CIPS Level 3 cheat sheet

Five rights of procurement: right quality, right quantity, right time, right price, right place - a purchase failing any one of these is not fully effective.

CIPS procurement cycle stages: understand need, define specification, develop sourcing strategy, identify suppliers, obtain and evaluate offers, award contract, manage contract and relationship, review and learn.

Three sectors differ in rules: public sector is bound by transparency and equal-treatment obligations, private sector by commercial discretion, third (voluntary) sector by donor and trustee accountability.

Sourcing spectrum from transactional to strategic: spot purchase, regular trading, framework/call-off, single-sourced partnership, and in-house provision; risk and dependency rise along that spectrum.

Make-or-buy decision tests: core competence, cost comparison of total cost of ownership, capacity, confidentiality, and supplier market maturity.

Kraljic matrix axes are profit impact (value/volume) and supply risk (dependency); quadrants are non-critical, leverage, bottleneck and strategic, each with a distinct sourcing approach.

Supplier preferencing matrix axes are attractiveness of the account to the supplier and relative value of the business; quadrants are nuisance, exploitable, development and core.

Triple bottom line (people, planet, profit) and the five capitals (natural, human, social, manufactured, financial) underpin sustainable procurement and whole-life costing.

Total cost of ownership includes acquisition price plus transport, inspection, storage, quality failure, downtime, disposal and end-of-life costs, not price alone.

Specification types: conformance (technical, prescriptive), performance (outcome-based, output), and functional (need-based); performance specs widen supplier innovation but need measurable KPIs.

Tender process sequence: pre-qualification, invitation to tender, clarification period, submission deadline, opening, evaluation against published criteria, moderation, award and standstill/debrief.

RFI gathers market information; RFQ prices a defined requirement; RFP/ITT invites proposals against stated criteria - using the wrong instrument weakens comparability and audit defence.

Evaluation models: lowest price, lowest whole-life cost, and most economically advantageous tender (MEAT) scored by weighted criteria; weights and scoring method must be published before bids.

Incoterms allocate cost, risk and task between buyer and seller; risk passes at the named point, e.g. FOB passes on loading, CIF adds insurance and freight to named destination, DDP places maximum duty on seller.

Payment terms levers: early settlement discount, milestone/stage payments, retention, performance bond, advance payment guarantee and letter of credit for cross-border risk.

Contract types by risk allocation: fixed price (seller bears cost risk), cost-plus (buyer bears cost risk), time-and-materials, and gain-share/pain-share incentive arrangements.

Stock control: economic order quantity balances ordering cost against holding cost; safety stock covers demand and lead-time variability; ABC analysis ranks items by annual spend value.

Ethical and legal controls in operations: conflicts of interest declared and managed, gifts and hospitality registers, anti-bribery due diligence, modern slavery and sanctions screening in the supply chain.

Stakeholder map by power and interest: high power/high interest = manage closely; high power/low interest = keep satisfied; low power/high interest = keep informed; low power/low interest = monitor.

Stakeholder salience model classifies by power, legitimacy and urgency; stakeholders holding all three are definitive, those with two are expectant, one is latent.

Supplier relationship spectrum: transactional, basic, collaborative and partnership/strategic alliance; relationship choice follows spend value, supply risk and innovation need.

Supplier performance measurement uses KPIs/SLAs with defined metrics, targets, frequency and escalation; scorecards distinguish quantitative delivery data from qualitative relationship health.

Supplier development is a structured intervention (training, process support, capability building) used where the supplier is strategically important but underperforming.

Communication planning records audience, message, channel, frequency, owner and feedback route; absence of a named owner is the most common cause of stakeholder disengagement.

Conflict handling styles: competing, collaborating, compromising, avoiding and accommodating; collaborating suits long-term supply relationships where both parties' needs matter.

Internal customer relationships require a service-level agreement between procurement and budget holders covering timescales, approval thresholds and category support.

Contract and relationship review cadence: operational meetings at delivery level, management reviews on performance, and executive reviews on strategy and risk.

Purchase-to-pay sequence: requisition, approval, purchase order, goods receipt, invoice matching, payment; three-way match compares PO, receipt and invoice before payment.

Segregation of duties: the person who raises a requisition should not approve it, receive the goods and authorise payment - a single person holding all steps is a fraud control failure.

E-procurement modules: e-sourcing (RFx and reverse auctions), e-tendering, e-catalogues/punch-out, e-invoicing, and spend analytics; each automates a defined stage of the cycle.

ERP systems (e.g. SAP, Oracle) hold master data - supplier records, material master, price conditions - and poor master data quality is the leading cause of invoice mismatch and maverick buying.

Approval workflow design uses delegated authority limits by value and category, with escalation rules and documented exception routes for urgent or single-source purchases.

E-invoicing and OCR capture reduce processing cost per invoice and cycle time; straight-through processing requires clean PO data and tolerance rules for price and quantity variance.

Reverse auctions suit commoditised, well-specified, price-driven requirements with several qualified bidders; they are unsuitable where quality, innovation or relationship continuity dominate.

Data protection and record retention: personal data in supplier records must be processed lawfully, access-restricted and retained only as long as needed for audit, tax and contract purposes.

Key procurement metrics: spend under management, P2P cycle time, percentage of invoices paid on time, PO compliance/maverick spend, supplier on-time-in-full (OTIF) and cost savings realised versus target.