1.

1 Analyse how business needs influence

procurement decisions

1.2 Identify how costs and prices can be estimated

1.0 Understand how to for procurement activities
devise a business case
for requirements to be
sourced from external
suppliers 1.3 Analyse the criteria that can be applied in the
creation of a business case

1.4 Interpret financial budgets for the control of

purchases
Defining Business Need

2.1 Analyse the different types of markets utilised by

procurement and supply

2.0 Understand market

[L4M2]

management in 2.2 Compare the competitive forces that influence

procurement and markets
supply
2.3 Contrast the breakdown between direct and
indirect costs and the types of data that can
provide information on cost and price

3.1 Analyse different types of specifications used in

procurement and supply and sources of information
that can be used to create specifications

3.2 Identify sections of specifications for through life

3.0 Understand the use contracts
of specifications in
procurement and
supply 3.3 Identify the risks that can result from inadequate
specifications and mitigation approaches

3.4 Identify opportunities to regulate short and

longer term specifications
 Type of purchase such as new purchase,
modified rebuy, straight re-buy
1.1 Analyse how
business needs
Implications of the business needs on the
influence
types of purchase
procurement
decisions
Procurement’s role in developing a
business case

Types of market data that can provide

information on costs and prices
Defining Business Need [L4M2]

1.2 Identify how Direct and indirect costs

1.0 costs and prices
Understand can be estimated
how to for procurement
activities Producing estimated costs and budgets
devise a
business
case for Approaches to total costs of
requirement ownership/whole life cycle costing
s to be
sourced from Examples of criteria typically applied in the
external 1.3 Analyse the production of a business case: costs, benefits,
criteria that can options, alignment with organisational needs and
suppliers timescales
be applied in the
creation of a
business case Benchmarking requirements

The purpose of financial budgets

1.4 Interpret Cost entries and timings of cash flows

financial budgets
for the control of
purchases Performance and control of budgets

Dealing with variances to budget

 Manufacturing

Construction

2.1 Analyse the

different types of Retail
markets utilised by
procurement and Financial
supply Such as:

Agriculture
Defining Business Need

Services

2.0 Understand Bargaining strength of suppliers

2.2 Compare the and buyers,
[L4M2]

market
competitive forces
management in
that influence
procurement
markets Availability of substitutes and
and supply
threat of entry

Collate sources of information

to estimate the breakdown of
costs between direct and
2.3 Contrast the indirect costs for purchased
breakdown goods and services
between direct
and indirect costs Use information to prepare
and the types of budgets or to negotiate prices
data that can
provide
information on Research market data and use
cost and price to estimate and negotiate
current and future prices and
costs for purchased goods and
services
 Drawings, samples, branded,
technical
Conformance specifications
3.1 Analyse different Output or outcome, statement of
types of specifications work based specifications
used in procurement and
supply and sources of Standards
information that can be
used to create
The internet
specifications
Suppliers

Directories

Scope
Defining Business Need

Definition
3.0
Understand Description of requirement
3.2 Identify sections of
[L4M2]

the use of specifications for through

specifications life contracts Testing and acceptance
in
procurement Change control mechanisms and
and supply remedies

Social and environmental criteria

3.3 Identify the risks that Under or over specified need

can result from
inadequate specifications Monitor specification creation by
and mitigation colleagues and other internal
approaches stakeholders

Implement standardisation

Value analysis
3.4 Identify opportunities
to regulate short and
Value engineering
longer term specifications

Provide guidance to internal

stakeholders on implementation