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A supply chain manager is evaluating transportation cost reduction opportunities and analyzing freight payment and audit (FPA) processes. Which benefit does a well-implemented FPA program deliver?

Replaces the need for a transportation management system

Eliminates the need for carrier contracts

Automatically renegotiates carrier rates with no human involvement

Identifies freight billing errors and overcharges, recovering costs and improving carrier invoice accuracy

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

2026 Statistics

Key Facts: CPSM Exam 2 Exam

165

Exam Questions

ISM

2h 45m

Time Limit

ISM

400/600

Passing Score

Each exam

29.1%

Category Management Weight

ISM content outline

$495

Member Exam Fee

ISM current pricing

4 years

Score Validity

ISM

CPSM Exam 2 (Supply Management Integration) contains 165 questions and runs 2 hours 45 minutes. A scaled score of 400 on ISM's 0–600 scale is required to pass. The five content domains are Category Management (29.1%), Supply Chain Strategy (25.5%), Logistics (25.5%), Forecasting/Planning/Inventory (10.3%), and Project Management (9.7%). ISM pricing is $495 for members and $795 for nonmembers, and the exam is delivered through Pearson VUE.

Sample CPSM Exam 2 Practice Questions

Try these sample questions to test your CPSM Exam 2 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 developing a category strategy for indirect spend on facilities maintenance. Which first step BEST establishes the foundation for a multi-year category plan?

A.Issue an RFP to the three largest incumbent suppliers

B.Conduct a spend analysis to understand current expenditure, supplier count, and sub-categories

C.Negotiate a price freeze with the primary incumbent

D.Outsource facilities management to a fourth-party logistics provider

Explanation: Spend analysis provides visibility into what is being spent, with whom, and on what sub-categories. Without that baseline, any category strategy rests on assumptions that may be wrong. The RFP and other steps come after spend is understood and the category segmented.

2A category team segments its portfolio using the Kraljic matrix. A purchased component falls in the 'strategic' quadrant (high supply risk, high profit impact). Which sourcing approach is MOST appropriate?

A.Automate purchasing through a catalog and reduce oversight

B.Use competitive bidding to drive annual price reductions

C.Develop a collaborative partnership with a preferred supplier

D.Switch to spot-market buying to avoid long-term commitments

Explanation: Strategic items require close supplier collaboration, joint planning, and investment in the relationship because both supply risk and profit impact are high. Collaborative partnerships reduce risk through transparency and joint problem-solving. Competitive bidding and spot markets are suited to leverage or routine items with lower strategic complexity.

3During a category strategy review, stakeholders disagree on whether to consolidate five marketing agencies to one or maintain multiple relationships. Which analytical tool BEST supports the consolidation decision?

A.Monte Carlo simulation

B.Supplier rationalization analysis comparing TCO, risk, and capability gaps

C.PESTLE analysis

D.Value stream mapping

Explanation: Supplier rationalization analysis compares the total cost of ownership, risk exposure, and capability gaps across the five agencies. It quantifies what is gained or lost by consolidation and makes the trade-off explicit for stakeholders. PESTLE is an environmental-scan tool, while value stream mapping is a Lean process tool.

4A category manager wants to align the IT hardware category plan with the company's three-year technology roadmap. Which action BEST integrates cross-functional alignment into the category strategy?

A.Submit the category plan for finance approval only

B.Share the final category plan with IT after it is approved

C.Co-develop the category strategy with IT stakeholders from the planning stage

D.Delegate all IT hardware decisions to the IT department

Explanation: Co-developing the category strategy with IT stakeholders from the outset embeds the technology roadmap constraints, lifecycle plans, and service requirements directly into sourcing decisions. Post-hoc sharing of a finished plan misses alignment opportunities and risks rejection or rework.

5A supply manager is conducting a category strategy for professional services. The spend is fragmented across 40 suppliers with no preferred-supplier agreements. Which sourcing wave sequence is MOST effective?

