Let’s imagine you are a buyer sourcing desks for your office. You want to purchase desks tailored to your bespoke requirements, but there is no suitable availability in the market. You need to communicate your needs to suppliers and these might include dimensions such as height, width, and depth, as well as materials and any unique features of the desks. You may have to speak with several suppliers to find the most suitable one. So, how can you ensure they understand your requirements clearly? CIPS suggests placing all your requirements in a document to avoid missing any key information. This document is known as a specification.

If you can identify your requirements in detail and specify how the desks should be made, this is categorised as a conformance specification. On the other hand, if you prefer to outline only the desired outcomes or outputs in the specification and allow the supplier to decide how the desks are manufactured, it is called a performance specification. It is important to differentiate between these two types of specifications, as CIPS will ask many questions about them in the Level 4 exams. Some exam questions may fall under the following topics:

• CIPS often includes a scenario in the question and asks candidates to identify the type of specification being used.

Scenario: Alex is a senior buyer at Company A. He is assigned to source a credible supplier to build a new warehouse. Alex prepares all the necessary information for negotiations, including the warehouse design, material requirements, and construction methods. Company A wants to control the construction quality of their warehouse. What type of specification are they using?

a. Performance specification
b. Outcome-based specification
c. Conformance specification
d. Key performance indicators

Obviously, C is the correct answer. If you understand the two types of specifications, it’s easy to score well on this question. It’s quite simple, isn’t it?

• Advantages and disadvantages of two types of specifications

Which of the following is an advantage of using a performance specification in sourcing?

a. The buyer is free to decide how the product is made
b. The risks of defective goods are allocated to the supplier
c. The buyer bears full responsibility for defective goods
d. The buyer makes significant cost savings by using performance specifications

If you do not have a solid understanding of the topic, this question may be confusing. All four options may appear reasonable, but only one is correct: B. With a performance specification, the supplier is free to determine the production process, materials, or design as long as the buyer’s desired outcomes are achieved. Therefore, the supplier assumes responsibility for any manufacturing defects.

• Risks of ambiguous specifications, over and under specification

Not every specification is clear and precise, which may lead to defects and rework costs for both parties. Over-specification includes requirements that exceed the actual needs of the buyer. Conversely, under-specification involves requirements that fall short of the buyer’s actual demand. Both cases can result in wasteful spending, as the products may become unused inventory.

• Roles of stakeholders in specification development

Well, it is necessary to form a cross-functional team to develop the specification. Each person contributes different aspects to it. For example, the finance department provides information related to budget, cash flow, and return on investment. The sales department can offer insights into consumption trends or seasonal demand. Meanwhile, the marketing department can supply information about brand image and reputation. Sourcing from unreliable brands may damage the buying company’s reputation and reduce future revenue.

We provide CIPS practice questions with answers and detailed explanation, besides they are updated regularly to reflect the actual exam. If you want to consolidate your knowledge before the exam, you can check the links below

L4M1: https://www.udemy.com/course/cips-l4m1-practice-test-short-learning-guide/?couponCode=STUDYSMART25

L4M2: https://www.udemy.com/course/cips-diploma-l4m2-practice-test/?couponCode=STUDYSMART25

L4M3: https://www.udemy.com/course/cips-diploma-practice-test-commercial-contracting/?couponCode=STUDYSMART25

L4M4: https://www.udemy.com/course/cips-diploma-practice-test-ethical-responsible-sourcing/?couponCode=STUDYSMART25

L4M5: https://www.udemy.com/course/cips-practice-test-commercial-negotiation/?couponCode=STUDYSMART25

L4M6: https://www.udemy.com/course/cips-diploma-practice-test-supplier-relationships/?couponCode=STUDYSMART25

L4M7: https://www.udemy.com/course/level-4-diploma-whole-life-asset-management-l4m7/?couponCode=STUDYSMART25

L4M8: https://www.udemy.com/course/cips-l4m8-practice-in-procurement-and-supply/?couponCode=STUDYSMART25

L5M1: https://www.udemy.com/course/updated-l5m1-full-course-managing-teams-and-individuals/?couponCode=STUDYSMART25

L5M2: https://www.udemy.com/course/cips-l5m2-daniel-do/?couponCode=STUDYSMART25

L5M3: https://www.udemy.com/course/l5m3-daniel/?couponCode=STUDYSMART25

L5M4: https://www.udemy.com/course/l5m4-advanced-contract-and-finance/?couponCode=STUDYSMART25

L5M5: https://www.udemy.com/course/l5m5-daniel/?couponCode=STUDYSMART25

L5M15: https://www.udemy.com/course/updated-cips-l5m15-practice-questions-advanced-negotiation/?couponCode=STUDYSMART25