CIPS Level 2 Procurement key terms

The whole process of acquiring the goods, works or services an organisation needs, from identifying the requirement through to paying the supplier and managing the contract afterwards.

The transactional part of procurement: raising orders, placing them with suppliers and arranging payment for goods or services that have already been selected.

An organisation or individual that provides goods, works or services to a buyer under an agreed arrangement, often formalised in a contract.

The connected network of organisations, people and activities that turn raw materials into finished goods and move them to the final customer.

Getting the best balance of cost, quality and fitness for purpose over the whole life of what is bought, rather than simply choosing the lowest price.

The full cost of an item across its life, including buying, delivery, use, maintenance and disposal, rather than just the purchase price alone.

The classic test that a purchase delivers the right quality, quantity, price, time and place; used to judge whether a buying decision is sound.

Inviting two or more suppliers to bid for the same requirement so that price, quality and service are tested against each other and better value is achieved.

A situation where a person's private interests, such as a family link to a bidder, could improperly influence their procurement decisions or actions.

Buying in a way that respects human rights, labour standards, environmental protection and anti-corruption rules throughout the supply chain.

The team, roles and responsibilities within an organisation that carry out buying activities and set the rules and standards for how purchasing is done.

A structure where one central team handles buying for the whole organisation, giving greater buying power and consistent standards but less local flexibility.

A structure where individual sites or business units do their own buying, giving speed and local knowledge but risking duplication and weaker bargaining power.

A hybrid structure where a small central team sets strategy, policy and frameworks while local buyers handle day-to-day purchasing within those guidelines.

Grouping similar purchases into categories and managing each one as a business unit, with its own strategy, supplier base and improvement plan.

The structured way an organisation manages its ongoing contacts with key suppliers, aiming to improve performance, reduce risk and create joint value.

Transferring an activity previously done in-house to an external provider under contract, usually to gain specialist skills or a lower operating cost.

The repeating sequence of stages a purchase goes through, from defining the need and sourcing suppliers to contracting, delivery and review.

A clear written description of what is required, covering performance, technical features or outputs, that forms the basis for supplier offers and later acceptance.

An early-stage document that asks suppliers to explain what they can offer, used to research the market before running a formal competition.

A simple invitation asking suppliers to state a price for a clearly defined, usually low-risk requirement; common for routine or low-value purchases.

A formal document inviting suppliers to submit priced offers against a detailed specification, usually under sealed and structured procedures.

The stated factors, such as price, quality and delivery, together with their weightings, against which supplier offers are scored and compared.

Structured discussion between buyer and supplier aimed at agreeing terms such as price, delivery, quality and risk allocation that suit both sides.

A pre-agreed arrangement with one or more suppliers setting terms for future orders, so buyers can call off work without a new full competition each time.

A formal document sent to a supplier authorising the supply of stated goods or services at an agreed price and on agreed delivery terms.

Using electronic systems and online tools to carry out buying activities such as raising requisitions, running tenders, ordering and paying.

An internal request asking the procurement team to buy something, stating what is needed, how much and when, and usually requiring budget approval.

A record completed when goods arrive, confirming the quantity and condition received; it supports payment and helps resolve later disputes.

Checking that the purchase order, the goods received note and the supplier's invoice agree on quantity and price before the invoice is paid.

A register of suppliers that have been checked and accepted by the organisation and may be used by buyers without seeking further approval.

The complete, ordered record of what was bought, why, by whom and when, allowing later checking and showing that rules were followed.

A measurable target, such as delivery on time or cost saved, used to judge whether suppliers or the procurement team are performing as intended.

Any person or group who affects, or is affected by, a procurement activity and therefore has an interest in its process or outcome.

A colleague or group inside the organisation, such as a budget holder, user or finance officer, who influences or depends on buying decisions.

A person or body outside the organisation, such as a supplier, regulator, customer or community group, with an interest in procurement activity.

Analysing stakeholders by their level of influence and interest so that communication and involvement effort can be targeted appropriately for each group.

Planned two-way communication and involvement with stakeholders to understand their needs, keep them informed and secure their support for procurement decisions.

The person who actually uses the goods or services being bought and whose needs the specification should reflect.