By the end of this section, you should be able to:
1. Describe the importance of specification requirements from a procurement perspective.
2. Identify the different methods of descriptions and the general presentation for a specification to capture the organisation’s expectations.
3. Identify the key differences between product and service specifications.
4. Identify the elements of a procurement specification and principles of specification writing.
A specification has been defined as a statement of the attributes of a product or service or a statement of needs to be satisfied by the suppliers, e.g., 4 feet by 8 feet 2 mm thick mild steel plate (acceptance tolerance of +0.05 mm). It must be distinguished from standards. A standard is a specification intended for recurrent use, e.g., enclosure for electrical equipment reference standard IEC529:1989-11 (2nd edn). Standards differ from specifications in that, while every standard is a specification, not every specification is a standard. The guiding principle of standardisation is the elimination of unnecessary variety.
Both specifications and standards aim to:
1. Indicate fitness for purpose or use, linking quality to product satisfaction and dissatisfaction.
2. Communicate the requirements of a user or buyer to the supplier.
3. Compare what is actually supplied with the requirements in terms of purpose, quality and performance stated in the specification.
4. Provide evidence, in the event of a dispute, of what the buyers required and what the supplier agreed to provide.
The primary purpose of procurement is to contribute to the profitability of the organisation by obtaining the best-quality products or services in terms of fitness for use at the least possible total cost. From the procurement perspective, the purpose of specifying requirements is to provide the information that the supplier requires in order to reliably meet the organisation’s expectations. It is important, therefore, that all expectations are captured in the specification. If they are not, the supplier may meet the specification but not at all satisfy the organisation’s actual needs.
Specifying requirements correctly is fundamental as it is a major determining factor of cost and effectiveness, and hence of profitability. Unclear or incorrect specifications can result in:
1. Disruption and delays in supply of the product or service, e.g., caused by time spent providing additional information and clarification or correcting errors with the supplier.
2. Additional costs arising from the product or service not performing as needed, e.g., the cost of rectifying its performance.
Within the procurement requisitioning process, it is hence important to include a detailed description of what is to be sourced. The using, requesting or specifying department must be capable of reasonably describing what is required to be sure of getting exactly what is needed.
Although the prime responsibility for determining what is needed usually rests with the using or specifying department, the Procurement function, as the intermediary between the user and the supplier, has the direct responsibility of checking for the completeness of description given. Buyers should, of course, not be allowed to alter arbitrarily the description or the quality. They should, however, have the authority to insist that the description be accurate and detailed enough to be perfectly clear to every potential supplier. In addition, the Procurement function also has other
important roles to play by:
1. Bringing supply market knowledge and commercial awareness to the process. For example, the buyers should call the attention of the requisition party to the availability of other options that might represent better value. They should also be able to advice on whether or not any of the requirements stated in the specification are liable to cause commercial, environmental or legal problems.
2. Contributing to the design or specification stage in the application of value analysis and the provision of innovative suggestions, aimed at achieving cost reduction without detriment to the required performance, reliability, quality and maintainability.
3. Facilitating supplier involvement where appropriate.
It is therefore important for a buyer or a Procurement manager to be fully familiar with how requirements are determined, in order to carry out his/her job competently.