In any organization, managing purchases efficiently is critical to maintaining smooth operations, controlling costs, and ensuring resources are allocated wisely. Enter the purchase requisition process—a foundational workflow that keeps procurement organized and accountable. Whether you’re a small business owner or part of a large corporation, understanding this process can save time, money, and headaches. Further, leveraging the right technology solutions can help to streamline the process and ensure that the organization receives high quality goods, on time, and at a fair price.
The purchase requisition process flow is a formalized system used by organizations to request, approve, and track the purchase of goods or services. It begins when an employee identifies a need. How exactly this need is identified can vary considerably depending on whether the goods are direct material spend or indirect spend. Direct material requirements will come as a demand from the product’s bill of material as part of the cost of goods sold (COGS). This could be metal and tires for an automobile or cotton and polyester for clothing. In contrast, indirect spend comes out of the operational expenses budget and, although necessary to make the final product, do not go into the final product. This could be the tooling and factory equipment, building maintenance, and various software products the organization uses to run its operations.
At its core, a purchase requisition (PR) is a document or digital form that outlines the details of the request: what’s needed, why, how much, and who’s asking. It’s not the same as a purchase order (PO), which comes later and is sent to the supplier. The PR is an internal checkpoint to ensure spending aligns with budgets, policies, and priorities.
The purchase order requisition process isn’t just bureaucratic red tape—it serves several key purposes:
Without this process, organizations risk chaotic spending, duplicated orders, or purchases that don’t align with strategic goals. It’s the guardrail that keeps organization spending on track.
The exact process can vary between organizations and even between different procurement departments. For example, the purchase order requisition process for purchasing software and building maintenance services may be quite different from the purchase requisition process for buying engines or electrical components. Here’s how the process typically unfolds:
1. Identify the Need
An employee or department recognizes a requirement—whether it’s restocking inventory, replacing broken equipment, or subscribing to a new tool. This could be done through the bill of material creation process in the case of direct materials or it could be done much later or completely independent of the bill of materials.
2. Create the Requisition
The requester fills out a purchase requisition form in the purchase requisition software system detailing the item/service, quantity, estimated cost, and justification. The requester should also include all relevant technical data and information that will potentially be needed by the buyer or the supplier to quote and eventually supply the goods.
3. Submit for Approval
There is sometimes an approval step in-between the purchase requisition creation and being forwarded over to the procurement team. The challenge is that oftentimes, the exact cost of the goods is not yet known because it hasn’t been quoted by the supplier. In these scenarios, it often makes sense to have an initial review of the request prior to sending the request out for supplier bidding. Then, later when the price is known, the request can be formally approved by any required managers or financial authorities prior to being awarded as a purchase order.
4. Forward to Procurement
The purchase requisition can be sent to procurement and require a multitude of things from the procurement team. In some circumstances, such as when ordering commercial off-the-shelf parts from a catalogue, the pricing, vendor, and lead time are already set and procurement simply needs to place the order with the supplier. Other times, the request includes multiple files of technical data that need to be meticulously reviewed by the procurement agent when creating the bid list and ultimately by the supplier when they are pricing out the materials and labor required to make the product requested. Procurement software tools can dramatically simplify this hand-off and keep things organized.
5. Receive Goods
Once the purchase order is submitted, it is up to the supplier to deliver the order. Once the goods arrive, they need to be inspected to ensure that the quantities match what was ordered on the purchase order. Once the receipt, purchase order, and invoice are checked and matched, in a process known as three-way-match, supplier payment can be scheduled and the order marked to close upon payment transmission.
To get the most out of your purchase order requisition process, consider these tips:
Even with a solid process, things can go wrong. Watch out for these traps:
Technology can transform the purchase requisition process from a clunky chore into a seamless operation. These features include:
The purchase requisition process is more than a formality—it’s a strategic tool for keeping your organization’s spending in check and operations humming. By understanding its purpose, following a clear step-by-step approach, sticking to best practices, avoiding common pitfalls, and embracing technology, you can turn procurement into a competitive advantage. Whether you’re requisitioning high volumes or large, high-value purchases, a well-oiled process ensures you get what you need, when you need it—while getting a fair price.
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