PROCUREMENT PRINCIPLES

AND PRACTICES-BPLM I
 PLU 07101

CPSP-MBA(PSM)
MEM’BWANA
AHMED
 TOPIC 2

QUALITY PRINCIPLES TO
SPECIFY PRODUCTS IN AN
ORGANIZATION
 COVERAGE

• Right quality, quality system, total quality

management
• Specification (attributes, importance, contents
and methods of specifying products)
• Describe the relationship between
specification and standardization; quality and
value; quality assurance and quality control;
value engineering and value analysis
• Specify products by using different methods
 MEANING QUALITY

What is the Quality

• Quality: Refers to either ‘conformance to
specification’ or ‘fitness for the purpose’
• Most people view quality in a subjective way,
think of luxurious image e.g. iPhone cell phones,
Samsung etc. in business and commerce, we
need more objective (measurable, specific)
means of defining quality. Essentially, there are
two ways.
i. Conformance to specification
ii. Fitness for the purpose
 ‘CONFORMANCE TO
SPECIFICATION’
• Conformance to Specification describes
quality as getting a product or service that
does meet what was specified.
• The means of transmitting such
requirement are known as conformance
specification
 ‘FITNESS FOR PURPOSE’
• ‘Fitness for purpose’ describes quality in
terms of whether the product or service
does what is required, and is usually
known as performance specification.
• It encourages suppliers’ innovation. What
the supplier is expected to deliver is a
product that will fit for the purpose
intended/required.
 RIGHT QUALITY

❧ Refers to the totality of features or

characteristics of a product or service that bring
its ability to satisfy the intended purpose/need.
❧ This is buying of goods and services that
conform to the specification and fit purpose of
the organization so as to meet specified quality.
❧ Therefore the quality of goods to be purchased
must reflect the desired requirements/ needs.
 FACTORS TO DETERMINE THE
RIGHT QUALITY
1) Specification
Specification refers to the description of
characteristics of the items to be procured.
2) Reliability
Ability of goods or materials to perform the
intended purpose over a specified period of time.
3) Suitability for use
The items required based on its condition stated
should fit to a certain activity.
 QUALITY SYSTEM
• A quality management system (QMS,
alternatively “quality system”) is a mechanism
for managing and continuously improving core
processes to “achieve maximum customer
satisfaction at the lowest overall cost to the
organization”.
• A quality system is a specific implementation of
quality philosophies/concepts, standards,
methodologies and tools, for the purpose of
achieving quality-related goals.
• When implemented, a quality system will
be unique to an organization.
 TOTAL QUALITY
MANAGEMENT
• TQM is an organization-wide activity that has to
reach every individual within an organization.
• Total Quality Management (TQM) is an approach
to improving the effectiveness and flexibility of
business as a whole. It is essentially a way of
organizing and involving the whole organization;
every department, every activity, every single
person at every level.
 TOTAL QUALITY
MANAGEMENT
• This means that suppliers, as well as customers
and the company’s own workforce, would be
involved in determining quality.
• Inspection and supplier assessment are
superseded by a shared approach to the
elimination of defective work, with the emphasis
on prevention rather than detection and cure.
• Key idea associated with TQM as a policy are
“Team work”, “Involvement” and “Process”.
 ASSIGNMENT
i. Explain the principles of total quality
management
ii. Describe the importance of total quality
management
 SPECIFICATION
Is a statement of the attributes of a product or
services. Or a statement of requirement,
attribute of the product or statement of needs to
be satisfied by the supply of a product. Is the
description of characteristics of item.
• Is a document which clearly, accurately and
completely describes the essential requirements
of goods or services being purchased.

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 SPECIFICATION
• It defines what the procurer wants to buy
and what the supplier is required to
provide.
• Specification are a means of
communicating to a supplier precisely
what is required, so that the products and
services supplied meet the needs of the
purchasing organization and a means of
assessing what was actually supplied.
 THE PURPOSE OF SPECIFICATION

Specification aim to:/Importance

1. Indicate fitness for purpose or use.
This is the definition of quality. Quality is
linked to product satisfaction or
dissatisfaction. Satisfaction relates to
superior performance or features and
dissatisfaction relates to deficiencies or
defect in a product or services.

