category is buying larger volumes of items than other categories
  • B. No - This fails to address the importance of the item to the organisation's service / product
  • C. Yes - Categories with larger budgets buy more important items
  • D. No - All categories are equally as important to the business
Answer: B
Explanation:
Francis is not correct. Spend alone does not determine the importance of a category. For example, a high- spend category may include non-critical items, while a lower-spend category may include bottleneck or strategic items essential to operations. The importance of a category is determined by its impact on organisational goals and supply risk, not just spend.
Reference: CIPS L5M6 Study Guide, p.98

NEW QUESTION # 27
Joe is a Category Manager at an automobile company. Which of the following would be the best way to decide on categories in this industry?
  • A. By part
  • B. By spend
  • C. Alphabetically
  • D. By supplier
Answer: A
Explanation:
In the automobile industry, the most logical method for structuring categories is by part. Large manufacturing organisations, such as Ford or Toyota, procure thousands of parts and materials from hundreds of suppliers. To manage this complexity effectively, they segment procurement responsibilities into categories such as engines, tyres, glass, electronics, or body frames. This allows Category Managers to develop deep expertise in their assigned areas, improving supplier relationships and value delivery.
Other approaches are less effective:
* Alphabetical categorisation is impractical and arbitrary, providing no strategic value.
* By spend creates imbalances, as high-value categories would attract disproportionate workload and risk, leaving others underrepresented.
* By supplier could lead to inefficiency and over-fragmentation, as suppliers often provide multiple types of products.
The study guide stresses that categorisation must allow procurement teams to be efficient, balanced, and capable of strategic focus. By organising categories by part, managers can align more closely with engineering and production needs, ensuring better cross-functional collaboration.
[Ref: CIPS L5M6 Study Guide, p.3 - Defining categories in Category Management]

NEW QUESTION # 28
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