How to Streamline Your Organization's Purchase Requisition Process?

Streamlining maintenance is very important for organizations; if that is not done, then the purchase requisition process increases unnecessarily. It is a long process from identifying the need to creating a purchase order and then delivering it by the vendor's end. So, a lot of time is consumed in this whole process. It might take several days to fulfill requirements, and during that time, employee productivity suffers. Why does that happen? Because sometimes a purchase requisition form is not filled out correctly, and even if it is, the manager might be out of the station, causing regular delays. Remember, this is just one employee's requirement. Several other employees are also waiting at the same time. On a large scale, productivity suffers, and daily operation speed slows due to the lack of required items.

What Is a Purchase Requisition?

A purchase requisition is a form and an official document that an employee uses to purchase goods on behalf of the company. However, in order to approve a purchase requisition, it goes through various stages. First, all information needs to be filled in correctly, and once the manager thinks it is required, it is approved by the manager and passed to the financial department. Moreover, they also check if the required item is available in stock. If stock is available, then the item is allotted. Otherwise, the financial department checks the expenses, quantity, and budget as well. If the budget is insufficient, the quantity is decreased to fit the budget, and then approval is done. Finally, it goes to top management for final approval.

In the purchase requisition form, all the essential information is stored, such as the name of the requestor, department, item requirement, quantity, price, vendor details, and most importantly, why the item is required. At any stage, if the purchase requisition is rejected, comments are written, and an explanation and justification are given for the rejection.

What Is a Purchase Order?

Once the purchase requisition is approved, it is converted into a purchase order. Then the purchase order is forwarded to the selected vendor. After that, the vendor accepts the order; once it is approved, this document becomes legally binding. The vendor can communicate how payment will be done. However, in most cases, payment is made after the product is delivered, and the quality and quantity of the product are checked. If everything is fine, a Goods Received Note (GRN) is generated. The order is checked to ensure everything is as per the order, nothing extra, and quality is also checked. After that, an invoice is generated by the vendor, and the financial team checks it and pays the vendor.

How You Can Streamline Your Purchase Requisition and Purchase Order Process?

You can streamline your purchase requisition and purchase order process with the help of a purchase order system. This system centralizes the process and provides updates whenever any progress occurs. It simplifies the process of purchasing and saves a lot of time. Moreover, it leads to an easy workflow and eliminates unnecessary workflow operations. The cycle makes it more straightforward to arrange and identify incoming items and services and improves inventory management as well. Eventually, a unified purchase order management system speeds up the purchasing process and reduces delays by individual departments, which can otherwise interfere with efficiency. When you invest in automated procurement software, you get many benefits and a systematic approach to eliminating delayed work processes. Furthermore, with this software, you can streamline your purchase requisition process as well.

According to Business Wire, "The global procurement software market held a market value of USD 5,635.6 Million in 2020 and is forecasted to reach USD 9,654.8 Million by the year 2026. The market is anticipated to register a CAGR of 9.4% over the projected period."

What Are the Benefits of the Purchase Order & Purchase Requisition Process?

Benefits of the purchase order and purchase requisition process are discussed below:

1. Keeps Everyone Informed

Keeps everyone informed and on the same page. Whenever a comment is added to the purchase requisition, the requestor is notified, and all the people who are in the loop are also notified.‍

2. Alert & Notification

Whenever any purchase requisition process is initiated, the manager can quickly check and approve or reject and justify the reason. The alert and notification feature comes in handy when you have multiple tasks. If the manager has some tasks pending, the system alerts again, improving efficiency.

3. Avoid Fraudulent Activities

Lots of employees use manual purchase orders to bring equipment for their utilization or select vendors who have their benefits. This purchase requisition process eliminates chances of fraudulent activities. With this system, you can check vendor performance as well, such as tracking quality and timely delivery. These techniques help minimize fraud.

4. Avoid Duplicate Orders

In a large organization, there are many employees, and in the purchasing department, there are several employees as well. Therefore, there are chances of creating duplicate orders and making multiple purchases, leading to increased unnecessary expenses and inefficiency. But when you have automated purchase order software, there is no chance of creating duplicate orders.

Conclusion

The purchase requisition process is necessary to keep purchasing systematic; otherwise, you will lose a lot of money without noticing, and fraudulent activities can also occur. That is why investing in purchase order software or purchase requisition software is important for business.

Frequently Asked Questions (FAQs)

What is the difference between a purchase order and a purchase requisition?

A purchase requisition is an initial document, whereas a purchase order is a final document that is legally binding. In purchase requisition documents, you send a request for purchasing, whereas in purchasing order documents, an actual number of items are given for purchasing. A purchase requisition document stays inside the premises of the organization, whereas a purchasing order document is sent outside the premises of the organization.

What are the various types of purchase requisitions?

Various types of purchase requisitions are as follows:

1. Standard purchase order

2. Subcontracting

3. Stock transfer

What is a purchase requisition?

A purchase requisition is a form submitted by an employee to their company's finance department to request permission to purchase external goods or services. When a purchase requisition has been approved, the actual purchasing of goods or services can now happen with the use of a purchase order.