Specification Harmonization can help evaluate suppliers

Procurement buyers face mounting pressure to add more business value, with the majority stating cost reduction as a focus area in the coming year. Around78 percent of procurement executives said that cost reduction is still their top priority for 2018, according to Deloitte’s 2018 Global Chief Procurement Officer Survey.

Supply chain and logistics managers pursuing lean operations generally prefer to eliminate excess inventory. However, sales and marketing initiatives often lead companies to increase the volume of products they keep in stock. Moreover, ‘specifications’ (or ‘specs’) have become a critical factor. Big brands with different amounts of specs are attaining better evaluation and cost savings through the ‘specification rationalization’ exercise. Thus, the specification rationalization/ harmonization process has become a distinct trend across Procurement Organizations of all sizes.

In any supplier negotiation, it is critical to evaluate a particular supplier’s spend, and this is no different for packaging suppliers. In this article, we look at the spend for various packaging products, such as corrugates, films and labels, which have thousands of specifications, by suppliers and locations across the world. Sourcing managers are required to manage the spend and achieve cost savings for a particular category.

What is Specification Harmonization?

One way of explaining specification harmonization is thatit is the prevention or elimination of differences in the specifications having the same scope.