Imagine a workplace where purchase requests are flying in from every single direction, with no clear approval in sight. This results in a high level of errors along with budget chaos. There have also been studies that reveal that a company without a proper purchase requisition system faces 30% more procurement costs. Miscommunication and unauthorized spending are the main reasons. 

So the question arises, what exactly is a purchase requisition, and why does it matter so much? In simple words, it basically is a written note that says “ please buy this” in the buying process and makes sure everyone approves before the decision is made. This step makes sure every purchase is well tracked and aligns with the company’s policies, so no unnecessary time or money is spent. 

Let’s dive deeper and clarify what is a purchase requisition and how much importance it holds in a business. 

What Is a Purchase Requisition?

A purchase requisition is a company’s simple internal document to officially request the purchase of the commodities it requires. It starts the procurement workflow by notifying the teams relevant to the purchase that it needs to be bought. This ensures that the request is properly reviewed before moving to the next procedure. 

In the end, the procurement workflow is executed in a controlled, cost-efficient manner, ensuring the buying process stays on track with no irrelevant or unauthorized spending. 

Why Do Businesses Use Purchase Requisitions?

Guesswork shouldn’t be a part of a company. So, in order to bring order and insight to the buying process, businesses use purchase requisitions. That is because they provide a clear and structured way to process their request, without long approval chains and bypassing the budget.

With the combination of requisition system and requisition approval workflow, which comes from purchase requisitions, the business gains a strong grip on budget control, which leads to greater transparency, along with no delays and overspending.

Purchase Requisition vs. Purchase Order: What’s the Difference?

Purchase requisition and purchase Order are completely two different things, but often misunderstood. 

What Does a Typical Purchase Requisition Include?

A solid requisition form template can also be called a cheat sheet for fast and seamless approvals. But this doesn’t mean that every company uses the same layout. Mostly, they follow a clear structure that contains the key elements to keep the requisition system running without any delays. The following are what a requisition document mainly includes:

1. Requestor’s Details
   Name, employee ID, contact information, and department of the person who is making the request.
2. Item Description
   A clear explanation of the goods or services needed, which includes the brand, model, or specifications.
3. Quantity
   The number of units required for each item is listed.
4. Price Estimates
   Approximate cost based on past purchases or vendor quotes, which are used for budget control.
5. Justification
   A short explanation of why the item is needed helps streamline the requisition approval workflow.
   
6.  Department or Project Code
   Indicates which budget or project the expense is tied to, which is essential for tracking and internal reporting.

The Purchase Requisition Process

The purchase requisition process is the hero of efficient procurement. It makes sure every purchase is planned, approved, and tracked. 

1. Identify the Need
   An employee or team spots a requirement, like equipment or services.
2. Fill Out the Requisition
   Using a requisition form template, they list item details, cost estimates, and justification.
3. Get Managerial Approval
   The request goes through the requisition approval workflow for budget and policy checks.
4. Send to Procurement
   Once approved, it heads to the procurement team to create a purchase order and move forward.

Real-World Examples of Purchase Requisitions

The following are two examples of purchase requisitions:

• Manufacturing Industry

A factory manager finds out that there’s a low stock of machine parts. So instead of going out and rushing to buy, they file a purchase requisition. Then it gets approved and turns into a purchase order, which helps keep the budget controlled and low.

• Retail Sector 

A store manager requires new stock for an upcoming sale and submits a requisition document. When it gets approved, the procurement team takes over and ensures smooth restocking. 

Best Practices for Managing Purchase Requisitions

Do you want your requisition process to run like a well-oiled machine? Try the following methods:

• Automate it

 Use requisition management software to lessen the paperwork involved and speed the work.

• Clarify approvals 

Set clear approval roles and deadlines to keep things running smoothly.

• Review regularly 

Keep the procurement workflow sharp by updating policies as your business grows over time.

• Train your team 

A little guidance can make sure that every requisition form template is filled out right, every time.

How Purchase Requisitions Fit Into the Procurement Workflow

Purchase requisitions start most procurement workflows by formally requesting the required commodities. They act as the starting signal before spending anything and making sure every purchase aligns with the company’s policies. 

These requisitions are linked to inventory, budgets, and ERP systems, enabling the control of costs and updating of records for a more efficient procurement process.

Conclusion 

Modernizing your purchase requisition process isn’t just smart, it’s essential for staying efficient and in control. Next time when you ask, “What is a purchase requisition?”, remember tools like KAISPE’s Purchase Requisition App can help you make automation easy, helping you streamline approvals, reduce errors, and keep your procurement workflow running smoothly.