The Purchase Request process might sound as easy as buying weekly necessities at the supermarket. However, recall all the mistakes we often make while shopping: temptation leads us to buy items we don’t actually need, or leaving the store leaves us with a much lighter wallet.
Purchasing on a larger scale is not much different. Many businesses end up with excess stock that brings more loss than benefit.
This is where the importance of a Purchase Request (PR) lies. But before we delve deeper, let’s first understand what this Purchase Request actually is.
Simply put, a Purchase Requisition is an internal document that details the goods or services required by a company. Because it is internal, this document needs to obtain approval from the relevant parties before the procurement team finally sends a Purchase Order (PO) to a vendor.
Purchase Request: Is It Really Necessary?
The answer to this question depends on the needs of each company.
A small company might still be able to operate without a Purchase Request (PR) process. However, for a large company with hundreds of employees, having a PR process will be extremely helpful for tracking the origin of a request without needing to “play detective.”
7 Steps in the Purchase Request Process
The workflow for the PR (Purchase Request) process can be simple or complex, depending on the company’s needs. However, certainly no one wants a long and complicated process that takes weeks just to get approval from the procurement team.
Therefore, the PR process must be flexible and adaptable. Even though it might add one approval step, the benefits it provides far outweigh the drawbacks.
The general workflow is as follows:
- Filling out the PR form The process begins when the company has a need for a purchase. This can range from office supplies to pantry necessities, which are then documented in a PR form.
- Internal Approval The completed PR form is submitted to the relevant department head for review and approval.
- Purchasing and Finance Team Approval The procurement and finance teams will review the document once the department head approves it. They can approve or reject it based on urgency and budget availability.
- Request for Quotation The purchasing team contacts several vendors to request price quotations for comparison, considering cost, reliability, and delivery time.
- Creation of Purchase Order (PO) The purchasing team issues and sends a PO to the vendor after selecting a quotation. This PO serves as the official contract between the buyer and the vendor.
- Goods Receipt The goods are received and checked for conformity in both quantity and quality. If any goods are non-conforming, a return process is initiated at this stage.
- Three-Way Matching To ensure accuracy, a match is performed between the Purchase Requisition, the Purchase Order, and the Invoice from the vendor.
Challenges in the Purchase Request Process
As is evident, the PR process involves many documents and transfers between parties, making it susceptible to damage or even loss, which consequently causes delays.
However, there is a solution to this problem…
Meet ADAM: Automated E-Procurement Solution
ADAM is a provider of integrated e-procurement solutions that helps to automate the entire Purchase Requisition (PR) process from start to finish.
Automation is the ideal solution to streamline your PR workflow: reducing human error, increasing spending transparency, and accelerating productivity!
Frequently Asked Questions
A PR is an internal document that details the goods or services required by the company.
A Purchase Order (PO) is a document sent to a vendor that contains the details of the goods or services the company intends to buy. The PO constitutes a legally binding contract between both parties.
Filling out the PR form (Purchase Requisition form)
Internal Approval
Purchasing and Finance Team Approval
Request for Quotation
Creation of Purchase Order (PO)
Goods receipt (or Receiving the goods)
3-way matching between the PR, PO, and invoice
It depends on the company’s size. Small companies might not need it, but for large companies, a PR (Purchase Requisition) is important for tracking the source of the request.
An e-Procurement system that manages the PR (Purchase Request/Requisition) process digitally and paperlessly, making the process more efficient and well-documented.
Conclusion
Implementing an efficient Purchase Requisition process is key to optimizing your procurement workflow. The next step is to simplify your Purchase Order process. Our guide on “7 Essential Things You Need to Know about Purchase Orders” can help you increase accuracy, save time, and ensure smooth communication across all departments.
Reduce the risk of errors and increase transparency with PR (Purchase Request/Requisition) automation. Consult with our team about your needs today!
About Us
Veris Solution is a trusted implementer of SAP Business One solutions for small and medium-sized businesses in Southeast Asia. We have over 20 years of experience implementing SAP Business One and offer a comprehensive range of services, including implementation, support, customization, and integration. We are committed to helping businesses streamline their operations, improve efficiency, and achieve their goals through the power of SAP Business One. Our team of certified professionals provides tailored solutions to meet the specific needs of each client, ensuring a smooth and successful digitalization journey.
