1.1 L4M2 LO1

Question 1

What are business needs?

Answer 1

Inputs and/or things they can add value to by transforming into goods/services that meet customer needs

All needs have costs associated with them

The aim is to add enough value to make profit

Procurement needs to meet these needs by using the 5 Rights of Procurement

Question 2

What are the three types of purchase?

Answer 2

Straight re-buy
No changes to the spec or terms

Modified re-buy
Some changes to spec and/or terms. Route to market may also change

New buy
Never been purchased before, completely new purchase. New spec, research market. Full procurement cycle.

Question 3

What is a business case?

Answer 3

Aims to gain approval for a project or activity requiring significant organisational commitment by demonstrating how it meets the needs or delivers benefits to the business

Question 4

What are the implications of business needs on the type of purchase?

Answer 4

• the level of effort required
• the problem solving skills needed
• the degree of risk to the organisation
• the current level of experience of buying that product/service
• the number of tasks involved in the process
• The amount of information required

Question 5

What are the key components for the specification for a modified re-buy or new buy?

Answer 5

• An executive summary
• long term strategy considerations
• business requirements
• a price and cost analysis
• market analysis
• supply analysis
• technical developments
• vulnerability
• sourcing objectives
• implementation plan
• competitive advantage it will deliver

Question 6

When talking about identifying business needs, what is RAQSCI?

Answer 6

Regulatory
Availability 
Quality
Service requirements 
Cost
Innovation

Question 7

What is RACI?

Answer 7

Responsible
Accountable
Consulted
Informed

Question 8

What are the 5 components to consider when framing the business for senior management?

Answer 8

Return on investment 
Time to market
Customer satisfaction 
Improving productivity 
Managing risk