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A supply manager wants to capture early-payment discounts offered by suppliers (e.g., 2/10 net 30 terms). What does '2/10 net 30' mean?

The supplier charges 2% interest after 10 days and adds 30% after 30 days

The buyer must pay at least 10% of the invoice within 2 days as a deposit

The supplier gives a 10% discount if paid within 2 days of invoice date

The buyer receives a 2% discount if the invoice is paid within 10 days; otherwise the full amount is due in 30 days

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ArticleCPSM Exam Guide 2026: Certified Professional in Supply Management6 min read

2026 Statistics

Key Facts: CPSM Exam 1 Exam

180

Exam Questions

ISM

3 hrs

Time Limit

ISM

400/600

Passing Score

ISM scaled score

APSM

Earned by Passing Exam 1

ISM

$495

Member Exam Fee

ISM 2026

4 years

Score Validity

ISM

CPSM Exam 1 is the first of three exams in ISM's CPSM certification path. It contains 180 multiple-choice questions with a 3-hour time limit and requires a scaled score of 400 on ISM's 0-600 scale. Passing Exam 1 alone earns the APSM (Associate Professional in Supply Management) credential. ISM current pricing is $495 for members and $795 for nonmembers per exam. No official 2026 blueprint change has been announced as of May 2026.

Sample CPSM Exam 1 Practice Questions

Try these sample questions to test your CPSM Exam 1 exam readiness. Each question includes a detailed explanation. Start the interactive quiz above for the full 100+ question experience with AI tutoring.

1A supply manager is evaluating a new category of indirect spend and needs to understand the market landscape before committing to a formal sourcing event. Which document should be issued to potential suppliers?

A.Request for Information (RFI)

B.Request for Proposal (RFP)

C.Request for Quotation (RFQ)

D.Purchase Order

Explanation: An RFI is used at the early market-research stage to learn about supplier capabilities, capacity, and market dynamics without committing to a specific sourcing action. An RFP or RFQ comes later once requirements are defined and the buyer is ready to compare formal offers.

2Which sourcing strategy BEST reduces supply risk for a single-source critical component while maintaining competitive pricing?

A.Sole sourcing with a long-term agreement

B.Dual sourcing with split award between two qualified suppliers

C.Spot-market buying for all volume

D.In-house manufacturing of the component

Explanation: Dual sourcing maintains competitive tension that supports pricing while reducing the catastrophic risk of a single supplier failure for a critical item. Sole sourcing concentrates risk; spot buying sacrifices price predictability; in-house manufacturing requires capital and core-competency analysis.

3A buyer wants to ensure specifications are clear and technically complete before issuing a formal solicitation. Which internal step BEST accomplishes this?

A.Issue a reverse auction to let the market define the specification

B.Conduct a cross-functional specification review with engineering and operations stakeholders

C.Accept the first supplier's technical proposal as the baseline specification

D.Use the prior-year purchase order as the specification without review

Explanation: A cross-functional specification review engages technical, operations, and quality stakeholders to validate that requirements are correct, complete, and free of unnecessarily restrictive features. This reduces costly scope changes and supplier confusion later in the sourcing process.

4During supplier selection, a supply manager applies a weighted scorecard with criteria for price, quality, delivery, and financial stability. Why is pre-defining weights before reviewing proposals MOST important?

A.It speeds up the review process by eliminating low-scoring suppliers immediately

B.It prevents post-hoc rationalization and ensures criteria drive the award decision objectively

C.It guarantees the lowest-price supplier always wins the award

D.It allows the team to adjust criteria after reviewing proposals if needed

Explanation: Pre-defining evaluation weights before reviewing proposals removes the temptation to shift criteria to favor a preferred supplier — a form of post-hoc rationalization. It produces a defensible, auditable award decision grounded in organizational priorities rather than evaluator bias.

5A supply manager is qualifying a new overseas supplier. Which activity BEST validates that the supplier can meet quality and production requirements before a contract award?

