Specifications
In order to streamline the procure-to-pay process, it is important to have a clear and concise specifications definition. This definition should include all of the necessary information about the desired product or service, as well as any pertinent details about delivery, installation, warranties, etc.
In procurement, there are generally two types of specification definitions: functional and performance-based. Functional specifications define what the product or service must do, while performance-based specifications focus on how well the product or service must do it.
It is important to note that functional specifications should not be confused with project requirements. Project requirements define what the final product or service must achieve in order for the project to be successful; they are not concerned with how that goal is achieved. For example, a project requirement might be ‘the software must be able to process 100 orders per second.’ This says nothing about how that goal will be accomplished; that is up to the developers to figure out.
Once the overall procuring organization’s needs are understood, it is time to start developing specific procurement requirements. These requirements will become part of the Request for Information (RFI), Request for Proposal (RFP), or Request for Quotation (RFQ) documents that will eventually be sent out to potential suppliers.