How to Get Clarity in Your Procurement Specifications

How to Get Clarity in Your Procurement Specifications
By Stephen C Carter

A procurement specification is an essential document when going to market with a new tender. It is a statement of what you, the buyer, wants from the purchase in terms of the attributes the product or service must have. Equally, it is an essential document for the supplier as they use the specification to ensure that they have understood your requirements, can deliver to the standards you have set and can also price their bid so that they make a fair profit.

If your specification is to achieve all of this, it is vital that the specification is clear and unambiguous. Here is an example of what I mean.

Suppose your specification contains the statement “We need to improve the quality of our services”. You might think this is a reasonable and clear statement. Here are seven questions that show that it is not.

1. Who is the “we” in the statement? Is it the buying organization? Or the supplier? Or maybe even the end-user. Without this knowledge it is not clear as to what quality means to them – they may have very different views.

2. What is the “need”? Why is it a need? Is it really a want? The difference between need and want can be significant when it comes to the cost of your purchase. We have all heard the phrase “don’t buy a Rolls-Royce if a Ford Fiesta will do” (or whatever makes of car are local to you). The point is that the Rolls will have a lot of functionality that is nice to have but is not essential if all you want to do is to drive economically and safely from point A to point B. Stripping out these “nice to have” components (the wants) leaves you with a product or service that meets the outcomes you want but at a lower cost.

3. “Improve” from what to what? Over what period of time? Without a baseline of current performance levels (for example) it is not possible to measure whether the supplied performance is better or not and if better whether or not that improvement warrants the cost. Equally, the time period over which you want the improvement can add significantly to the product or service cost. There is always a premium for speed.

4. Improvements measured by whom and how? Unless you have an agreed way of measuring improvements then suppliers are unlikely to trust you as it will not be clear how and why penalties are incurred in the contract. The result will be reflected in the price. Also, depending on how complex the data collection, analysis and reporting is, having the supplier manage this will usually add to the cost. If you are to do it then you need to make sure you have the resources (people, processes and systems) to do it.

5. Is there a clear definition of “quality”? This is similar to the previous point. If you do not have an unambiguous definition of quality that can be measured then there will be uncertainty in whether or not the chosen supplier is delivering it or not. This can only add to your costs.

6. Who is “our”? Defining this helps to clarify the scope of our tender and this is one of the key drivers of both quality and cost.

7. “Services” – does this mean all of our services, some of them or just this one? Does it apply to services delivered to all of our customers (internal or external) or just one or more segments?

Steve has been a consultant, coach and interim manager since 1987 specializing in purchasing category management, strategic sourcing and supplier relationship management. His clients come from both the public and private sectors and include many household names as well as SMEs. He has also held a variety of senior line management positions with both a UK and a US multinational and has extensive experience of working with subsidiaries across the world. He now offers online training and coaching courses on a variety of Procurement and Supply Management topics. You can email Steve at steve.carter@crestbsl.com