A.Request references from the supplier's existing customers

B.Conduct an on-site supplier audit covering quality management, capacity, and financial health

C.Issue a small test purchase order and accept delivery

D.Review the supplier's marketing brochures and website

Explanation: An on-site supplier audit provides first-hand verification of quality management systems, manufacturing capacity, financial stability, and compliance against defined criteria. References and website reviews are useful supplements but cannot replace direct assessment for critical or overseas suppliers.

6Which RFx document is MOST appropriate when the buyer has fully defined technical specifications and the primary differentiator among suppliers is expected to be price?

A.Request for Information (RFI)

B.Request for Proposal (RFP)

C.Request for Quotation (RFQ)

D.Statement of Work (SOW)

Explanation: An RFQ is the correct solicitation type when the buyer has complete, non-negotiable specifications and wants suppliers to compete primarily on price and commercial terms. An RFP invites solution proposals; an RFI gathers market intelligence; a SOW defines work scope but is not a solicitation document.

7A supply manager is entering a negotiation for a multi-year service contract. Before the session begins, what is the MOST important preparation step for securing favorable terms?

A.Reveal the organization's budget ceiling to demonstrate good faith

B.Define the BATNA (Best Alternative to a Negotiated Agreement) and walk-away point

C.Promise future business volume to build supplier goodwill before negotiating

D.Limit the agenda to price alone to simplify the discussion

Explanation: Defining BATNA and the walk-away point gives the negotiator a rational boundary — if the deal cannot meet minimum requirements, the negotiator knows when to walk away. Without this preparation, negotiators risk conceding more value than the deal justifies.

8During a negotiation, the supplier repeatedly anchors on a very high opening price. Which negotiation tactic BEST helps the buyer reset the anchor and move toward the target price?

A.Accept the anchor as a fair starting point and negotiate small concessions from there

B.Counter with a well-justified counter-offer supported by market benchmarks and cost data

C.Immediately walk away to signal disapproval of the high price

D.Introduce personal pressure by complaining about the supplier's reputation

Explanation: A fact-based counter-offer grounded in market benchmarks, cost breakdowns, or competitive data directly challenges the supplier's anchor with evidence rather than emotion. This approach is professional, defensible, and shifts the negotiation toward an objective price range.

9A supply manager wants to create value in a negotiation beyond price. Which approach BEST expands the value available to both parties?

A.Focus exclusively on reducing the unit price by 10%

B.Trade items of different value to each party, such as extended payment terms for multi-year volume commitment

C.Insist on a fixed price with no room for other terms

D.Accept the first offer to build goodwill for future negotiations

Explanation: Expanding value in negotiation — often called integrative or win-win bargaining — involves identifying items each party values differently and trading them. For example, extended payment terms cost the supplier relatively little but provide significant cash-flow value to the buyer.

10Which cost analysis method is MOST effective for understanding how a supplier's price is structured and identifying opportunities for cost reduction?

A.Market basket comparison across three competing suppliers

B.Should-cost modeling based on material, labor, overhead, and profit components

C.Year-over-year price trending to identify inflation

D.Requesting the supplier's audited financial statements

Explanation: Should-cost modeling (also called price analysis from a cost perspective) breaks a supplier's price into components — raw materials, labor, overhead, and profit margin — enabling the buyer to challenge specific cost drivers rather than negotiating against an opaque final price.

About the CPSM Exam 1 Exam

CPSM Exam 1 — Supply Management Core — tests foundational and operational supply management knowledge across sourcing, negotiation, contracts, cost analysis, P2P, inventory, logistics, quality, ethics, and supplier relationship management. Passing Exam 1 also earns the APSM (Associate Professional in Supply Management) credential from ISM.

Assessment

180 multiple-choice questions covering four content domains: Sourcing (~20%), Negotiation (~22%), Legal and Contractual (~16%), and Supplier Relationship Management (~42%).

Time Limit

3 hours

Passing Score

400/600 scaled score

Exam Fee

$495 (member) / $795 (nonmember) (Institute for Supply Management (ISM) / Pearson VUE)

CPSM Exam 1 Exam Content Outline

~20% of Exam 1

Sourcing

Needs assessment, market analysis, RFx solicitation (RFI/RFP/RFQ), supplier identification and qualification, make-or-buy, Kraljic matrix, spend analysis, and supplier selection methodologies.

