CIPS Level 4 Diploma cheat sheet

Procurement cycle stages: identify need, define specification, source, select supplier, agree contract, manage contract, review and learn.

Kraljic matrix axes are profit impact (high/low) and supply risk (high/low), giving four categories: strategic, leverage, bottleneck, non-critical.

Strategic items: high value and high risk - use long-term partnership, joint development, and detailed risk planning.

Leverage items: high value, low risk - use competitive tendering and volume-based negotiation to exploit buying power.

Bottleneck items: low value, high risk - secure continuity via backup sources, stockholding, or long-term supply assurance.

Non-critical items: low value, low risk - minimise transaction cost with catalogue ordering, e-procurement, and consolidated purchasing.

Five rights of procurement: right quality, right quantity, right time, right price, right place.

Total cost of ownership includes acquisition, operating, maintenance, and end-of-life disposal costs, not just purchase price.

Specification types: conformance (design) specification states how to make it; performance specification states what it must achieve.

A contract requires offer, acceptance, consideration, intention to create legal relations, and capacity of the parties.

Express terms are stated explicitly; implied terms come from statute, custom, or business efficacy.

Conditions are fundamental terms; breach allows termination and damages. Warranties are minor terms; breach allows damages only.

Innominate (intermediate) terms take their status from the seriousness of the breach and its consequences.

Remedies for breach: damages, specific performance, injunction, rescission, and termination.

Liquidated damages must be a genuine pre-estimate of loss; a penalty clause is unenforceable.

Force majeure clauses excuse performance for defined events; without the clause, frustrated contracts may discharge at common law.

Contract management activities: mobilisation, performance monitoring, KPI review, change control, dispute resolution, and exit planning.

Corporate strategy sets mission and objectives; procurement strategy must align vertically with it and horizontally with other functions.

Make-or-buy decision compares internal cost and capability against external supply cost, risk, and strategic control.

Market analysis tools: Porter's Five Forces, PESTLE, and supply market segmentation by capacity and competition.

Supplier relationship spectrum runs from transactional (low involvement) to partnership and co-destiny (high involvement).

Supplier preferencing matrix plots attractiveness of the account against value of the customer to the supplier.

Sourcing options include single source, dual source, multi-source, and consortium/cooperative buying.

e-Procurement tools: e-tendering, e-auctions (reverse), e-catalogues, purchase-to-pay, and spend analytics.

Spend analysis classifies spend by category, supplier, and business unit to identify consolidation and savings opportunities.

BATNA is the best alternative to a negotiated agreement; a strong BATNA raises negotiating power.

ZOPA is the zone of possible agreement - the overlap between each party's reservation point.

Positional (distributive) bargaining is win-lose; integrative (interest-based) bargaining seeks joint gains.

Principled negotiation (Fisher and Ury): separate people from the problem; focus on interests not positions; invent options for mutual gain; use objective criteria.

Negotiation stages: preparation, opening, exploration, bargaining, agreement, and implementation/review.

Tactics include anchoring, bracketing, silence, conditional trades, and the 'higher authority' and 'good guy/bad guy' plays.

Contract price mechanisms: fixed price, cost-plus, time-and-materials, target cost with gain-share/pain-share, and index-linked.

Contract terms to negotiate: payment terms, delivery and Incoterms, warranties, liability caps, indemnities, termination, and governing law.

CIPS Code of Conduct principles include integrity, transparency, accountability, and respect for stakeholders and the environment.

Conflicts of interest must be declared and managed; a conflict exists where personal interest could influence a procurement decision.

Gifts and hospitality policies set monetary thresholds and require declaration and approval before acceptance.

Bribery offences typically cover offering, promising, giving, requesting, agreeing to receive, and accepting a financial or other advantage.

Modern slavery and human trafficking statements disclose steps taken to prevent forced labour in supply chains.

Supplier codes of conduct set minimum labour, human rights, environmental, and anti-corruption standards.

Ethical audit tools: supplier self-assessment questionnaires, site audits, third-party certification, and grievance mechanisms.

Whistleblowing channels allow confidential reporting of unethical conduct without fear of retaliation.

Risk is the combination of the probability of an event and its consequence (impact).

Risk assessment: identify, analyse (likelihood × impact), evaluate against criteria, treat, monitor, and review.

Risk treatment options: avoid, reduce (mitigate), transfer (e.g. insurance, contract terms), and accept (tolerate).

A risk register records risk description, owner, likelihood, impact, score, mitigation action, and review date.

Supply risk sources include single sourcing, supplier financial failure, capacity constraints, quality failure, and geopolitical or logistics disruption.

Contract risk controls: performance bonds, parent company guarantees, liquidated damages, retention, and step-in rights.

Business continuity management covers business impact analysis, recovery time objectives, and continuity plans for critical suppliers.

Fraud risk controls: segregation of duties, dual authorisation, three-way matching, and supplier due diligence.