- 23
- JAN
- 2012
Specification management: procurement’s dirty secret
Author: Jonathan Webb - Categories: Procurement Strategy, Talent
Users state requirements and feed this through to purchasing. But what role do buyers have in challenging this?
This has sparked a lot of debate over the past week in the PIU.
Unsurprisingly, for a group of procurement geeks, it has revolved around an inevitably prosaic subject, namely: specifications.
There are essentially two schools of thought. Both relate to deep-held convictions over the fundamental role of procurement.
The first camp, which we might term the ‘specialists’, believes that specifications come from internal customers and purchasing aims to meet that stated need by going to market. Procurement’s expertise lies in market intelligence and supplier negotiation.
It does not challenge engineers (or other operational customers) but can suggest alternatives, establish cross-functional teams and try its best to reduce and rationalise the number of specifications.
The other camp, the “generalists”, believes that it is absolutely the role of procurement to question specifications. The purchasing department is partly staffed with engineers (or other technical experts) and prides itself with a strong technical expertise. Its role is to maximise the organisation's value by ensuring the most efficient purchases are made.
It’s interesting to see how the debate splits people. Many of the specialists come from a manufacturing background, where procurement’s role is seen as a transactional service to the business, whereas generalists have ambitions for purchasing’s strategic value for the business.
The most efficient approach to specification management probably varies between sector and business model. But it is important to recognise that there are decisions to be made in this regard and not simply continue the legacy position of specification management in the organisation.
Comments
Frank Callaghan
Thu 26 Jan 2012 19:06
Love the topic and have lived in both worlds. As part of the sourcing process, I think that understanding the commercial impact of the different specifications, their impact on the service or the product and discussing the what ifs (what if reduce/increase/eliminate the spec) is a discussion that sourcing needs to have with suppliers and operational stakeholders. As an example, in a direct procurement situation for a raw material, the industry standard was to ship it at 50% dilution with water. By doing a 'what if we dilute it to a 60 raw/40 water mix, we were able to increase the active ingredient delivered by 20% and improve both cost and logistics efficiencies. This would not have happened without questioning the spec.
Frank Callaghan
Thu 26 Jan 2012 19:06
Love the topic and have lived in both worlds. As part of the sourcing process, I think that understanding the commercial impact of the different specifications, their impact on the service or the product and discussing the what ifs (what if reduce/increase/eliminate the spec) is a discussion that sourcing needs to have with suppliers and operational stakeholders. As an example, in a direct procurement situation for a raw material, the industry standard was to ship it at 50% dilution with water. By doing a 'what if we dilute it to a 60 raw/40 water mix, we were able to increase the active ingredient delivered by 20% and improve both cost and logistics efficiencies. This would not have happened without questioning the spec.
Mike Licholat
Sat 18 Feb 2012 14:39
Frank,
Specifications evolve due to necessity such as this. Thanks for the interesting perspective and experience; I will be quoting your post in my MS class.
Mike Licholat