CIPS cheat sheet

The procurement cycle: identify need → define specification → develop strategy → source/solicit → evaluate → award → contract → manage performance → review/close. Each stage has a decision gate; skipping specification or review transfers risk downstream.

The 5 Rights of procurement: right quality, right quantity, right time, right place, right price. A purchase is only fully effective when all five are satisfied; price alone is a single dimension.

Carter's 10 Cs of a good supplier: competence, capacity, commitment, control, cash, cost, consistency, culture, cleanliness, communication. Use as a qualitative screening checklist before detailed scoring.

Kraljic portfolio matrix axes: profit impact (purchase value/volume) and supply risk (availability, number of sources, substitution difficulty). Quadrants: non-critical (low/low), leverage (high impact/low risk), bottleneck (low impact/high risk), strategic (high/high).

Non-critical items: routine, many suppliers, low value → simplify, consolidate, e-catalogues, minimise transaction cost. Leverage items: competitive tendering, volume discounts, price benchmarking. Bottleneck items: secure supply, long-term agreements, contingency stock. Strategic items: partnership, joint development, detailed contracts.

Make-or-buy decision compares total cost of ownership of internal production against outsourcing; consider capability, capacity, IP control, fixed-cost absorption, and strategic importance of the activity.

Total cost of ownership (TCO) = acquisition price + transaction costs + transport + inventory carrying + quality/defect + maintenance + disposal/end-of-life. TCO, not unit price, is the correct basis for comparison.

Specification types: brand/design specification (prescriptive, low supplier innovation), performance/functional specification (outcome-based, allows innovation, needs clear KPIs), and standard/conformance specification (references a published standard).

Purchase order is an offer to buy; it becomes a contract only on acceptance. Goods received note, invoice, and PO must be matched (three-way match) before payment.

Stockholding cost rule of thumb: annual carrying cost typically 15–25% of inventory value. Economic order quantity EOQ = √(2DS/H), where D = annual demand, S = order cost, H = holding cost per unit per year.

Strategy alignment chain: organisational mission → corporate strategy → business unit strategy → procurement/supply strategy → category plans → sourcing plans. A procurement strategy that cannot be traced upward is not defensible.

Spend analysis outputs: spend by category, by supplier, by business unit, by contract coverage. Pareto rule (80/20) - typically a minority of suppliers/categories accounts for the majority of spend; target those first.

Supplier relationship tiers: strategic (few, executive sponsorship, joint plans), preferred (performance-managed), transactional (automated, low touch). Tiering drives the level of management effort.

Stakeholder mapping: power/interest grid → high power/high interest = manage closely; high power/low interest = keep satisfied; low power/high interest = keep informed; low/low = monitor.

RACI for procurement projects: Responsible (does the work), Accountable (single owner, approves), Consulted (two-way input), Informed (one-way update). Only one accountable person per activity.

Category management steps: profile the category (spend, market, demand) → define strategy → select sourcing approach → negotiate and contract → manage performance and value.

Demand management levers: specification review, volume consolidation, standardisation, substitution, make-or-buy, and internal customer behaviour change; these reduce spend before any negotiation occurs.

Supply market analysis: Porter's Five Forces applied to the supply market - supplier concentration, threat of substitutes, buyer power, barriers to entry, and supplier bargaining power.

Stakeholder engagement plan elements: who, what they need, influence level, communication channel, frequency, and owner. Without a named owner, engagement fails.

Contract formation requires offer, acceptance, consideration, intention to create legal relations, and capacity. Certainty of terms matters; vague agreements risk being unenforceable.

Key contract terms: scope/statement of work, price and payment terms, delivery, acceptance criteria, warranties, indemnities, limitation of liability, IP ownership, confidentiality, termination, variation, force majeure, and dispute resolution.

Remedies hierarchy: rework/replacement → service credits or liquidated damages → price reduction → termination → damages. Liquidated damages must be a genuine pre-estimate of loss, not a penalty.

Negotiation stages: preparation (BATNA, ZOPA, interests) → opening → exploration → bargaining → closing → recording. BATNA = best alternative to a negotiated agreement; ZOPA = zone of possible agreement between reservation points.

Distributive vs integrative negotiation: distributive is a fixed pie (price-only); integrative expands the pie via variables such as volume, payment terms, lead time, warranty, and risk allocation.

Negotiation variables to trade: price, volume, payment days, contract length, service levels, warranty period, delivery lead time, exclusivity, and innovation contribution.

KPI design: SMART, few in number, balanced (cost, quality, delivery, responsiveness, innovation, sustainability). Poorly designed KPIs drive gaming and unintended behaviour.

Supplier performance review cadence: monthly operational (OTIF, quality, credits), quarterly commercial (spend, savings, issues), annual strategic (value, roadmap, risk).

Contract change control: all variations in writing, priced and approved before work starts; undocumented change is the most common source of contract dispute.

Ethical principles: fairness, transparency, integrity, impartiality, confidentiality, and avoidance of conflicts of interest. Declare and manage conflicts; do not merely avoid the appearance.

Bribery and facilitation payments are prohibited under laws such as the UK Bribery Act 2010; the Act also creates a corporate offence of failing to prevent bribery, so adequate procedures are a defence.

Gifts and hospitality: record in a register, apply a value threshold, and require approval above it. The test is whether the gift could improperly influence a decision.

Modern slavery and human rights due diligence: risk-assess the supply chain, include contractual clauses, audit high-risk tiers, and publish required statements where legislation applies.

Sustainability in procurement: whole-life cost, carbon and environmental criteria in specifications, supplier codes of conduct, and circular-economy options (reuse, repair, recycle).

Competition and fairness: equal information to all bidders, no late disclosure to a favoured bidder, consistent evaluation criteria published in advance, and documented scoring.

Fraud and corruption red flags: single-source awards without justification, split orders below approval thresholds, unusual urgency, close personal relationships with suppliers, and invoice/PO mismatches.

Supplier due diligence: financial stability, legal status, sanctions and debarment checks, capacity, HSE record, insurance, and reputation. Do this before award, not after.

Compliance framework: policy → procedure → controls → monitoring → audit → corrective action. Controls without monitoring are ineffective; document decisions and retain evidence for audit.