CIPS Level 3 key terms

The whole process of acquiring goods, services or works, from identifying a need through to paying the supplier and managing the contract. It is broader than purchasing because it includes planning and relationship management.

The transactional part of procurement concerned with ordering and receiving goods or services, often limited to the commercial buying activity rather than the wider strategic process.

The activity of identifying, evaluating and selecting the suppliers and arrangements that will best meet a defined need, including market analysis and the choice of sourcing route.

The connected network of organisations, people and activities that transforms raw materials into finished goods or services and delivers them to the final customer.

The series of activities through which an organisation adds value to inputs before delivering outputs to customers, used to identify where cost and differentiation advantages arise.

A calculation of all costs associated with acquiring and using an item over its life, including purchase price, delivery, installation, operating, maintenance and disposal costs, not just the headline price.

The total cost of an asset or service across its entire life cycle, including acquisition, operation, maintenance and end-of-life costs, used to compare competing offers fairly.

The optimum combination of cost and quality to meet the user's requirement, judged across the whole life of the purchase rather than on lowest price alone.

A precise statement of the requirements a product or service must meet, covering performance, technical or functional needs, so suppliers can offer compliant solutions and bids can be compared.

A document that describes the work to be performed under a contract, including deliverables, timescales and acceptance criteria, commonly used for services and projects.

A stated need that a purchase must satisfy, expressed in measurable terms such as quantity, quality, timing and standards, forming the basis for sourcing and evaluation.

Any person or group with an interest in, or affected by, a procurement decision, such as internal users, finance, legal, suppliers or regulators.

A structured way of identifying stakeholders and assessing their influence, interest and likely impact, so engagement effort can be prioritised and tailored.

A grid that plots stakeholders by their level of power and level of interest, guiding whether to manage closely, keep informed, keep satisfied or simply monitor them.

The systematic approach to managing interactions with suppliers, segmenting them by importance and working collaboratively to improve performance, innovation and value over time.

The practice of grouping suppliers according to spend, risk, strategic importance or dependency, so that management effort and controls are proportionate to each group.

A portfolio tool that classifies purchases by supply risk and profit impact into routine, leverage, bottleneck and strategic items, each needing a different sourcing approach.

A measurable value used to track whether a supplier or process is meeting agreed targets, such as on-time delivery rate or defect rate, typically reported regularly.

A contract clause or document setting out the service standards a supplier must achieve, with measures, reporting and remedies if standards are missed.

The process of administering a contract after award, monitoring performance, managing variations, risks and payments, and ensuring both parties meet their obligations until closure.

The clauses that set out the legal rights and obligations of buyer and supplier, covering matters such as payment, delivery, liability, warranties and termination.

A pre-agreed sum payable by a supplier for a specified breach, such as late delivery, intended to compensate the buyer without needing to prove actual loss.

A competitive process in which suppliers are invited to submit formal offers against a defined requirement, usually in sealed or electronic form, so bids can be evaluated fairly.

A document inviting suppliers to propose solutions to a stated need, including technical approach and price, used where requirements allow room for supplier innovation.

A simpler request asking suppliers to quote prices for clearly specified goods or services, typically used for routine or low-risk purchases.

The stated factors, and their weightings, against which bids will be assessed, such as price, quality and delivery, published in advance so scoring is transparent.

The decision about which supplier or suppliers to award business to, based on evaluation against criteria, risk checks and value for money.

The checks a buyer makes on a supplier before contracting, covering financial stability, capability, compliance and reputation, to reduce the risk of failure.

A register of suppliers that have been assessed and cleared to receive business, used to control who may be invited to quote or tender.

An internal request from a user or department asking procurement to obtain goods or services, which is checked and approved before any order is raised.

The workflow step in which a requisition is reviewed against budget and delegated authority limits before it can progress to an order.

A formal document sent by a buyer to a supplier confirming an order for specified goods or services at an agreed price and terms.

A record confirming that goods or services have been delivered and checked against the order, often triggering the invoice-matching step.

A control that compares the purchase order, the goods receipt note and the supplier invoice to confirm quantity and price agree before payment is approved.

The end-to-end sequence from identifying a need and raising a requisition, through ordering and receipt, to invoice matching and payment of the supplier.

The use of electronic systems such as online catalogues, e-tendering and e-invoicing to carry out procurement activities, improving speed, control and data visibility.

The examination of an organisation's purchasing data to understand what is bought, from whom and at what cost, supporting consolidation and better sourcing decisions.

The formal limits set by an organisation stating who may approve purchases or commit spend, and up to what value, as an internal control.

The process of identifying, assessing and treating risks that could affect supply, such as supplier failure or disruption, and putting controls or contingency plans in place.

A documented schedule setting out what information will be shared with which stakeholders, in what format and how often, to keep engagement consistent.