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 THE PURPOSE OF
SPECIFICATION
2. Communicates the buyer’s requirements to
potential suppliers.
Specification aim to communicate the
requirements of a user or purchaser to the
suppliers of goods or services.
Communicating the characteristics of the
product, performance, life, reliability, control of
quality, packing and protection and after sales
services such as installation, operation and
maintenance.
 THE PURPOSE OF
SPECIFICATION
3. Compare requirements with supplied
deliveries.
It helps the buyer to evaluate and make
comparison what is actually supplied with
the requirements in terms of purpose,
quality and performance stated in the
specification.
 THE PURPOSE OF
SPECIFICATION
4. Provide evidence in the event of a
dispute or conflict.
• Specification is an evidence of a contract in
case of dispute of what the purchaser
required and what the supplier agreed to
provide. It is essential contract document
and is required for arbitration or court
cases.
 CHARACTERISTICS OF GOOD
SPECS/ATTRIBUTES
• Clear and unambiguous.
There should be only one way to interpret
the requirement, avoid ambiguity which is
introduced by undefined acronyms. The
requirement should not contain
unnecessary information. It should be
stated clearly and simply.
• It should be correct/ accurate and
understandable
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 CHARACTERISTICS OF GOOD
SPECS/ATTRIBUTES
• It should be feasible (Realistic/ possible). The
requirement should be doable within existing
constraints such as time, money and availability
resources
• Concise (avoid lengthy)
• Comprehensive. It should cover all aspect of
requirements
• Consistent (throughout the specification and with
other specification and should not conflict laws
and legal requirement)
 APPROACHES/TYPES OF
SPECIFICATION
• There are basically two approaches to
specification
i. Performance specification
ii. Conformance specification
 PERFORMANCE
SPECIFICATION
• This is a clear indication of the purpose,
function, application and performance expected
of the supplied material or service is
communicated, and the supplier is allowed or
encouraged to provide an appropriate product.
• Describes quality in terms of whether the
product or service does what is required.
• Have we specified the right materials for the job,
and have we communicated our requirement to
the supplier in a clear and unambiguous way?
 CONFORMANCE SPECIFICATION

• Describes quality as getting a product or service

that does meet what was specified.
• The specifications where the buying organization
lays down clear and unambiguous requirements
that must be met. The specification is of the
product, not the application.
• Has the supplier provided material in
accordance with the specification? We usually
establish the answer to this question by
inspection
 METHODS OF
SPECIFICATION
There are many methods of specification. The buyer should be
aware of which method of specification is appropriate for a given
requirement. These includes;
• Brand name e.g. Sony TV
• Sample
• Performance specification –seller is given the performance that is
required, not how to make the item.
• Technical specification- highly prescriptive, written specification
gives a detailed definition of what is required.
• Functional specs
• Blue print or engineering drawing
• Composition specification- used in chemical products, solvents etc.

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 1. THE USE OF BRAND NAME OR TRADE NAME

• This type of specification is used to describe

a commodity of a fairly common nature.
• It states a detailed description and a
manufacturer and catalog which meets the
description and has been determined to be
acceptable.
• Competition among brands is usually attained
by specifying brand in the specification.
 2. SPECIFICATION BY
SAMPLE
• This is where by when orders are placed and
products specified by reference to a sample
previously submitted by a supplier.
• The sample can be provided either by the seller
or buyer and is a useful method of specification
in relation to products such as materials such as
cloths.
• This method is used only if other methods of
description are not feasible and is difficult to
describe without a sample
 3. PERFORMANCE
SPECIFICATION
(SPECIFICATION BY USER)
❧ This type of specification in which the goods or
services are described in terms of required
performance. It defines the purpose of the goods
or services in terms of how effectively it will
perform.
❧ Seller is given the performance that is required,
not how to make the item. It may include such
details as required power, strength of material,
test method and standards of acceptability and
recommended practice.
CPSP-MBA(PSM)-MEMBWANA
08-Nov-22
AHMED
 4. FUNCTIONAL
SPECIFICATION
• These are the specification that defines the
function, duty or role of the goods or
services.
• It describes what the goods or services are
required to do.
• Functional specification defines the task or
desired result by focusing on what is to be
achieved rather than how it is to be done.
 5. TECHNICAL SPECIFICATION

• These are specification that defines the technical

and physical characteristics or measurements of
a product such as physical aspects. Eg
dimension, color, design details, material
properties, energy requirements, processes,
maintenance requirements and operational
requirement.
• It is used when functional and performance
characteristics are insufficient to define the
requirement. It gives a detailed definition of what
is required.
 CONSEQUENCES OF POOR
SPECIFICATION
• Requirement will not be met.
• Disputes may arise due varied
interpretation of terms.
• Additional cost.
• Disruption and delays of services/products

