How To Create A Purchase Requisition Workflow
Table of contents
1. Why is it important to have a purchase requisition workflow?
2. What does a purchase requisition workflow look like?
3. How to write a requisition - with examples
4. The challenges of paper-based workflows
5. How Prokuria helps you manage your purchase requisition workflow
In case you don't have time to read the entire article, here is a quick video summary:
A purchase requisition workflow is a step-by-step process that outlines how a purchase is made inside an organization. This process starts when a purchase requisition is submitted for review and ends when the procurement department sends a purchase order (PO) to suppliers.
The purchase requisition starts out as a draft, then it’s reviewed and checked until it’s finally approved. This journey from a draft to an approved document is what we call a purchase requisition workflow.
This workflow can include one or more steps, depending on your needs. You can also skip reviews and automatically approve certain requests.
Why is it important to have a purchase requisition workflow?
Effectively managing purchases is a critical component of any business. Yet many organizations completely forego purchase requisitions (and, sometimes, even purchase orders) because they perceive paperwork as a hassle that slows them down.
Paperwork can slow you down, but the benefits of an efficient workflow far surpass the disadvantages.
For one, the lack of a proper purchase requisition workflow can lead to fraud because you have no visibility over who purchases what from where and at what cost until after you get the invoice.
Second, in the absence of clear guidelines, you might be overspending on things you already have because the person who made the request didn’t check the inventory. Or you might waste money on products that are not right for you because the document wasn’t reviewed by the right stakeholders.
The bottom line is, you need a purchase requisition workflow.
What does a purchase requisition workflow look like?
Purchase requisition workflows are not one-size-fits-all. They are unique to each organization because each organization has different needs and internal processes.
However, there are a few components that are common across all organizations:
First, an employee makes a request and sends it for review. The person who reviews the request must ensure it’s within budget, from an approved supplier, etc. Most of the time, there will be more than one stakeholder involved in the approval process, especially for costly goods and services. This means this step will be resumed by each stakeholder.
If the purchase requisition is missing information, the document is sent back for correction and then resubmitted. If the reviewer does not agree with the contents (for example, there’s not enough budget to satisfy the request, or the supplier is not approved), they can reject it.
Last but not least, when all stakeholders agree with the purchase requisition contents, it can be approved and sent as a purchase order to suppliers.
How to write a requisition - with examples
When you create a purchase requisition workflow, consider the following questions:
What purchases do you want to review?
Which purchases can be automatically approved?
Who is in charge of reviewing purchase requisition? Is it only one person or more stakeholders involved?
What do you do when the reviewer is not available?
Based on these questions, there are two ways you can configure your workflow:
A single document for all your requested goods/services
For this type of workflow, you will need to fill the following roles:
Requester: the person who requests goods or services. The requester can write the purchase requisition himself, or another employee can write it on his behalf (this employee will be called “preparer”). Whoever writes the purchase requisition is also in charge of managing it through the review process.
Reviewer: the person who will review and approve the request.
The requester’s manager: the person who will perform a managerial review.
The workflow should look something like this:
The preparer submits the purchase requisition for review.
The reviewer is notified. If the document is missing information, he can add it or return the request to the preparer to add it. When all the required information is filled in, the purchase requisition can move to the next step.
The requester’s manager reviews the purchase requisition to see if the goods/services are necessary or if there’s enough budget. He can approve or reject the document, or send it back to the preparer for changes.
An individual document for each requested good/service
If there’s more than one good/service being requested, you can write a different purchase requisition for each. The workflow will be similar to the requisition example above, except each document will need to be submitted for review before the workflow can be completed for the whole purchase requisition.
The roles you’ll need to fill are:
The requester’s manager
Department manager: he will perform a spend review (money, time, effort, or other resources).
Group manager: he will perform a signature authority review.
The purchase requisition approval workflow should look like this:
The preparer submits the purchase requisitions.
The reviewer makes sure all information is filled in for each good/service. If not, he can send the document back or fill in the information himself. When all the required information is filled in, the purchase requisition can move to the next step. One person can review all purchase requisitions, or different persons can review each document, depending on the nature of the goods that are requested.
The requester’s manager reviews the purchase requisition and approves or rejects it. If approved, the document moves to the next step in the workflow.
The department manager reviews and approves the purchase requisition. For example, he can approve the budget. More than one department manager can be involved in this step, depending on the goods being requested.
The group manager will give the final approval. He can also approve a bigger budget if the costs exceed the limit the department manager can approve.
The challenges of paper-based workflows
As you can see in the requisition example above, purchase requisition workflows can become quite complex. Imagine doing all this on paper.
For small companies that don’t make lots of purchases, that could work; but it requires a lot of effort. However, the margin for error is high as the purchase requisition passes through several reviews before it’s approved and transformed into a purchase order.
If you also add queries, resubmissions, rejections, and other issues, it becomes almost impossible to keep track of all information without missing anything.
Another challenge is the lack of clarity and transparency as to the progress of the purchase requisition. If it affects a department’s ability to undertake operations, the issue must be solved immediately. But that’s hard to do if the document sits in a drawer.
How Prokuria helps you manage your purchase requisition workflow
By using technology, you can streamline your purchase requisition workflow and achieve time & cost savings. Moreover, you’ll be able to move forward with better efficiency and accuracy.
You’ll be able to write purchase requisitions online quickly & easily, and submit them for reviews with just one click. This will leave you more time to concentrate on the activities that are most important for your organization.
You’ll also be able to track purchase requisitions at every stage of the process. You’ll gain visibility over the progress and be able to solve any issues before they get the chance to negatively impact your business.
Are you ready to streamline your purchase requisition workflow? Get your free demo.