Purchase Requisition

Purchase Requisition Definition

A purchase requisition—also called a “purchase request” or “requisition”—is a user-generated or personnel-generated document that notifies the Purchasing department of items or equipment to order, what quantity, and a timeframe when the items or equipment are needed. Purchase requisitions can also include purchase authorization, and are often required for purchases over a set dollar threshold.

Purchase requisitions are the beginning step of the procurement process. Once a need for goods or services has been identified, a purchase requisition formally instructs the Purchasing department to procure a particular quantity of the good or service, to be made available at a certain point in time. If the purchase requisition is approved, a purchase order that specifies the exact specifications continues the procurement process. Some organizations will not create a purchase order until a requisition has been approved—a standard practice that ensures all purchases are vetted and rogue orders do not occur.

Best Practices

Purchase requisitions are an important step in the procurement process that should not be overlooked. As a business grows, it is vital to control spending on material goods and services that allow employees to do their jobs.

Even though a purchase requisition is an internal form, it creates a process to streamline purchasing so organizations stay productive. Purchase requisitions allow businesses to:

  • Plan ahead and budget for needs
  • Control employee spending and usage by ensuring only necessary goods and services are ordered
  • Clearly define quantity and quality of needs prior to procurement
  • Provide accountability and an audit trail
  • Possibly identify discounts and favorable vendors through greater visibility and control over purchasing

Datapoints

Transaction flow leading to the Close Purchase Orders process

Source: Understanding the Closed Purchase Order Process (Oracle)

“According to a 2014 study by Deloitte, 69% of CPOs surveyed said cost reductions were their primary focus. While there are a number of ways Procurement and Purchasing can benefit the bottom line, it all starts with purchase requisitions. After all, what good is it to obtain competitive bids if someone goes and purchases from a totally different supplier? By improving compliance and organization within your purchasing process, your company will see a noticeable improvement to the bottom line.”

Source: Capture Cost Savings and Reduce Maverick Spend with Purchase Requisitions (Deltabid)

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