The purchasing function typically acts as the interface between the customer (internal or external) and suppliers. Purchasing’s primary role of taking a business requirement – finding a supplier, negotiating a deal and then ordering the item is hinged on that first step – without knowing what’s really needed – costs can be far higher than required and the purchasing process inefficient.
Specification can be attributed in two ways, attributes related to things – (i.e. the part, component or raw material) and actions (functions, processes, ,procedures, services, performance)
Let’s consider this practically:
Requisition 1) A loose specification – “I want something to drink my coffee out of”
Requisition 2) A tight specification – “I want a red cup to drink my coffee from – it must be no more than 15 inches high – and it must have a white handle – it must be microwave safe.”
Consider in the above simple example that both orders want things (a cup) but they want different attributes. Requisition 2 enables the buyer to measure the market against specific needs and where he can achieve cost reduction it’s done directly against the specification without detriment to the fit form and function. Requisition 1 provides the buyer with much more scope however there is the chance that the person who raised the requisition may well change their mind / refine the specification as quotes begin to arrive.
Once the item is delivered the specification can be used to compare the delivered item to what was ordered. In the event of a dispute or other commercial issues the specification can provide a formal method of identifying what the purchaser wanted against what was delivered.
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One Response to “The importance of Specification within the procurement places”
Very helpful for studies.