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Define Requirements

Requirements form the basis for the entire supply chain process. They provide the necessary detail to understand what is required and to develop a solution to meet the need. If there is a buy decision, the requirements contribute to the specification, statement of objectives (SOO), or statement of work (SOW), as well as to the evaluation of suppliers.

The complexity of a need will determine the extent to which requirements must be defined. For example, buying a single stapler does not require a formal requirement definition, but the purchase of new automation equipment for a facility will require detailed requirement definition.


Figure 1.7 illustrates the methodologies that transform a need into a requirement. The requirement begins to be defined by drawing on the outputs from these methodologies.

Figure 1.7

Requirement Inputs Diagram

image of Requirement Inputs Diagram

Determine Requirements

There are several types of requirements:

Quality requirements

Delivery requirements

Process requirements

Pricing requirements

Volume requirements

Technical requirements

Location requirements

Marketing requirements

Frequency requirements

Lead-time requirements

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Requirement Specifications

The requirement comprises specifications that are used as its description, including:

Performance specification (what the product/service is required to do)

Functional specification (what is to be achieved, rather than how it will be done)

Brand or trade names


Market grades

Qualified products

Commercial standards

Design specifications

Engineering drawings

Material and method of manufacture


Warranty support

Specifications should be clear and nonrestrictive. Lack of clarity can be misleading and result in poor proposals or a more expensive solution than is necessary. To enhance competition and invite innovation, specifications should be nonrestrictive, mirror what is in the market, and, whenever possible, recommend purchasing commercially.

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