A purchase requisition form and a purchase order are two different documents that can work together for more efficient procurement and purchasing processes. Learn about the difference between these two documents, how they work together, and how to optimize both for a smoother procurement and purchasing process.
What is a purchase requisition?
Purchase requisition is the process of getting approvals to buy or acquire company needs, like goods or services. It is a set of steps a company goes through to initiate a purchase.
This process is critical to modern and efficient businesses because it enables buying when the time is right and stops unnecessary purchase requests before they take up too much valuable management time.
But a purchase requisition process is much more than acquiring approval for purchases. It also involves:
- Analyzing margins;
- Aligning purchasing with business objectives;
- Identifying cost-savings opportunities;
- Evaluating suppliers or vendors;
- Obtaining quotes and negotiating.
The more consistent, streamlined, and automated the purchase requisition process is, the faster, more efficient, and accurate it can be.
What is a purchase requisition form?
A purchase requisition form is a document or request submitted internally to formally request a business purchase, such as software or equipment. If it is approved by the procurement manager, it is then routed through the purchasing process.
In an automated purchase requisition process, a request automatically moves through the approval and purchasing steps which allow those involved — like approvers — to receive notifications when approvals or actions are needed and update requests electronically. This way, all the information about that purchase request is in one place.
What is the difference between a purchase requisition and a purchase order?
The key difference between a purchase requisition and a purchase order is this:
- A purchase requisition is an internal document that serves as a permission slip for purchase requests that require approval.
- A purchase order is an official, approved purchase document that is provided to suppliers or vendors for fulfilling a purchase.
In other words, the purchase requisition form can become a purchase order form. With the help of a business process automation solution, these two documents can be combined to work as complementary documents.
For example: upon approval, the purchase requisition form can auto-populate a purchase order form that is then submitted to vendors. This leads into the actual buying part of the process, and, as a result, streamlines the purchase request and order process.
Below is a breakdown of the differences:
| Purchase Requisition | Purchase Order |
| An internal permission form submitted to the procurement manager | An external order that goes to the vendor |
| Includes all relevant information management needs to approve or deny the purchase request | Only includes what the vendor needs to see to complete the order |
| Considering the purchase | Making the purchase |
| Management uses it to audit the purchase requisition process | Accounting uses it to pay vendors and audit books |
| A buying efficiency document | A legal contract with a vendor |
Why is a purchase requisition process important for procurement?
A modern procurement process combines technology, like low-code business process automation, with a clearly-defined and streamlined set of steps to complete a purchase.
Advantages
An effective purchase requisition process delivers companies many benefits and solves many challenges and inefficiencies in the procurement and purchasing process. Benefits include:
- Stopping double-buying.
- Preventing frivolous spending.
- Aligning buying with objectives and KPIs.
- Gaining control over the budget through enhanced visibility and traceability.
- Cutting costs while ensuring money is spent where it delivers the highest ROI.
- Reducing the risk of fraud, due to optimal process transparency
Disadvantages
However, when companies implement new workflows or updates to existing workflows or processes, it can add complexity or additional steps to the procurement process. These additions may be considered time- or resource-consuming for requesters.
Despite this, with the right technology, companies can achieve greater transparency and gain long-term business advantages, like reducing errors or standardizing requisitions.
3 steps of the purchase requisition process
Step 1: Submission
Create a purchase requisition form in your procurement system. Add relevant information regarding the objectives this purchase pertains to and needs analysis. Once all the required data is collected and submitted, the purchase requisition will be forwarded for screening.
Step 2: Screening
The purchase requisition goes to the person responsible for screening the requests. This person may have a series of tasks to perform while the form is in their court, including:
- Checking inventory to make sure the requested item isn’t already in stock.
- Ensuring that it’s within budget.
- Getting a quote(s) from vendors when multiple vendors are involved.
- Negotiating to get the best prices.
Once they’ve completed this screening process, they add this quote information to the requisition form and send it on for approval.
Step 3: Review
If the requisition is not approved, a reason is given. If approved, it becomes an official purchase order. If you’ve centralized and automated the purchase request process, the system can then submit this purchase order to the approved vendor automatically.
Once the order is received, it’s inspected and any issues are addressed. If the order is accepted, the remaining invoice is paid according to the terms and you’ll review the vendor online.
With all your records in one place, management and finance teams can audit requests and purchases to increase quality, cut costs, and optimize the overall purchase requisition system.
Best practices for optimizing your purchase requisition process
Centralize information
It’s inefficient to have to look in multiple places for status updates, purchase history, deadlines, and invoices. By centralizing information, teams can manage updates and activities in a single place for easy review, and streamline process reporting.
With data housed in one place, analytics tools can easily collect that data and present it to management in a useful form. They can use it to stay on top of the process and procurement as a whole.
Maintain autonomy over your department’s technology
Many purchase request technologies require IT involvement when you want to update a workflow. This can lead to outdated workflows that require error-prone workarounds.
Seek out a low-code automation solution that empowers teams to easily, quickly, and securely scale process solutions on their own. This means that updating the technology needs little (if any) IT intervention.
Business units need agility. IT needs control. See how no-code delivers both. No-code Automation: Good for Business, Great for IT
Increase process visibility
Invisible spending can negatively affect a company — and it’s worse the larger a company gets. Get everything out in the open where team members and management can see it with a process management system that improves visibility.
Audit and optimize regularly
Sticking to a process auditing schedule makes it easier to continuously improve the purchase requisition process without feeling overwhelmed.
Start by making incremental improvements and assess the efficiency of the process and purchases that result from it. Adjust when and where needed for an optimized process.
Get real-time reporting
To maintain greater control over procurement, you need to be able to review the performance and efficiency of a process in real-time.
Up-to-date visual reports that automatically run and go to key managers can serve this purpose. With access to this data, you can see what worked or didn’t and whether there were specific bottlenecks holding up the process.
Automate tedious, repetitive tasks
Manual tasks lead to increased errors, and delays, and make it hard to measure both productivity and success of a process. Plus, repetitive, menial tasks cause even the most mindful team member to zone out, which doesn’t serve the pursuit of accuracy well.
Automation technology eliminates these repetitive, time-consuming tasks and intervenes in possible errors, so your team stays more engaged with their work and feels more fulfilled by it.
6 benefits of automating the purchase requisition process
- A more connected and streamlined process. Automatically assign responsibility, notify responsible professionals, and alert them of a purchase request in need of their attention.
- Better procurement manager oversight. Management can see precisely where and with whom a purchase request is in the process.
- Fewer errors and delays. Automated handoffs, assigned approvals, and integrated software eliminate delays or errors introduced by manually managing updates.
- Faster and more efficient procurement process.
- Increased spend visibility for greater control over how your company spends money.
- Higher employee job satisfaction, which can lead to higher employee retention.
Take control of your purchase requisition process
Pipefy can take lengthy, manual, or unstandardized purchase requisition steps and turn them into an optimized, transparent, and automated process.
Features like customizable dashboards bring visibility to your process, making it easier to identify issues and improvement opportunities, and integrations connect Pipefy to your existing software or apps for a seamless, error-free process experience.
With its low-code visual user interface, quickly scale solutions to streamline the request, approval, and purchasing process from a single source.
