1. Diploma in Procurement & Supply Business needs in Procurement & Supply Introduction to the unit Basic concepts and approach

2. Overarching Learning Outcomes (knowledge and understanding) By the end of this unit you should  Understand how to devise a business case for requirements to be sourced from external suppliers (1.0)  Understand the fundamentals of specifications and key performance indicators that are included in contractual arrangements made with suppliers (2.0)  Understand the main clauses that are included in formal contracts (3.0)  Understand the main implications of outsourced work or outsourced services for procurement (4.0)

3. Learning outcomes for this introductory session By the end of this session you will:  Be aware of the broad requirements of this unit  Be aware of how to relate these requirements to the structure of this learning site  Think about your own style of learning and develop an approach to learning that best suits your requirements  Be aware of some of the basic concepts relating to the nature and role of procurement and supply

4. How is the learning structured for this unit? This unit is divided in 8 learning sessions as shown below: Session 1- Business needs and procurement decisions Session 2- Estimating costs and prices Session 3- Financial budgets Session 4 - Specifications Session 5 - Key performance indicators Session 6 - Contract terms Session 7 - Pricing arrangements Session 8 - Outsourcing

5. Procurement – some initial concepts The final section of this introduction looks at some basic concepts relating to procurement and supply.

6. What is Procurement? You will see the commitment of expenditure referred to in a variety of ways. Below are just four examples:  Buying  Purchasing  Sourcing  Procurement

7. Procurement versus purchasing  Procurement is a wider term than purchasing  Procurement is a broader process than purchasing  Procurement is more proactive, relational, strategic and integrated within an organisation

8. CIPs definition of Procurement ‘Procurement is the totality of acquisition starting from the identification of a requirement to the disposal of that requirement at the end of its life. It therefore includes pre-contract activities e.g. sourcing and post contract activities e.g. contract management, supplier relationship management activities. However, it does not include stores management and logistics that are aspects of the wider subject of Supply Chain Management. Procurement generally relates to goods, works and service(s) requirements’. CIPS (2013)

9. The importance of procurement  While estimates may vary there is little doubt that for a typical organisation bought in goods and services represent the single most significant proportion of costs  ‘Many organisations now have as much as 80% of their turnover comprising bought in goods and services’. CIPS (2013)

10. Supply In order to be able to buy goods or services someone has to be able to supply those goods or services. What’s more those goods or services need to be:  available when required  of the agreed quality

11. Supply chain management (SCM) ‘SCM is the management of all activities aimed at satisfying the end consumer; via the total management of the Supply Chain (Networks) as such it covers almost all activity within the organisation. It includes a number of key success factors that include a clear procurement strategy, effective control systems, and development of expertise’. CIPS (2013)

12. The Chartered Institute of Purchasing and Supply (CIPS) ‘CIPS is the premier global organisation serving the procurement and supply profession. Dedicated to promoting best practice, CIPS provides a wide range of services for the benefit of members and the wider business community’ CIPS (2013)