Purchase Requisition

A Purchase Requisition (PR) in procurement is an internal document used within an organization to request the purchase of goods or services. It typically originates from a department or individual who identifies a need for specific items and submits the request to the procurement or purchasing team for further action. The purchase requisition serves as the first step in the procurement process and helps initiate the creation of a Purchase Order (P.O.) once it is approved.

Key Features of a Purchase Requisition:

1. Description of Goods/Services: Specifies what is required, including details such as quantity, quality, specifications, and purpose.
2. Cost Information: Includes estimated prices or budgeted amounts, though the final price will be determined after supplier negotiations or quotations.
3. Justification or Reason: The requester may provide a reason or justification for why the goods or services are needed, helping to ensure that purchases are aligned with business goals.
4. Delivery Details: Specifies required delivery timelines, shipping instructions, and delivery locations.
5. Approval Workflow: The purchase requisition typically goes through an approval process, where managers or authorized personnel review the request before it is sent to procurement.
6. Requester Information: Identifies the person or department making the request, making it clear who is responsible for the need.

Key Benefits of a Purchase Requisition:

• Control and Oversight: Ensures that purchases are approved before any order is placed, helping to manage budgets and avoid unauthorized spending.
• Improved Efficiency: Helps streamline the procurement process by organizing and tracking requests, ensuring a smooth transition to the next step (creating a purchase order).
• Accountability: Clearly identifies the originator of the request and tracks the status of procurement requests.
• Alignment with Budget: Helps procurement teams ensure that requested items are within budget and meet the organization’s procurement policies.

Process Involving Purchase Requisition:

1. Initiation: A department or individual identifies a need and creates a purchase requisition document detailing the required goods or services.
2. Approval: The requisition is submitted for approval from managers or department heads to ensure that the purchase is necessary, budgeted for, and aligned with company objectives.
3. Creation of Purchase Order: After approval, the procurement team creates a Purchase Order (P.O.) and sends it to the supplier to formally request the purchase.
4. Supplier Selection: If the supplier isn't already identified, the procurement team will source and negotiate with suppliers before issuing the P.O.

Difference Between Purchase Requisition and Purchase Order:

• A Purchase Requisition is an internal document requesting approval to purchase goods or services, while a Purchase Order is an external document sent to a supplier to officially order the goods or services.
• A PR initiates the process, and the P.O. executes the actual purchase.

Purchase requisitions are critical in maintaining proper procurement controls and ensuring that purchases are made only after thorough review and approval.