A well-written specification in procurement lays the foundation for effective sourcing and supplier performance. It defines the business need, sets expectations and ensures fairness and transparency throughout the procurement process. Clear specifications save time, reduce risk and strengthen relationships by helping all parties understand what success looks like.
At this stage of the CIPS Procurement Cycle, the focus should be on translating stakeholder needs into precise, measurable requirements that support organisational goals.
Performance vs Conformance Specifications
Specifications fall into two broad categories, performance or conformance. When creating a performance specification the functionality, performance, capabilities, outputs of outcomes should be stated.
When opting for a conformance specification, we are procurement professionals provide the supplier with the exact details of what is required and how they are to provide it. So here, the supplier’s task is to conform to our instructions.
Therefore, deciding on the type of specification to use depends on whether the requisitioner knows exactly what they want and how it needs to be achieved or whether they know the desired output or outcome and will allow the supplier to work on a solution to achieve that.
Regardless of the choice of type of specification, a good specification document should contain the following.
Figure 1: A well-structured specification
What Makes a Good Specification?
To allow specifications to be clear and to save valuable time, standards can be included within them. Standards referred to may be ISO or Health and Safety. The benefit of including an approved standard means that there is no requirement to document what the standard stands for or represents, the inclusion of its title and reference to a specification conforming to it reduces the word count of the document.
Using Early Supplier Involvement (ESI)
As mentioned in a previous blog, suppliers can assist greatly in developing or creating a specification. The use of ESI (early supplier involvement) has many advantages but should be used with caution.
Sustainability and the Total Cost of Ownership (TCO)
A key area of importance in current times when creating specifications is to think about aspects such as:
- Sustainability
- Environmental impact
- Social value
- Disposal
Classically specifications were designed to allow for the best solution at the lowest price. Now we should be considering TCO (total cost of ownership) from the outset of specification development.
- Think about the materials being specified for inclusion, are they from a sustainable source?
- Think about the reusability or recyclability or the product or associated packaging?
- Think about the social value the product or service will have on the people. Consider employees in the supply chain and the general public.
- Think about how the product, its bi-products or those or the service will be disposed of. Is this a cost effective, environmentally friendly and socially acceptable approach?
Having considered all of this the specification will not be the cheapest on price but will promote the highest value.
Having contemplate all of the above a good specification should be clear, consider and include a complete description of the requirement. It should:
- Not exceed the actual need
- Not be unduly restrictive
- And be stated in terms that the stakeholders can understand
The Risks of Over- and Under-Specifying
If your specification is over specified you may expose the business to risks such as:
- Great expense
- Poor competition
- Fewer offers to meet your requirements
- Difficulty in evaluation
However, if you under specify you face risks such as:
- The procurement is not suitable for the identified needs
- Unnecessary expense incurred
- Unhappy and unsatisfied stakeholders
It seems to appear therefore, that creating a specification can be a complex task and whilst procurement have a key role in this process it is common and expected that a cross-functional team is created to ensure that the specification covers all the requirements adequately but does not fall into the over-specification bracket.
Final Thoughts
A fundamental area of importance when working on creating a specification against a defined need is communication. Ensuring that the information received in relation to the need is clear and understood, using that information cross-functionally to gain all the inputs needed and channelling that information using clear, comprehensive and concise information to the supplier will result in achieving a specification that is fit for purpose and one that fulfils the need.
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