Description
Within the requisitioning process, it is important to include a description of what is to be sourced. Why? If the time is not spent to describe the product or service, purchasing will have no idea of what to go out and purchase! How purchasing accomplishes this will differ dramatically from one situation to the next. There are a variety of methods for communicating the user’s requirements. Description by market grade or industry standard might be the best choice for standard items, where the requirements are well understood and there is common agreement between supply chain partners about what certain terms mean. Description by brand is used when a product or service is proprietary, or when there is a perceived advantage to using a particular supplier’s products or services. A builder of residential communities, for example, might tell the purchasing staff to purchase R21 insulation, an industry standard, for walls, and to buy finish-grade lumber, a market grade, for the trim and fireplace mantels. In addition, it might also specify brands such as Georgia-Pacific’s Catawba hardboard siding, Kohler faucets, and TruGreen-Chemlawn lawn treatment for all the homes. As you can see, brand names, market grades, and industry standards provide purchasing with an effective and accurate shortcut for relaying the user’s needs to potential suppliers.
More detailed and expensive methods of description will be needed when the items or services to be purchased are more complex, when standards do not exist, or when the user’s needs are harder to communicate. Three common methods include description by specification, description by performance characteristics, and prototypes or samples.
In some cases, an organization may need to provide very detailed descriptions of the characteristics of an item or service. We refer to such efforts as description by specification. Specifications can cover such characteristics as the materials used, the manufacturing or service steps required, and even the physical dimensions of the product. In contrast, description by performance characteristics focuses attention on the outcomes the customer wants, not on the precise configuration of the product or service. The assumption is that the supplier will know the best way to meet the customer’s needs. A company purchasing hundreds of PCs from Dell Computer might demand: (1) 24-hour support available by computer or phone, and (2) 48-hour turn-around time on defective units. How Dell chooses to meet these performance characteristics is its choice.
Firms often develop prototypes or samples to share with their suppliers. Prototypes can provide critical information on the look or feel of a product or service. Such information is often difficult to convey in drawings or written descriptions. Note that prototypes or samples are not limited to physical products. An excellent example is a prototype information system that a company might share with potential software vendors. The prototype may include sample output screens and reports. Through the prototype, the company can give its software vendors a clearer idea of how the company expects its users to interact with the system.