Are you trying to manage your purchase requisitions but feel overwhelmed by the complexity of the process?
Don’t worry, AirProcess is here to support you.
In this article you will discover :
- The key steps for creating and managing requisitions.
- The different types of requisitions.
- The advantages of using a formal document.
- Tools to facilitate requisition management.
- The importance of automation in the purchase requisition process.
By the end of your reading, you will know how to structure your purchase requisitions effectively, choose the right tools to manage them, and automate your processes.
Now, let’s start with a clear definition!
1) What is a purchase requisition?
A purchase requisition is a formal document written by an employee in a company to request the purchase of goods or services.
This document can be prepared by the purchasing department and then submitted to the finance department for approval.
a) Typical contents of a purchase requisition
- 1️⃣ Description of purchasing needs.
- 2️⃣ Relevant department and budget line.
- 2️⃣ Company address.
- 2️⃣ Items and quantities to order.
- 2️⃣ Supplier information.
After submission, the purchase requisition is sent to the authorized departments, which decide whether to approve or reject it.
Depending on the details provided, this decision will be made by the purchasing department and/or the finance department. In smaller companies, the director may approve it directly.
2) Types of purchase requisitions
There are mainly two types:
a) Internal purchase requisitions
These requests concern the acquisition of items or services from another department within the same organization.
b) External purchase requisitions
These requests involve items or services sourced from external suppliers.
3) Possible scenarios after submitting a purchase requisition
Several scenarios can occur after submitting a purchase requisition:
a) The requisition is approved
This triggers various actions that make up the procurement process.
b) The requisition is rejected
This may be due to reasons such as a price that is too high, an inappropriate quantity, or a late submission.
c) The requisition requires additional information
The requisition is returned to the requester who must complete the missing information.
d) The requisition requires approval from a higher-level supervisor
It is quite common for approval levels to be set up based on the amount of the requisition: for example, a manager at level N+1 may approve up to €1,000, and above that amount, approval from the manager at level N+2 is also required.
4) Steps in the purchase requisition process
a) Creating the requisition.
This initial step requires particular attention to avoid complications later on.
Every detail must be carefully considered to ensure the requisition is complete and accurate.
b) Validation and approval of the requisition
Stakeholders such as the accounting, finance, purchasing departments or management review the requisition before approving or rejecting it.
c) Tracking and managing purchases
An effective system is necessary to track and manage all purchase requisitions to align the requirements of all parties involved.
5) Benefits of using a formal purchase requisition
Using a formal process offers several benefits, such as:
- 1️⃣ Early involvement of different stakeholders.
- 2️⃣ Protection against fraud and abuse.
- 2️⃣ Optimization of budget planning.
- 2️⃣ Improvement of the procurement process through better contract management.
a) Supplier selection and contractual terms
Good management of the purchase requisition also makes it possible to select appropriate suppliers and negotiate more favorable terms.
Additionally, it is always possible to change the supplier as long as the requisition is still under approval and the budget has not yet been committed.
6) Tools to facilitate requisition management
To successfully implement a management process for your purchases, you should first equip yourself with a BPM software (Business Process Management).
These tools help better manage purchase requisitions and automate parts of the process.
7) Process automation
a) Use of BPM software
Implementing software solutions such as BPM can greatly facilitate the management of requisitions.
These tools allow you to centralize all information and automate approval workflows.
b) The benefits
Automating the process offers several advantages:
- Reduced processing time.
- Reliability thanks to digital audit trails.
- Better visibility into spending and budget optimization.
- Stronger compliance with the company's internal policies.
8) Integrating AirProcess into the purchase requisition process
a) Creating and customizing purchase requisition forms
To optimize the process, you need flexible and customizable forms.
With AirProcess, you can create forms tailored to your specific needs in minutes.
Whether you need fields for product descriptions, quantities, delivery dates, or budget approvals, AirProcess lets you add and configure various field types such as text, numbers, dates, checkboxes and more.
Example: a purchasing team can create a standardized form for all purchase requests with sections dedicated to product details, supplier information, and requester comments.
b) Automation of validation and approval workflows
One of the most critical steps in the purchase requisition process is validation and approval.
AirProcess allows you to define automated workflows (using its workflow engine) that ensure every requisition goes through the necessary validation steps before being approved.
You can configure specific rules for different types of requisitions and assign responsible actors at each step.
Example: a purchase requisition for office supplies might require approval from the department manager and the CFO before being processed by the purchasing department.
AirProcess enables this workflow to be configured in a few clicks.
c) Tracking and managing purchase requisitions
After requisitions are created and approved, tracking and management are essential to ensure purchases are completed on time and within budget.
