Requirement specification development– how to save money and avoid unnecessary costs

Several sourcing organisations unfortunately work too reactive. They might receive an already defined requirement specification for a product and service that they should source based upon. Their job is then to find and negotiate the best price with a supplier that can deliver that product or service based on the requirement specification. However, a big portion of the cost the product and services is already set in the requirement specification. You can save a big portion of money by having sourcing involved in the requirement specification and develop the specification in a structured way. In this article we present a process for how sourcing organisations can be more proactive and drive the requirement specification development to avoid unnecessary cost. 

The requirement specification is done in 5 different steps

1.  Perform a stakeholder analysis

2.  Understand your stakeholders needs and develop a long list of requirements

3.  Classify the requirements

4.  Analyse and discuss the requirements

5.  Sign off

1.  Perform a stakeholder analysis

The first step is to identify who the stakeholders are for the product and service that will be purchased:

-  Which people are affected by the product and service?

-  Should we add any new stakeholders or remove existing ones?

-  Do we need to communicate differently with any stakeholders to get a buy in? 

-  What kind of impact will the different stakeholders have in the decision process?

-  How should we approach and manage each stakeholder?

2.  Understand your stakeholders needs and develop a long list of requirements

Collect input from the different stakeholders by interviews, work shops, by using cases, trials, etc. Understand different areas such as:

-  What technical requirements do we have?

-  What is the purpose of the product and service?

-  What experience does the supplier need to have?

-  When do we need the service or product?

-  What cost are we willing to pay?

-  What capacity do we need?

-  What quality level can we accept?

-  Do we have any environmental and/or CSR requirements?

3.  Classify the requirements

When you have collected the long list of requirements you need to go through it make priorities in order to decrease your list of requirements. Which points are really necessary? Which are more “nice to have” and which can be left out? It is important to understand that usually the more requirements you have, the more costly the product or service is. Please use this process to classify the requirements:

-  Are there any old requirements that are on the list and that are out of date and no longer necessary?

-  Are there any requirements that are not in line with your policies?

-  Are there any requirements that would mean a big cost saving if just make a smaller change without impacting the service or product?

-  Classify the requirements in “Critical”, “Important” and “Nice to have”

4.  Analyse and discuss the requirements

By now you have a long list of requirements that are classified into different categories. You have a good understanding of which requirements that are really important. Now it is time to make a final review and understand what impact your requirements will have:

-  Make sure all requirements are precisely defined, worded and clear

-  Perform an impact analysis to understand what impact your requirements will have on all stakeholders including suppliers and customer. Review if you need to change any requirement.

-  Solve any conflict by discussing with stakeholders to find a common way

5.  Sign off

List your final, short list of requirements and get sign off from your key stakeholders. This will be the