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How To Prevent Wrong Specification In The Procure
The design of procurement tender document is fraught with many challenges of which specification design is one of them. Right from the onset a buyer must understand what its internal customers' purchasing needs are without any ambiguity in order to save its organisation from supply risk exposure. One uncertainty in the definition of organisational requirement in the tender document can cause massive financial leakage for the buying organisation. If you are a supplier, you are not going to find it funny if a tender was withdrawn or suspended after tons of hours of your productive time have been invested preparing your bids, only to be told the specification was found to be wrong. For suppliers new to the tendering for contract world, you may be wondering what specification means and why it is so important in the tender design stage to get it right. Think about this situation- you are off to shop for a car you need desperately because your old and existing car is well and truly past its sell by date. You leave your office with no clue about what type of car you want to buy and how much you can afford to spend going forward in its operational and running costs and, as if all that is not bad enough, you have given very little thought about the complete needs for the car aside your immediate personal comfort. Can you picture this scenario and see yourself in the car dealers' shop floor with a blank cheque ready to buy your car in a sea of ignorance. That is almost like signing off your chequebook to the waste bin - it won't take long for you to see that the car you have bought is not meeting some of your future business needs or worst case scenario, it running and maintenance cost is astronomical with significant pressure on your budgets.
A buyer's role in the procurement cycle in any organisation is to support the budget holders and requisitioning team to make an informed decision about what is it that they need to purchase for the benefits of the organisation as a whole. The buyer must ensure that the needs of the organisation is primarily considered in a holistic manner bearing in mind the importance of meeting organisational strategic goals and objectives. To this end, the buyer must ensure that the procurement function achieves economic savings without compromising the quality of the required products or services. Buyers must play the role of the devil's advocate challenging any over-specification that does not add value to the productivity function of the organisation with a view to minimising costs. Failure to get the specification right at this stage can significantly create financial and supply risk exposure which, will undermine the value added in the buyer's supply chain network, leading to poor delivery of final products supply to the internal and external customers of the organisation. This ripple effect will no doubt spell serious financial disaster for the buying organisation if not tackled head on as quickly as possible. It is also for this reason, buyers must have some understanding of financial skills so that the effect of their actions on the bottom and top line of the organisation's financial report can be clearly assessed in their decision making process.
It is with this in mind, that buyers have to spend significant time in the specification design stage, relative to the other segments of the procurement cycle to ensure it is coherent and correctly communicate the buying organisation's needs to prospective suppliers. This prudent approach whilst time consuming have the benefit of saving the organisation from the risk of awarding contracts to the wrong suppliers for the wrong products that will add no value to the business at the final stage. Where the products procured are very complex, specification design will be more challenging and in this situation, steps should be taken to engage potential suppliers with the right type and level of expertise needed to assist in the procurement process. Strict adherence to the legal guidance that underpins the procurement function is called for at all times and even more in this case. This is so important, for public bodies where strict legislations to control unethical practices such as fraud is mandatory. There are various best practices to minimise procurement risk relating to wrong specification. One such tool that have proven very reliable is the use of multifunctional team comprising all the key stakeholders of the item to be procured (marketing, design, production, finance, logistic teams etc) being involved in the specification design process. This approach commonly known in some circles as the 'Commodity Team' has the added benefit of eliminating the risk of under or over specification and in many cases have boosted the success rate of the procurement team achieving its overall corporate objectives when all other factors remain constant. Like all team work, the risk of multi functional team members focusing on their sole team needs and working against other commodity team members must be watched out for and stamped out at all costs if present. Members of the commodity team must be reminded that congruency of corporate vision, mission, objectives and goals take precedent over individual team needs.
At Business Services Support Limited, we offer procurement training alongside leadership and management skills training. You will find details of our courses on our website, as well as more articles in various subject matter including procurement and team member skills.
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