~22% of Exam 1

Negotiation

Negotiation planning, BATNA and walk-away point, anchoring and counter-offer techniques, integrative versus positional negotiation, concession strategy, and value creation.

~16% of Exam 1

Legal and Contractual

Contract formation under UCC and common law, contract types (FFP, T&M, cost-plus), key clauses (SLA, liquidated damages, force majeure, NDA, indemnification), dispute resolution, and contract administration.

~42% of Exam 1

Supplier Relationship Management and Operations

Supplier segmentation, scorecards, SCAR, supplier development, P2P operations (three-way match, PO management, p-card), inventory management (EOQ, ABC, safety stock, MRP, VMI), cost-price analysis (TCO, should-cost, PPV, total landed cost), logistics basics (Incoterms, transportation modes), ethics and compliance (ISM principles, gift policy, conflict of interest), and quality management.

How to Pass the CPSM Exam 1 Exam

What You Need to Know

Passing score: 400/600 scaled score
Assessment: 180 multiple-choice questions covering four content domains: Sourcing (~20%), Negotiation (~22%), Legal and Contractual (~16%), and Supplier Relationship Management (~42%).
Time limit: 3 hours
Exam fee: $495 (member) / $795 (nonmember)

Keys to Passing

Complete 500+ practice questions
Score 80%+ consistently before scheduling
Focus on highest-weighted sections
Use our AI tutor for tough concepts

CPSM Exam 1 Study Tips from Top Performers

1Know the four major content domains and their approximate weights — Supplier Relationship Management is the largest at ~42% and includes SRM, cost analysis, P2P, inventory, and ethics.

2Master the RFx sequence: RFI for market research, RFP for solution proposals, RFQ for price-competitive defined specifications.

3Practice BATNA preparation — know how to define your walk-away point and how it changes your negotiation stance.

4Understand UCC contract-formation rules including battle-of-the-forms (Section 2-207) and FOB title/risk-transfer rules.

5Distinguish price analysis (market benchmarking) from cost analysis (should-cost modeling) — both appear on the exam.

6Learn the Kraljic Matrix quadrants and the sourcing strategy that fits each: leverage items → competitive bidding; strategic items → partnership; bottleneck → secure supply; routine → efficiency.

7For ethics questions, default to ISM's Principles: disclose conflicts, decline non-compliant gifts, refuse purchase-splitting, escalate violations.

Frequently Asked Questions

Does passing CPSM Exam 1 earn me a credential?

Yes. ISM awards the APSM (Associate Professional in Supply Management) credential to candidates who pass CPSM Exam 1 — Supply Management Core. The APSM is a standalone ISM credential that recognizes core supply management competency. To earn the full CPSM, you must also pass Exams 2 and 3 and meet ISM's experience requirements.

What is on CPSM Exam 1?

CPSM Exam 1 — Supply Management Core — covers four content domains: Sourcing (~20%), Negotiation (~22%), Legal and Contractual (~16%), and Supplier Relationship Management (~42%). Core topics include RFx processes, supplier qualification, BATNA and negotiation tactics, contract types and clauses, UCC fundamentals, cost-price analysis, TCO, inventory management, P2P operations, and ISM ethics.

How many questions and how long is CPSM Exam 1?

CPSM Exam 1 contains 180 multiple-choice questions with a 3-hour time limit, delivered through Pearson VUE test centers or OnVUE online proctoring.

What is the passing score for CPSM Exam 1?

ISM uses a scaled 0-600 score; you must achieve 400 or higher to pass each CPSM exam, including Exam 1.

How much does CPSM Exam 1 cost in 2026?

As of 2026, ISM charges $495 for members and $795 for nonmembers per exam. The full CPSM path requires all three exams, totaling $1,485 for members or $2,385 for nonmembers in direct exam fees.

Can I take CPSM Exam 1 before meeting the CPSM experience requirements?

Yes. ISM allows candidates to sit Exam 1 without first meeting the full CPSM experience requirements. Passing Exam 1 earns the APSM, and the experience requirement must be met to receive the full CPSM credential after passing all three exams.