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 MAJOR MISTAKES IN PREPARING SPECS

• Over specification: usually this mean specifying

a product better than it needs to be to fulfill the
purpose
• Under-specification: specifying something that is
simply not good enough for the purpose required
• The supplier failing to conform to the
specification: this tends to be a problem relating
particularly to conformance specifications.
• Unclear or incorrect specification that might
result in disruption and delays to provision of
services or goods
 STANDARDS
• Standards is Specs used for recurrent use
and code of practice – guidance about the
best practice in relation to engineering and
construction practices for the purpose of
operation such as installation,
maintenance and service provision.
 BENEFITS OF USING STANDARDS

• They are clear and unambigious specs to both

the buyer and the supplier
• They are reliable and reduces costs
• Time and cost saving since there is no need of
preparing specs
• Necessitate easy comparison of quotes
• Less dependency on specialist supplier and
greater scope for negotiation/favours
competition
 BENEFITS OF USING
STANDARDS
• Reduces error and conflicts thus increasing
suppliers’ goodwill
• Facilitate international sourcing i.e. in case of
using ISO standards
• Reduces material handling costs
• Elimination of the need to purchase costly
brands names
• Help in variety reduction (VR) therefore save
inventory management costs in a proactive or
reactive manner
 THE RELATIONSHIP
BETWEEN
• Describe the relationship between the
following
i. Specification and standardization
ii. Quality and value
iii. Quality assurance and quality control
iv. Value engineering and value analysis
 SPECIFICATION AND
STANDARDIZATION

❧ Specification: Is a statement of the attributes of

a product or services. Or a statement of
requirement, attribute of the product or
statement of needs to be satisfied by the supply
of a product. Is the description of characteristics
of item.
❧ Standardization: find out
 QUALITY AND VALUE

• QUALITY:
Refers to either ‘conformance to
specification’ or ‘fitness for the purpose’.
Refer slide no 5 and 6 for more details
• VALUE: find out
 Strategies for
Managing/Avoiding Quality
Mistakes
i. Preventing defects also known as
Quality Assurance
ii. Detecting and correcting/rectifying
defects also known as Quality control
 QUALITY ASSURANCE
• Is defined as all those planned and systematic activities
implemented within the quality system that provide confidence
that an organization will attain quality. The aim is to preventing
defects.
• Quality assurance approaches
• Quality systems including the use of ISO 9000
• New design control, aimed at getting it right first time i.e. TQM
• Design of manufacturing processes which include early supplier’s
involvement (ESI)
• Incoming material control
• Supplier appraisal to ensures that only suppliers able to meet
quality requirements are approved especially where JIT
technique is to be applied
 QUALITY CONTROL
• Detecting and correcting/rectifying defects
also known as quality control which is –
this is made through inspection once the
product is made.
• Questions like how much to inspect, how
often and where to inspect, are highlighted
and the main activities such as receiving
inspection, classification inspection,
control inspection and audit inspection.
VALUE ANALYSIS AND VALUE
ENGINEERING
❧ Value Analysis (VA) and Value Engineering
(VE) can enhance purchasing
performance by creating a value culture
that permeates every aspect of purchasing
activity.
❧ Purchasing, on the other hand, has the
opportunity to increase value as a result of
its internal interactions and external
involvements while reducing costs.
 VALUE ANALYSIS
• It’s an organised and creative approach which
has a purpose of identifying unnecessary cost,
i.e. cost which provides neither quality nor use,
nor life, nor appearance, nor customer features.
• A simpler definition of VA is the systematic study
of the relationship of design, function and cost of
any material, product or service with the
objective of;
– Either reducing its cost without impairing it
function. or
– Improving its function without increasing it
 Is VA cost focused only?
• NO.
• In carrying out VA, apart from the cost as
referred to above, the emphasis is placed
on the following:
– Performance of the item: That the item can carry
out the function for which it is intended.
– Reliability of the item: That it can perform well
under given conditions for a specified period without
breaking down.
– Safety: That the item can be used without
endangering the safety of the users.
– Marketability of the item: That the item is desirable
 VALUE ENGINEERING
• Is regarded as value analysis at the design
stage. It is concerned with building cost
avoidance or value enhancement provisions
when an item is being designed. Hence, it
involves the application of value analysis
techniques to new products, services, processes
or systems commencing with the conceptual or
design stage.
• The importance of applying VA as early as
possible in the design process is emphasized
because; It will create competitive advantage by
means of designs that enhance customer
END OF TOPIC TWO