A.Begin with a single mega-RFP covering all 40 suppliers simultaneously

B.Sub-segment by service type, prioritize the highest-spend sub-categories first, and run sequential sourcing waves

C.Immediately implement a spend freeze until a single vendor is selected

D.Route all purchases through procurement cards without a category strategy

Explanation: Sourcing waves sequence sub-categories by spend impact, complexity, or market readiness, allowing the team to capture quick wins while building capability for more complex categories. A mega-RFP is unmanageable with 40 incumbents and no baseline agreements, and a spend freeze disrupts the business.

6Which supply chain network design decision is PRIMARILY driven by customer service-level requirements and total landed cost?

A.The number and location of distribution centers

B.The choice of ERP system

C.The HR policies for warehouse employees

D.The credit terms offered to end customers

Explanation: Distribution center location and count directly determine delivery lead times (service level) and transportation and inventory carrying costs (total landed cost). These are the core trade-offs in network design optimization. ERP, HR, and credit-term decisions are important but governed by different drivers.

7A company is deciding whether to manufacture a component in-house or outsource it to a contract manufacturer. Which framework BEST structures this make-or-buy decision?

A.Porter's Five Forces

B.Total cost of ownership analysis combined with a core-competency assessment

C.The balanced scorecard

D.SIPOC diagram

Explanation: Make-or-buy analysis should compare the full costs of internal production versus external supply (TCO) and assess whether the component is core to competitive differentiation. If it is not a core competency and external suppliers can produce it at lower TCO, outsourcing is often the right answer. Porter's Five Forces analyzes industry competition, not individual make-or-buy decisions.

8A global manufacturer sources components from Southeast Asia for assembly in Europe and sale in North America. Geopolitical risk is increasing in one supplying country. Which supply chain design strategy BEST improves resilience?

A.Increase safety stock at the European assembly plant to six months of supply

B.Adopt a China-plus-one or regional diversification strategy by qualifying suppliers in alternative countries

C.Lock in a single-source, long-term contract to reduce supplier switching costs

D.Shift all demand forecasting to the European assembly team

Explanation: A China-plus-one or regional diversification strategy reduces concentration risk by qualifying suppliers in geographically distinct locations. If one country faces disruption, alternative sources provide continuity. Sole-source long-term contracts increase, not reduce, geopolitical concentration risk.

9A company is evaluating whether to regionalize its supply chain by sourcing closer to end markets. Which factor would MOST favor a regionalization strategy over global centralized sourcing?

A.Highly standardized commodity products with long shelf lives

B.Short product life cycles requiring rapid response to demand changes

C.Very low transportation costs relative to production cost savings

D.Extremely stable and predictable demand

Explanation: Short product life cycles require fast replenishment and reduced lead times, which favor regional sourcing closer to end markets. Proximity enables rapid demand response, reduces obsolescence risk, and lowers total landed cost when speed-to-market value outweighs production-cost differences.

10Which sustainability practice in supply chain design directly reduces Scope 3 greenhouse gas emissions for a buying organization?

A.Installing solar panels at the buyer's corporate headquarters

B.Requiring suppliers to measure and reduce their own energy consumption and emissions

C.Purchasing carbon offsets for the buyer's domestic air travel

D.Switching the buyer's company fleet from diesel to electric vehicles

Explanation: Scope 3 emissions are indirect emissions from the value chain, including supplier operations (upstream) and product use/disposal (downstream). Requiring suppliers to measure and reduce their own energy consumption and emissions directly targets Scope 3. Solar panels, carbon offsets for air travel, and fleet electrification primarily affect Scope 1 and Scope 2 emissions of the buying organization.

About the CPSM Exam 2 Exam

CPSM Exam 2 — Supply Management Integration — tests the integrative supply chain knowledge that connects sourcing with broader organizational functions: category strategy, supply chain network design, logistics and transportation, demand and inventory planning, and project management.

