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Defining Business Need (L4M2)

Module Purpose

On completion of this module, learners will be able to devise a business case for requirements to be externally sourced and will understand the role of market management and competitive forces as they specify goods and services in procurement and supply.

Module aim(s)

The development of a business case and the ability to analyse markets are key if an organisation is to successfully work with external suppliers. Similarly, the clear definition of specifications for through-life contracts is crucial to overall business achievement. This module is designed for those who are expected to analyse, interpret and evaluate information on the different types of markets utilised by procurement and supply. It explores a variety of elements that underpin the development of business cases and specifications, and considers the options that should be explored when procurement and supply personnel are involved in defining requirements.

Next steps

Starting a CIPS qualification programme means you will join the largest institute in the world for those working in procurement and supply. You can join as a student member online today. Once joined you can book your examinations online

Key Module Details

Icon showing the letter C, with CORE MODULE written below the circle.

Icon showing the number 60 and the word QUESTIONS, with IN THIS EXAM written below the circle.

Icon showing the letters OR, with OBJECTIVE RESPONSE EXAM written below the red-bordered circle.

Icon showing the number 6 and the word CREDITS inside a red-bordered circle.

Icon showing the number 1.5 and the words HOURS, with EXAM DURATION HOURS written below the circle.

Icon showing the number 60 and the word HOURS, with MODULE LEARNING TIME written below the circle.

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Learning outcomes, assessment criteria and indicative content

1.1 Analyse how business needs influence procurement and supply decisions

1.1.1Type of purchase such as new purchase, modified rebuy, straight rebuy
1.1.2Implications of the business needs on the types of purchase
1.1.2Role of procurement in developing a business case

1.2 Identify how costs and prices can be estimated for procurement activities

1.2.1Types of market data that can provide information on costs, prices and pricing strategies
1.2.2Identification of direct and indirect costs
1.2.3Producing estimated costs and prices
1.2.4Estimating the costs associated with whole-life asset management

1.3 Analyse the criteria that can be applied in the development of a business case

1.3.1Examples of criteria typically applied in the development of a business case: costs, benefits, options, competitor analysis, alignment with organisational needs, stakeholder requirements and timescales

1.4 Interpretation of financial budgets and cost models for the control of purchases

1.4.1The definition and purpose of financial modelling
1.4.2Cost models and profiling of cash flows
1.4.2Control of budgets: ways to measure budget performance
1.4.3Approaches to budget variances

2.1 Analyse the consideration for procurement and supply when working with different markets

2.1.1Manufacturing sector
2.1.2Construction sector
2.1.3Retail sector
2.1.4Financial sector
2.1.5Agriculture sector
2.1.6Service sector

2.2 Compare the competitive forces that influence markets

2.2.1Bargaining strength of suppliers and buyers
2.2.2Availability of substitutes and threat of new entrants

2.3 Contrast direct costs and indirect costs. Consider the types of data that can provide information on cost and price

2.3.1Sources of information to estimate costs and prices breakdowns and to assess the direct and indirect costs of purchased goods and services
2.3.2Use information to prepare budgets and assess the scope for price or cost variability

3.1 Analyse the types of specifications used in procurement and supply, and sources of information that can be used to create them

3.1.1Sources of information used to create specifications: external standards, internal expertise and knowledge, other product specifications, sustainability considerations and internet sources
3.1.2Conformance specifications: drawings, samples, brand, technical standards
3.1.3Performance specifications: output, outcome and functional specifications

3.2 Identify sections used in developing specifications supporting procurement and supply arrangements