AirProcess offers customizable view features that allow users to track the status of requisitions and check delivery timelines.
Example: the purchasing manager can use filtered views to display all requisitions pending approval, those in progress, or those recently completed. They can also generate statistics on purchase volumes by department, product type, date, etc.
d) Simplified collaboration and communication
Collaboration between different departments is facilitated by AirProcess features.
Thanks to collaborative fields and automated notifications, all participants involved in the purchase requisition process can be informed of updates and changes in real time, improving communication and reducing delays.
Example: when a purchase requisition is modified or approved, automatic notifications can be sent to the relevant departments, ensuring everyone is informed in real time.
e) Continuous optimization and adaptation to changing needs
AirProcess enables continuous optimization of your processes through data analysis and user feedback.
By regularly adjusting workflows and forms, you can meet your company's needs and improve the efficiency of your procurement management.
Example: your purchasing team can analyze historical requisition data to identify bottlenecks and adjust workflows accordingly, ensuring continuous process improvement.
Therefore, to improve your purchase requisition management, start today with AirProcess.
9) What is the impact of digitalization?
a) Acceleration of administrative processes
Reduced processing times: digitalization enables better document management compared with manual handling.
With digital purchase requisitions, information can be transmitted and approved instantly, without waiting for the physical movement of documents.
Automation of workflows: digitized processes can be automated, reducing the need for manual interventions and minimizing errors.
10) Why is it important to have a purchase requisition process?
a) For accuracy and control
A well-structured process verifies whether the expressed need is justified and aligns with the company's budgetary objectives.
It also enables selection of the best suppliers based on defined criteria.
b) To prevent unnecessary spending
Without such a process, maverick purchases can quickly accumulate, leading to depletion of financial resources.
Also, a well-managed purchase requisition prevents fraud and duplicate payments.
c) How can a well-managed purchase requisition reduce costs?
1) By optimizing supplier relationships
Selection of the best suppliers: a well-managed purchase requisition allows you to choose the most competitive suppliers based on defined criteria such as price, quality and delivery times.
To do this, you can use your supplier database and select the one offering the best value for each product type.
Negotiation and discounts: with a clear, centralized view of all purchase requisitions, you can better negotiate prices and obtain discounts for bulk purchases.
2) By improving inventory management
Reduction of excess inventory: a well-managed requisition helps maintain optimal stock levels, avoiding costs related to excess inventory.
Prevention of stockouts: good requisition management enables forecasting of future needs and planning of procurements accordingly.
For example, a retail chain can use forecasting tools to place orders in time, avoiding stockouts and potential lost sales.
d) Why is it important to have good traceability of purchase requisitions?
1) You maintain control and security over your purchases
On fraud prevention: traceability of purchase requisitions allows you to follow each step of the process, from creation to approval and reception of goods or services.
By recording all actions and decisions, it enables quick identification of any attempted fraud.
This way, you can detect repeated suspicious requisitions for the same supplier or approvals that fall outside established purchasing policies.
On verification and audits: good traceability facilitates internal and external audits by providing a complete and detailed view of all transactions.
Auditors can thus verify that all purchase requisitions comply with company procedures and applicable regulations.
2) Optimization of inventory management
Inventory management: traceability enables better management of inventory by ensuring each purchase requisition is justified and aligned with current stock levels.
This avoids overstock and stockouts, optimizing storage and logistics costs.
Performance tracking: traceability of purchase requisitions allows measurement of supplier performance in terms of delivery times, product quality and compliance with contractual conditions.
This information then helps you make informed decisions when renewing contracts or selecting new suppliers.
Claims and disputes: in cases of disputes or claims, traceability provides documented evidence of transactions and communications with suppliers, facilitating conflict resolution.
3) Traceability also helps with compliance and regulation
Regulatory compliance: companies often must comply with strict regulations regarding procurement management, particularly in sectors subject to rigorous audits such as healthcare, finance and public procurement.
Good traceability ensures that all purchase requisitions meet legal and regulatory standards.
Risk management: traceability helps identify and mitigate risks related to purchases by providing full visibility over transactions.
This includes the management of high-risk suppliers, cost monitoring and quality assurance.
Thus, if you are in the food industry, you can use traceability systems to ensure all purchased ingredients meet food safety standards.
e) Why should companies automate their purchase requisitions?
1) To be more efficient and reduce the risk of errors
Automation of repetitive processes: automating purchase requisitions reduces repetitive manual tasks, freeing up time for higher-value activities.
