Purchasing Decisions

Material Specifications:

Specifications are a detailed description or listing of the characteristics of materials, parts and components used in making a product. Specifications describe the quality of the product desired in quantitative terms, through specifications. It should be noted that compiling specifications is a difficult task and it requires a good deal of time. It is a costly method of informing the suppliers about what is desired of the product, so far as the amount and labor to be spent for compiling specifications is concerned. But it is a better method of informing the customers what a product contains i.e. what are the characteristics of the product and how it differs from the same type of products of other manufacturers. The following are the examples of specifications:
(A) Specifications for “dome tweeters” used in stereo systems – made by Peico Electronics and Electricals Ltd., Calcutta.

Type No. — IPD 01630

Frequency response — 1500 Hz to 20000 Hz

Operating Power — 3 watts

Magnet dia. — 72 mm

Dome material — Textile

Sensitivity — 3 watts input for 90 cl B sound level

Power handling capacity — 50 watts in enclosure

(B) Engine specifications for the Peugeot 7 XDP 4.90 diesel engine fitted in Mahindra NL 665 DP Mini Fruck, Pick up van and Ambulance manufactured by Mahindra & Mahindra Ltd

No of Cylinders — 4

Bore – mm — 90

Stroke – mm — 83

Bore / stroke — 108

Displacement – cc — 2112

Compression Ratio — 22.4 : 1

RPM (Max) — 4500

Max B H P — 75

Max Torque Kg.m @ 200 rpm — 13.3

Weight Kg — 184

On the basis of such specifications comparison of the same type of products manufactured by different manufacturers can be made. Buying by specifications has become a very common practice for most of the business units because it is the easiest way of describing their needs.

Generally a committee consisting of representatives of various concerned departments should be formed. The committee should include a design engineer, a production engineer, a quality controller, a purchasing officer, a sales officer etc. The design engineer should prepare the design of the product. Production department will consider the practicability of its production and cost of production. Purchasing departments will consider whether the materials for its production will be available or not and the sales department will consider sales potential considering chemical and physical properties or not. Thus only after approval of the committee the design is finalized with or without some changes. If design department only is made responsible for preparing the designs, it may prepare unnecessarily stringent specifications, which may cause a great harm to the firm. Once the design is finalized, the specifications are reduced to writing so that buyer as well as seller can have an idea about what they want or what they understand and it helps in making good purchasing. Efficient working of various departments such as design engineering, production, purchase, sales, stores, quality control etc. depends on good specifications written in clear and understandable terms.

Sometimes the manufacturers prepare specifications for their products, e.g. different manufacturers of trucks, tractors, cars, scooters etc have their own specifications. It is not possible to manufacture such items as per the specifications of buyers. In case of military purchases or purchases of the items of special use, the buyers prepare specifications as per their needs and they inform suppliers / manufacturers, so that the suppliers /manufacturers can supply as per buyers’ specifications. Buyers and suppliers prepare specifications when specifications do not exist.

In case of most widely and highly competitive items, standard specifications are available. The products with standard specifications, manufactured by different manufacturers, will be the same. When products or goods are ordered on the basis of standard specifications, the buyer as well as seller knows what is required. Such items are available at reasonable prices. There exist many users and therefore the producers can sell their whole production at reasonable price. Standard specifications specify the standard of materials to be issued, the process of manufacture, the quality of workmanship, performance standard, method of checking the quality and performance etc. Standard specifications prove to be most helpful in simplifying the design and purchasing procedure. Moreover, inventory control and cost reduction become easy. Copies of standard specifications can be obtained from various sources such as manufacturers, government departments, testing laboratories, standard institutes etc., and therefore buyer and seller has not to spend time, money and energy for preparation of such specifications.