Business process of procurement: awareness of the need (part 2)
"Or equivalent".
There is nothing seditious in requesting quotations or proposals, based on the manufacturer's brand or model, frequently followed by the words "or equivalent".In such circumstances, the buyer is trying to move the responsibility for compliance with the required performance on the potential supplier, and maybe, getting better results without spending money and effort to develop appropriate specifications.
Description based on the specifications.
The specification is one of the basic methods for describing the demands. The attempts of specifications related standardization and type,number and species reduction efforts are related to specification-based procurements.
The advantages of purchasing on the basis of the specifications include:
- Careful research needs;
- The emergence of a standard of measurement and inspection of supplied materials;
- The ability to purchase goods with the same parameters from different suppliers;
- The ability to conduct a fair competition;
- The responsibility of the supplier for compliance with the characteristics of the goods, after receiving information about them from the buyer.
Yet, there are certain limitations, besides the advantages.
The key ones are the following:
- There are commodities the specification of which is barely possible to be fairly prepared;
- Using specifications grow additional costs (for instance, it may be due to the need to test aiming at verification of the compliance with the characteristics of the given parameters of the proposed product specifications);
Too stringent specifications sometimes discourage potential suppliers.
The specs based on physical and chemical characteristics.
This type of specification contains a set of characteristics of the material, the procuring entity wants to purchase.The measurable characteristics that are necessary for the satisfactory use of the product at the lowest cost and given quality are formulated.
Specifications based on used materials and production methods.
These specifications are used relatively infrequently, in case you have special requests and when a buyer is willing to take responsibility for the results.
Specification based on characteristics and functions.
Specifications based on the characteristics require an understanding of the functions performed. This, in a sense, is the focus on results and use. The decision on how to produce the desired product is left to the supplier. This enables him to take advantage of the latest technological developments and to pass on material substitutes for any of the components, the characteristics of which exceed the minimum requirements.
Obviously, satisfactory use of these specifications depends on the correct choice of supplier. It should be notedprice comparison at the evaluation given may be difficult, as the supplier may include 'the risk charge' in the price.
Description based on technical drawings
Description based on the technical documentation is a widely used technique that is used in combination with one or another way of describing needs. Typically, this method is particularly useful in the procurement of construction materials, electrical equipment, machinery parts etc. This is rather expensive and time-consuming method of description, not only because of the costs of preparing the drawings, but also because it is usually used to describe the product, it is difficult for suppliers, and therefore expensive to manufacture. However, it is the most accurate description, and so it is used for the procurement of the units requiring a high degree of operational excellence and tight tolerance.
Mixed description methods
This category includes two methods: market categories (commercial varieties)based description and sample based description.
Description based upon market categories (commercial varieties)
Procurement based on commercial varieties apply to certain product categories only.
In particular, barley, cotton, rice, wood, steel, aluminum are the examples of such products. For some purposes, the procurement based upon commercial varieties is an acceptable method. Their value depends on the accuracy of grading and the ability to set the grade of the material by means of inspection.
Sample based description.
Almost all the procurement executives use this method, though, with a few exceptions, it is used for relatively small amount of the general range of goods. This technique is used when the other description methods are impossible to use.
Good examples of products to be purchased on the basis of visual matching is the timber having a certain structure, paints, appearance, odor, etc.