For example, using AirProcess can automate data entry and submission of requisitions for approval, eliminating common human errors such as typos or omissions.
Reliability and traceability: automated systems like AirProcess record each step of the process, ensuring complete and reliable traceability.
This makes internal and external audits easier by providing clear audit trails.
2) To gain better visibility and control over processes
Real-time tracking: automated solutions allow you to track the status of purchase requisitions in real time.
Managers can see which requisitions are pending, which have been approved, and which have been rejected.
For example, an integrated dashboard provides visual process management and can show all ongoing requisitions, enabling managers to quickly identify issues.
3) For compliance reasons and cost reduction
Adherence to internal policies: automating requisitions ensures all procedures comply with your internal policies.
Validation and approval rules can be embedded in AirProcess, ensuring each requisition is checked against predefined criteria.
You can configure workflows so that all requisitions above a certain amount are automatically sent to a senior executive for approval.
Cost optimization: automation centralizes and analyzes purchase data, making it easier to negotiate with suppliers and obtain discounts for bulk purchases.
11) Optimization and continuous improvement of purchase requisitions.
a) How to analyze purchase requisition performance?
Use of dashboards and KPIs: to analyze performance, you should implement dashboards with key performance indicators (KPIs).
These indicators can include requisition processing time, approval rate, compliance with delivery times, and cost per order.
For example, a dashboard in a purchase management software can display the average processing time of a purchase requisition, allowing managers to spot issues and address them.
Conduct regular process audits: regular audits of the purchase requisition process help identify weaknesses and improvement opportunities.
This involves reviewing the creation, validation, approval and tracking steps of requisitions.
Analyze historical data: analyzing historical data helps understand trends and recurring behaviors.
If you review data over multiple periods, you can identify demand peaks, the most requesting departments or employees, the best-performing suppliers, and the most common types of requisitions.
For example, historical analysis may reveal that certain months see an increase in requests for specific types of supplies, allowing you to plan accordingly.
b) What are best practices to optimize processing times?
Automation of workflows: automating purchase requisition workflows is a key practice to optimize processing times.
BPM systems (Business Process Management) like AirProcess can automate approval and validation steps, thus reducing manual delays.
With AirProcess, an automated workflow can automatically send purchase requisitions to the relevant approver upon submission, speeding up validation.
Standardization of forms and processes: standardizing purchase requisition forms and associated processes helps reduce errors and delays.
Uniform forms with mandatory fields ensure all necessary information is provided from the start.
Thus, by creating standardized purchase requisition forms for different types of goods and services, you ensure each request is complete and accurate.
Continuous training and awareness: regularly training teams involved in the purchase requisition process ensures they are up to date with best practices and available tools.
A good understanding of the processes and systems used contributes to faster and more efficient task execution.
12) Conclusion
In this article, we explored the different aspects of the purchase requisition, from its definition to optimal management.
We saw how a well-structured and automated requisition can improve efficiency, reduce costs and ensure compliance.
Moreover, the importance of general terms and conditions (T&Cs) and KPIs for analyzing purchase requisition performance was emphasized.
Thus, by integrating solutions like AirProcess, companies can automate and optimize their processes, ensuring smooth operations and cost savings.
In an increasingly digital business environment, mastering procurement processes is an important lever to remain competitive.
Have you considered how automating purchase requisitions could simplify your professional life and improve your performance?
Think about your own processes and imagine the benefits you could gain.
FAQ
1) What is the importance of general terms and conditions in purchase requisitions?
The general terms and conditions (T&Cs) define the contractual terms between the buyer and the supplier and provide clarity on each party's obligations.
They cover aspects such as delivery times, payment terms, and warranties, thereby reducing the risk of disputes.
For example, a company can ensure the T&Cs include penalty clauses for late delivery, thus protecting its interests.
2) How to calculate the return on investment of a purchase requisition management solution?
To calculate the return on investment (ROI) of a purchase requisition management solution, compare the costs of the solution with the savings and benefits generated.
Measure the solution costs (licenses, training, maintenance), then calculate the savings achieved (reduced errors, time gains, purchase optimization).
ROI is calculated as follows: ROI = (Gains – Costs) / Costs. For example, if the solution saves €50,000 and costs €10,000, the ROI would be 400%.
3) What is the difference between a purchase requisition and a purchase order?
A purchase requisition is an internal document used to request approval to purchase goods or services, detailing the needs and specifications.
A purchase order is the official document sent to the supplier to finalize the purchase.
Unlike the purchase requisition, the purchase order often includes the technical details required by the supplier, and these details do not always appear on the invoice.