Buy Smarter, Not Just Cheaper: Your Guide to Value for Money

11/07/2025 jessica Comments 0 Comment

You are a buyer responsible for purchasing office equipment. How can your company assess your performance? They may mismanage your performance if they focus solely on cost savings. CIPS recommends a concept known as “Value for Money”, which your company can use to evaluate your performance more comprehensively. This concept is frequently covered in the exam, so you should spend time researching what it means and how to apply it to your daily work.

In the CIPS study guide, several organizations define what Value for Money is. They outline various factors that help describe this concept. In this post, I will present key factors considered when defining Value for Money in a simple way.

Factor 1: Economy

To achieve Value for Money, you need to ensure that your purchases are economical. For example, you may receive several bids from suppliers who all meet your quality requirements. In that case, you should choose the one that offers the best price while still meeting your quality standards.

When evaluating their quotations, it’s important to consider the Total Cost of Ownership to make an accurate and comprehensive assessment. This helps you avoid incurring additional costs in the future. Otherwise, you might mistakenly choose the option with the lowest initial purchase price, which could lead to higher long-term expenses, especially when buying assets.

Factor 2: Quality

This is an indispensable part of achieving Value for Money. Your spending may be wasted if the purchased items do not meet your quality requirements. Quality refers to the extent to which purchased items fulfill specific standards or expectations. The higher the product quality, the greater the expectation it satisfies.

Quality requirements can be assessed through several dimensions:

Performance: How well the item functions. For example, if you purchase 100 computers for your company, performance factors may include speed (ability to handle multitasking smoothly), processor power (enabling fast data processing and responsiveness), memory capacity (supporting efficient operation), and graphics capabilities (ability to create, process, display, and manipulate visual information).
Conformance: Whether the product meets your specifications and standards. For instance, computers should meet minimum requirements such as Intel i7 processor, 16GB RAM, 512GB SSD, and Windows 11 Professional.
Durability: How long the product lasts under normal or stressful conditions, for example, drop-resistant hardware or spill-resistant keyboards.
Reliability: The consistency with which the product meets expectations over time.
Aesthetics: The product’s appearance, including design, color, and style.
Serviceability: How easily the product can be maintained, repaired, or upgraded.
Compliance: The product’s adherence to safety, legal, and environmental standards.
Fitness for Purpose: Whether the product effectively serves its intended use. For example, if you buy computers to support daily work tasks, they should be able to perform those tasks reliably. If not, they fail to meet their purpose.

Factor 3: Sustainability

Recently, the concept of sustainability has been widely discussed, and CIPS now includes it in nearly all of its modules. CIPS has also shifted its perspective, stating that purchases must take sustainability into account in order to achieve Value for Money.

You need to collaborate with suppliers to ensure that the production of purchased goods does not negatively impact the environment. Additionally, you should assess the social impact of your suppliers and evaluate how they operate. For example:

Do they have anti-corruption policies in place?
Do they conduct their business ethically?

Factor 4: Risks

You should consider the risks associated with your purchased items, such as supply risks and reputational risks. If there are only a few suppliers in the market, or if your chosen supplier is unable to deliver products within the required timeframe, your company may face prolonged production disruptions. Furthermore, if a supplier operates unethically, your company’s reputation could suffer, leading to a rapid decline in revenue.

Typically, the four factors mentioned above should be considered in purchasing decisions. Ignoring any one of them can result in poor procurement outcomes. You may also take other factors into account to define Value for Money, depending on your company’s objectives.

Although “Value for Money” consists of just three words, buyers have to put significant effort into achieving it.

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