Specifications - 5 Rights

In procurement, a specification is a detailed description of the goods or services required. It forms part of what are known as an RFQ (Request for Quotation) or an ITT (Invitation to Tender). Specifications should reflect the needs of the customer and user group.

Specifications help to ensure that the goods and services ordered meet the required quality. They hold the key to achieving the 5 R’s: right quality, right quantity, right price, right place at the right time.

Specifications can be produced for both products and services. There are two types of specification.

A conformance specification details exactly what the product or service will be made up of. It is a long document that requires more information to prepare with in-depth knowledge of the product. This type of specification, also known as an ‘input’ specification, could be a chemical formula or a recipe.

A performance specification outlines what the product or service is to do or achieve. It is a short document that should be simple and inexpensive to prepare. You don’t need to know much about the product. The supplier is given an opportunity to use their expertise to provide a solution.  This type of specification is also known as an ‘output’ specification.

A buyer may not have the skill or in-depth product knowledge to prepare a specification, so they will need support from the person or department requesting the product or service. Preparing specifications can involve many different individuals from various departments of a business. This can include the accounts department, quality control, research and design, and warehouse manager, and these will represent a cross-functional team.

If an order is supplied wrongly against a given specification, the receiving organisation can reject the order. If the order is supplied and there was no specification quoted and the supplier has sent a fair interpretation of the description, then the receiving organisation has no grounds on which to reject or not pay for the order.

Good specifications help ensure suppliers understand what customers need and are able to provide an accurate price in order to deliver to this level of quality and service. But poorly-prepared specifications are one of the main reasons why the procurement process fails to deliver the best outcomes.