Which of the following is a risk to buying organization when using conformance specification?

Which of the following is a risk to buying organization when using conformance specification?
A . Buyer is responsible for product failure
B . Buyer may face liquidity risks
C . Buyer cannot control the inputs
D . Time to produce specification is shortened

View Answer

Answer: A

Explanation:

When using conformance specification, the buying organisation is responsible for the performance of the purchase. If the product fails due to poorly designed specification, the buyer is wholly responsible for it. It cannot blame the supplier for the failure because they still provided ‘fit for purpose’ product.

‘Time to produce specification is shortened’: Conformance specification requires details on dimen-sion, materials, design, etc. With such requirements, time to produce a complete conformance specification is often longer than producing performance specification.

‘Buyer cannot control the inputs’: Conformance specification is a list of inputs from buyer, so buyer has control over the inputs that will make the product. It also means that buyer is responsible for any product failure.

‘Buyer may face liquidity risks’: Liquidity means that how quick a business turns its assets into cash.

This is a financial term, it does not link directly with specification failure.

Reference: CIPS study guide page 118-119

LO 3, AC 3.1