CIPS Level 2 Procurement flashcards
CIPS Level 2 Procurement · Build recall with a focused review session.
32 cards. Read the term and the definition here. The deck at the top of this page is optional.
- Five rights of procurement
- Right quality, right quantity, right price, right time and right place. A purchase meeting all five is judged effective; failure on any one creates waste, risk or added cost.
- Value for money
- The optimum combination of whole-life cost and quality to meet the user's requirement, assessed on cost, quality and sustainability rather than lowest purchase price alone.
- Total cost of ownership
- The full cost of an asset over its life: acquisition price plus delivery, installation, operating, maintenance, training and disposal costs, used to compare options on a whole-life basis.
- Triple bottom line
- A sustainability framework measuring performance against three pillars - economic (profit), social (people) and environmental (planet) - used to judge procurement decisions beyond financial return.
- Make-or-buy decision
- A decision on whether to produce a good or service in-house or buy it externally, based on cost, capacity, capability, confidentiality and supply risk.
- Maverick buying
- Purchasing carried out outside agreed contracts, catalogues or approval processes, which loses volume leverage, payment control and visibility of organisational spend.
- Procurement cycle
- The sequence of stages from identifying a need through specification, sourcing, supplier selection, contracting, ordering, receipt, payment and review. Each stage produces a decision and a record.
- Centralised procurement
- Purchasing carried out by a single central unit for the whole organisation, giving volume leverage, standardised terms and fewer suppliers, at the cost of slower local response.
- Centre-led procurement
- A hybrid model in which a central team sets policy, standards and category strategy while local or business-unit buyers execute day-to-day purchasing and supplier contact.
- Category management
- Grouping purchases into categories of similar spend or supply market, then managing each category as a business unit with its own strategy, supplier plan and performance targets.
- Cross-functional sourcing team
- A project group combining procurement with users, technical specialists, finance and legal to define requirements, evaluate bids and select suppliers jointly.
- Profit leverage of savings
- A cost saving adds directly to profit, so at a 10% net margin a £10,000 purchasing saving equals the profit earned from £100,000 of extra sales.
- Shared service centre
- A central unit handling high-volume transactional purchasing such as requisitions, orders, invoice matching and payment queries for several business units, leaving strategy to category teams.
- Request for information
- A market-sounding document used to gather information about suppliers, capability and indicative prices before a formal process. It does not award a contract.
- Invitation to tender
- A formal document inviting suppliers to submit a priced bid against a defined specification, with stated evaluation criteria, submission deadline and contract terms.
- Weighted scoring model
- An evaluation method in which each criterion carries a weight and each bid a score; weighted scores are summed to rank bids. The weights must total 100%.
- Three-way match
- A control comparing the purchase order, goods received note and supplier invoice for price, quantity and terms before payment to the supplier is released.
- Performance specification
- A statement of the required output or outcome rather than the method of delivery, allowing suppliers to propose solutions and innovate but requiring clear measurement.
- Pre-qualification questionnaire
- A short questionnaire used to screen suppliers on financial standing, capability, certifications and relevant experience before they are invited to submit a tender.
- Negotiation
- A planned discussion between buyer and supplier aiming to reach agreement on price and other variables such as delivery, payment terms, quality, volume and risk.
- Purchase requisition
- An internal document by which a user department requests goods or services and obtains budget approval before the procurement function takes any action.
- Purchase order
- A buyer's written offer to purchase on stated terms; once accepted by the supplier it forms the contract and authorises supply and later invoice payment.
- Goods received note
- A record completed on delivery stating the quantity and condition received. It supports stock updates, supplier performance monitoring and invoice matching.
- Audit trail
- The documented, traceable sequence of approvals and transactions - requisition, order, receipt, invoice and payment - allowing an auditor to reconstruct how a purchase was made.
- Incoterms
- Standard international trade terms defining where risk and cost transfer between seller and buyer. They do not determine price, title or payment method.
- Records retention
- Rules setting how long purchasing documents such as contracts, tender files and invoices are kept to satisfy audit, tax and legal limitation requirements.
- Stakeholder
- Any individual or group that affects, or is affected by, procurement activity, including internal users, budget holders, finance, suppliers, regulators and the wider community.
- Mendelow power-interest matrix
- A grid plotting stakeholders by power and interest. High power/high interest are managed closely, high power/low interest kept satisfied, low power/high interest kept informed, the rest monitored.
- Kraljic matrix
- A portfolio tool classifying purchases by profit impact and supply risk into strategic, leverage, bottleneck and non-critical items, each requiring a different sourcing approach.
- Supplier relationship spectrum
- A scale of buyer-supplier relationships from transactional, arm's-length and price-focused, through preferred and partnership, to strategic alliance with joint planning and shared risk.
- Conflict of interest
- A situation where a personal or financial interest could improperly influence a procurement decision; it must be declared and the person removed from that decision.
- On-time-in-full
- A delivery performance measure recording the percentage of orders received complete and by the agreed date, used in supplier scorecards and contract review meetings.