Assessment

165 multiple-choice questions covering five content domains: Category Management (29.1%), Supply Chain Strategy (25.5%), Logistics (25.5%), Forecasting/Planning/Inventory (10.3%), and Project Management (9.7%).

Time Limit

2 hours 45 minutes (165 minutes)

Passing Score

400/600 on ISM's scaled score

Exam Fee

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

CPSM Exam 2 Exam Content Outline

29.1% of Exam 2

Category Management

Category segmentation, spend analysis, Kraljic matrix, stakeholder alignment, sourcing waves, and multi-year category strategy.

25.5% of Exam 2

Supply Chain Strategy

Network design and optimization, make-or-buy analysis, resilience and regionalization, sustainability, and SCOR model.

25.5% of Exam 2

Logistics and Transportation

Transportation mode selection, Incoterms 2020, warehousing strategy, landed cost analysis, cross-docking, intermodal, reverse logistics, and 3PL/4PL management.

10.3% of Exam 2

Forecasting, Planning, and Inventory

Demand forecasting methods, S&OP, CPFR, bullwhip effect, EOQ, reorder point, safety stock, ABC analysis, VMI, and consignment inventory.

9.7% of Exam 2

Project Management

Project charter, critical path, float analysis, RACI, risk register, stakeholder management, and implementation governance.

How to Pass the CPSM Exam 2 Exam

What You Need to Know

Passing score: 400/600 on ISM's scaled score
Assessment: 165 multiple-choice questions covering five content domains: Category Management (29.1%), Supply Chain Strategy (25.5%), Logistics (25.5%), Forecasting/Planning/Inventory (10.3%), and Project Management (9.7%).
Time limit: 2 hours 45 minutes (165 minutes)
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 2 Study Tips from Top Performers

1Know Incoterms 2020 rules: who pays freight, who bears risk, and at what geographic transfer point — especially FOB, DDP, DAP, and CIF.

2Memorize the Kraljic matrix quadrants (routine, leverage, bottleneck, strategic) and the correct sourcing approach for each.

3Practice EOQ and reorder point calculations — Exam 2 includes quantitative inventory questions.

4Understand the bullwhip effect causes and CPFR as the collaborative remedy — these appear frequently in scenario questions.

5Study S&OP as a cross-functional process, not just a planning tool — know how capacity gaps are identified and resolved.

6For project management, focus on critical path, float, and project charter — Exam 2 covers project management at a functional (not PMI deep) level.

Frequently Asked Questions

How many questions are on CPSM Exam 2?

CPSM Exam 2 — Supply Management Integration — has 165 multiple-choice questions, to be completed in 2 hours and 45 minutes (165 minutes).

What score do you need to pass CPSM Exam 2?

ISM requires a scaled score of 400 on its 0–600 scale to pass CPSM Exam 2. Each CPSM exam is scored and must be passed independently.

What topics does CPSM Exam 2 cover?

Exam 2 tests Supply Management Integration knowledge across five domains: Category Management (29.1%), Supply Chain Strategy (25.5%), Logistics and Transportation (25.5%), Forecasting, Planning, and Inventory (10.3%), and Project Management (9.7%).

How much does CPSM Exam 2 cost in 2026?

As of current ISM pricing, CPSM Exam 2 costs $495 for ISM members and $795 for nonmembers. The fee applies to each attempt, including retakes.

Do you have to take the CPSM exams in order?

ISM does not require candidates to take the three CPSM exams in a specific order. Most candidates sit Exam 1 (Supply Management Core) first, but Exam 2 (Integration) can be taken in any sequence.

What is the difference between CPSM Exam 1 and Exam 2?

Exam 1 (Core) focuses on sourcing, negotiation, legal and contractual issues, and supplier relationship management fundamentals. Exam 2 (Integration) covers the broader integrative supply chain functions: category strategy, supply chain network design, logistics, planning, inventory, and project management.