Free CIPS Level 2 Exam Flashcards

The core objectives procurement aims to achieve: right quality, right quantity, right time, right place, and right price. All five must be balanced together, not optimized in isolation.

Goods or services must meet the agreed specification and be fit for purpose - not necessarily the highest quality available, but the quality level the requirement actually needs.

The price that represents best value for money considering total cost, not simply the lowest purchase price on offer.

Delivery must occur when the goods or services are actually needed - early delivery can raise storage costs, late delivery can disrupt operations.

Goods or services must be delivered to the correct location specified by the buyer, which affects transport cost and choice of delivery terms.

The end-to-end sequence of procurement activities: identify need, define specification, source and select a supplier, negotiate and award the contract, receive goods or services, then manage the ongoing contract and supplier relationship.

An organisation owned by individuals or shareholders that operates primarily to generate profit and is accountable mainly to its owners and investors.

A government-funded body accountable to citizens and taxpayers; its procurement is typically subject to public procurement regulations that promote transparency and fair competition.

A not-for-profit body such as a charity or social enterprise, driven by a social or environmental mission rather than shareholder profit.

Local sourcing buys from suppliers in the buyer's own country, favoring shorter lead times and lower transport risk. Global sourcing seeks suppliers worldwide for the best price, quality, or innovation, at the cost of longer lead times and more supply chain risk.

Typical sequence: raise a requisition, define the specification, source and evaluate suppliers (RFQ/ITT), award the contract, issue a purchase order, receive the goods or services, and process the invoice for payment.

An internal document raised by a department to formally request that procurement buy specified goods or services; it triggers sourcing but is not itself a contract.

A document issued by the buyer to a chosen supplier specifying the goods or services, quantity, and price; once accepted by the supplier it becomes a legally binding contract.

A design/technical specification that precisely states dimensions, materials, and standards the product must meet - best suited to standard, well-defined commodities.

A specification that states the required outcome or function rather than how to achieve it, giving suppliers freedom to propose innovative solutions; commonly used for services.

A Request for Quotation (RFQ) asks suppliers for prices on lower-value, straightforward purchases. An Invitation to Tender (ITT) is a formal, detailed process used for higher-value or more complex requirements.

A pre-vetted list of suppliers who have met an organisation's quality, financial, and compliance criteria; buyers select from the ASL to reduce sourcing risk.

Express terms are explicitly written into the contract; implied terms are not written but assumed by law or custom. Standard contracts use pre-drafted template terms for routine purchases; bespoke contracts are custom-drafted for complex, high-value, or high-risk agreements.

Requires CIPS members to act with integrity, professionalism, and high ethical standards - rejecting improper business practices such as bribery and conflicts of interest - and to be held accountable for their conduct.

Procurement decisions that weigh environmental and social impact alongside cost and quality, including working to eradicate unethical practices such as human rights abuses, fraud, and corruption from the supply chain - a core part of corporate social responsibility (CSR).

Individuals or groups within the buying organisation with an interest in a procurement decision, e.g., finance, operations, end users, and senior management.

Individuals or groups outside the buying organisation affected by or interested in procurement decisions, e.g., suppliers, regulators, customers, and the local community.

A tool that plots stakeholders on two axes - power to influence and interest in the outcome - to decide the appropriate level and type of engagement for each.

Stakeholders with high power and high interest; manage these closely and engage them fully in decision-making.

Stakeholders with high power but low interest; keep them satisfied with periodic updates, without overwhelming them with detail.

Stakeholders with low power but high interest; keep them adequately informed since they can raise useful concerns or become influential later.

Stakeholders with low power and low interest; monitor them with minimal communication effort.

Formal channels (reports, meetings, contracts) provide documented, structured communication; informal channels (emails, calls, conversations) are faster and build relationships but lack a formal record.

Resolving stakeholder disagreements using approaches such as collaborating (win-win), compromising, avoiding, accommodating, or competing - chosen to fit the situation's importance and the relationship involved.

Combining diverse expertise (e.g., procurement, finance, technical) improves specification quality, speeds up decision-making, and increases stakeholder buy-in for procurement decisions.

An integrated system covering the full procurement transaction cycle - requisition, purchase order, goods receipt, invoice, and payment - within one platform.

The use of electronic/internet-based systems to conduct procurement activities such as sourcing, ordering, and invoicing, improving speed, accuracy, and spend visibility.

An online, searchable listing of a supplier's products and pre-agreed prices that buyers use to place orders directly within a P2P system.

An e-sourcing event where multiple pre-qualified suppliers compete by bidding the price down in real time, with the buyer typically awarding to the lowest compliant bid.

The structured, computer-to-computer exchange of business documents (e.g., purchase orders, invoices) between buyer and supplier systems without manual re-entry.

A payment control that checks the purchase order, goods receipt note, and supplier invoice agree before an invoice is approved for payment, reducing the risk of paying for incorrect or undelivered goods.

A production-planning system that calculates the materials and components needed, and when, based on demand forecasts and bills of materials, to support manufacturing schedules.

An integrated software system that links procurement with other business functions (finance, HR, production, inventory) on a single platform, of which purchasing/MRP is one module.

A secure online interface that lets suppliers view orders, submit invoices, update catalogues, and communicate directly with the buying organisation's procurement system.

Accurate digital records create an audit trail, support spend analysis, ensure compliance, and provide evidence in the event of a contract or supplier dispute.

An inventory classification method: 'A' items are the small percentage of stock lines that represent the largest share of value (tightest control), 'B' items are mid-value, and 'C' items are low-value, high-volume lines (loosest control).

The order quantity that minimises the combined total of ordering costs and holding (storage) costs for an item of inventory.

An inventory strategy where materials arrive only as they are needed in the production or sales process, minimising stock holding but requiring highly reliable suppliers and logistics.

A buffer quantity of inventory held above expected demand to protect against uncertainty in demand or supplier lead time, reducing the risk of a stockout.

The stock level at which a new replenishment order must be placed so the new stock arrives before existing inventory runs out, accounting for lead time and demand.

The portion of inventory that is used up and replenished during the normal operating cycle to meet expected, regular demand.

A warehousing/stock rotation method where the oldest stock is issued or sold first, reducing the risk of obsolescence or spoilage.

A logistics technique where incoming goods are transferred directly from inbound to outbound transport with little or no intermediate warehouse storage, speeding up distribution.

A set of standardised international trade terms (published by the ICC) that define the point at which cost and risk for goods transfer from seller to buyer, e.g., EXW (seller's minimum responsibility) through DDP, delivered duty paid (seller's maximum responsibility).

Proactively monitoring and following up on outstanding orders with a supplier to confirm progress and resolve delays, ensuring delivery happens on time.