CIPS Level 5 Advanced Diploma in Procurement and Supply L5M6 Syllabus Exam Questions Answers

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]

Direct costs are those directly attributable to the production of goods or services. For BikeFace, raw materials such as rubber (used in tyres) and labour (workers assembling bicycles) are direct costs because they contribute directly to finished products. By contrast, advertising spend and IT systems are indirect costs as they support operations but do not directly form part of the bicycle. Category managers must distinguish between direct and indirect costs to design effective sourcing strategies. Direct categories often warrant closer supplier collaboration and longer-term contracts due to their critical role in production.

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 Direct Category refers to spend on items that are directly linked to the production of goods or delivery of services. For manufacturers, this includes raw materials, components, and items required in high volumes that form part of the finished product. These categories are critical because supply disruptions or price volatility can have significant impacts on production and customer delivery. Conversely, Indirect Categories refer to goods and services not directly linked to production, such as cleaning services, IT systems, or office supplies. Effective management of direct categories often involves long-term supplier relationships, strategic sourcing, and risk management. Since they directly affect business continuity, procurement strategies must prioritise availability, cost stability, and quality. Category managers often use Kraljic’s Matrix and forecasting tools to design robust sourcing strategies for direct categories.