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CIPS Flashcards L4M1 WITH ANSWERS GRADED A+
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CIPS Flashcards L4M1 WITH ANSWERS GRADED A+
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10/2/24, 7:00 AMEUNICE
CIPS Flashcards L4M1 WITH QEUSTIONS AND 100% sure
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Terms in this set (86)
Procurement is the process of obtaining goods or services through following a process
Define procurement
that includes identifying the need through to goods or services being delivered.
Define purchasing Purchasing is the act of physically ordering and buying something.
Define supply Supply is the infrastructure which ensures goods/services can be delivered
Value is the worth of something, the difference between what we pay and what a
Define value
potential customer is willing to pay
What is a good A good is a tangible physical item such as raw materials, components
What is a service A service is an intangible item such as cleaning, training
What are constructional works Constructional works include both goods and services, such as concrete, architecture
What are stock items Stock items are ones we can hold inventory of such as raw materials, components
What are non-stock items Non-items are ones which cannot be held, such as capital procurements, services
Direct material - traceable to units of production such as wood into furniture
Indirect material - not traceable to specific units such as sanding paper into sanding
machinery
Direct labour - directly involved in the making of units
Outline what is meant by direct and indirect
Indirect labour - Indirectly involved in the making of units such as maintenance
procurements
engineers
Direct expense - variable costs which are rare such as paying royalties on each unit
produced
Indirect expense - fixed or step-fixed, such as factory rent
Inbound logistics
Operations
What are primary activities in Porter's value
Distributional logistics
chain
Marketing & sales
Services
Firm infrastructure
What are support activities in Porter's value Human resource management
chain Technology development
Procurement
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expenses incurred for future benefit which depreciates over time, such as machinery,
What is a capital expense
building
What is an operational expense the day-to-day running costs of a business such as office supplies, wages
Charged to capital account
Procured for a long time period and long lifespan
What are the key features of capital Tend to be high-value assets
procurements Procurement involves complex requirements and many stakeholders
Involves developing a business case
Less frequent and irregular
Financed from resource budget
Purchased for short-term consumption
What are the key feature of operational
Tend to be low-value
procurements
Less complex repeat spends
Straight-forward, following pre-set budgets
Intangibility - specifying services levels is challenging
Heterogeneity - every instance is unique
What are the key features of services Perishable - provided in real time and cannot be stored
procurements Location - can only be performed in specific locations
Evaluate - they are difficult to assess due to subjectivity
Changing - requirements may change from initial specification
price - securing all of the below at a reasonable, affordable, and competitive price
place - goods delivered to the appropriate point and transported to ensure good
What are the 5 rights of procurement and condition on arrival
their definitions quality - goods which are fit for purpose
quantity - sufficient quantity to meet demand while minimising excess stock holding
time - goods delivered at the right time, not so early as to incur inventory costs
Supplier:
- A price the market will bear
- Allows seller to win business
- Covers costs and allows for a healthy profit
What is the right price Buyer:
- the purchaser can afford, allowing for a profit when the product is sold
- fair and reasonable, representing value for money for the total package of benefits
- gives the purchaser an advantage over competitors
- reflects sound purchasing practices
- Price analysis - determines if the offered price is fair and appropriate for the
What are the 2 methods used to determine if purchased goods.
the price is right - Cost analysis - looks how the quoted price relates to the supplier's costs of
production
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