The typical proportions of organisational costs accounted for by procurements of goods and services

Explain the importance of procurements of goods and services to the organisation

Different types of procurements such as:

• Capital and revenue purchases
• Products, services and constructional works
• Direct and indirect
• Outsourcing and insourcing

Explain the mix of direct and indirect supplies that are procured by the organisation. Advise internal stakeholders about different types of procurement that the organisation will typically contract

The five rights of purchasing and definitions of value:

• Price/total cost
• Quality
• Time
• Quantity
• Place

Apply the five rights of procurement and value criteria to any purchase of goods or services

Whole-life asset management criteria, including purchase price, servicing, repairs, consumables, disposal and other end-of-life costs

Explain how the procurement of goods or services can be evaluated on the basis of whole-life asset management

The roles of procurement and supply professionals in securing value with suppliers

Explain the importance of spending the organisation's money with suppliers to achieve best value outcomes

The roles of staff with devolved responsibilities for the procurement of goods and services

Identify staff with devolved responsibilities for the procurement of goods and services and explain how they can create orders and agreements with external suppliers

The main pricing methods used for the purchasing of goods or services including;

• Fixed pricing, lump sum pricing and schedule of rates
• Cost reimbursable and cost plus arrangements
• Variable pricing
• Target pricing
• Risk and reward pricing

Explain the advantages and disadvantages of a range of pricing methods and apply these in the procurement of goods and services

Data that relates to the pricing of goods or services procured by the organisation including:

• Price changes compared to historic figures
• Margins and mark ups
• Whole-life asset management
• Open book costing/accounting

Calculate basic financial analysis of costs and prices and use this data to negotiate with suppliers