When it comes to procurement, two prominent goals remain to reduce cycle times and improve the efficiency of the processes. These two goals subsequently contribute to higher operational efficiency, cost savings, and many other benefits for the organization.
However, procurement is a complex process with different stages, and each stage can either slow down or speed up the overall process. In this guide, we will focus on requisition workflows and the benefits of automated workflows for procurement within the organization. Let’s dive into it!
What is Purchase Requisition?
A purchase requisition is a process of making a formal request (by an employee in the procurement department) to procure goods/services within the organization. When the purchase requisition is approved, the purchase order can be placed and sent to the supplier to acquire goods or services.
What is Purchase Requisition Automation?
Purchase requisition automation essentially automates all the stages involved in the workflow that would otherwise be conducted manually. The key components of the purchase requisition workflow include:
- The requester. The purchase requisition process starts with the requester, who identifies the need for specific goods/services and then submits a formal request to acquire these. The requester is responsible for providing key information such as quantity, estimated cost, and reason why the purchase should be made.
- Reviewers. When the request is made and sent, it will move through various layers of reviewers. This depends on the roles and responsibilities of each reviewer; for instance, some might be decision-makers, others can be financial analysts, and so on. At each level of the review process, the request can be approved for further stages or denied (requested to make modifications).
- The approver. After the requisition request passes through reviewers stages, it reaches the approval stage, during which the approver makes sure whether or not the request aligns with the company’s priorities, budgets, and compliance requirements.
- Procurement team. After the requisition request is approved, it moves to the procurement team's employees, who are responsible for creating a purchase order, sourcing, and initiating contact with the approved vendor/supplier to sign the contract.
- Vendor/supplier. Suppliers also play a pivotal role in the purchase requisition workflow. Vendors are responsible for fulfilling orders according to the agreed-upon terms and conditions.
Purchase requisition automation leverages software technology to streamline the acquisition process with automation and digitization of different stages. Such automation tools allow the creation and submission of requisitions electronically and automate routing, increasing the speed and accuracy of the overall process.
Challenges and Risks of Manual Purchase Requisition Workflows
Traditional/manual purchase requisition workflows are faulty and can cause a variety of challenges and risks for the organization. To understand the whole picture, let’s review some of the common risks in more detail.
Risks of Errors
One of the most common risks associated with any manual process in the business is the increased risk of human error. While some mistakes go unnoticed, others can lead to significant headaches and financial consequences for the business.
Automated requisition workflows reduce errors by allowing for validation/checks, automated calculations, and centralized data management. For instance, with automated calculations such as budget estimations, tax considerations, and other financial metrics, the details of the requisition become clear and lack human error. With centralized data, every detail and requisition document can be stored and accessed from a single database, preventing duplicates.
Lack of Transparency and Limited Visibility
The lack of transparency and limited visibility is another challenge in the manual requisition workflow. Without visibility and transparency, tracking order and requisition statuses, updating relevant stakeholders, and efficiently reducing procurement cycle times can be increasingly difficult.
Inefficient Management due to Rigidity
Manual workflows often are inefficient and lack ROI due to the “one-size-fits-all” approach. The secret of effective procurement is that not all orders need the same amount of attention and complexity. Some orders are pretty simple and can be fast-tracked, while others need additional attention to ensure accuracy.
The key is for organizations to identify high and low-importance orders, e.g., raw materials for production are critical, while office supplies are necessary but not critical. Thus, the workflow to place requisitions and then a purchase order for office supplies can have fewer stages.
Benefits of Automated Purchase Requisitions
As far as we are clear about the challenges and risks associated with the manual process, let’s understand the benefits of automated requisition workflows.
Time Savings and Improved Efficiency
One of the most important benefits of automated requisition workflows is increased time savings and better process efficiency. Manual requisition orders are not only prone to error but also quite time-consuming. Automating the process eliminates unnecessary paperwork, manual data entry and contributes to a more accurate and faster process.
So, if your main aim regarding procurement processes is to reduce cycle times and minimize errors, then start by automating requisitions.
Improved Transparency
Another key benefit of requisition automation is improved transparency and visibility into the processes. Using a good software solution for process automation allows you to easily track every stage of the process. Improved transparency reduces risks associated with fraud, errors, or delayed approvals.
Also, improved transparency allows you to easily access historical data and audit trails to ensure compliance and internal control of the procedures.
Stronger Control over the Process
Automated requisition workflow allows for setting approval hierarchies, financial restrictions, and other important guidelines regarding POs, guaranteeing greater control over the process. Such control ensures better compliance with organizational standards and procedures, preventing risks associated with unauthorized purchases, directly leading to a reduction of unexpected and maverick spending.
Streamlined Approvals
Manual approval procedures can take quite a long time; however, this is not the case with automated requisitions. Automated requisitions guarantee speed and efficiency, streamlining approval routing.
Adaptability
Requisition workflows differ from organization to organization and from purchase to purchase. Automated workflows, unlike manual ones, offer more flexibility. Thus, you can easily adopt and personalize requisition workflows to fit specific requirements and time frames. This contributes to better versatility, efficiency, and speed.
Enhanced Accuracy
Automated requisition leads to higher accuracy and fewer errors. Automation almost entirely eliminated the need for manual processes and manual data entry, increasing accuracy and efficiency.
Instant Notifications
One more benefit of automated requisitions is instant notifications. Stakeholders can get automated instant notifications to speed up the approval process. With the right software tool that provides mobile access, the requisition approval process can take even less time.
Improved Vendor Collaboration
One of the key factors in creating and improving vendor relationships is building trust. Automated requisitions allow for greater visibility and transparency. Thus, both parties can effectively collaborate in real time, ensuring efficient order placement and fulfillment. This contributes to increased trust factor and long-term relationships that can secure better deals for the organization in the future.
Overall, the automated requisition will enhance and boost productivity within the organization, especially for procurement teams. The procurement team’s employees will be able to spend time on strategic business initiatives instead of manual data entry and repetitive tasks. This will contribute to higher operational efficiency overall, leading to better returns on investment for the organization.
How to Automate Requisition Workflows?
In order to efficiently automate purchase requisition workflows, you need a quality software solution. The purchase requisition software of your choice must offer features to easily streamline and simplify the processing process from request submission to approval.
Note that a quality software solution must offer features such as:
- Customization functionality to customize requisition forms and capture essential details with ease and accuracy.
- Automation features to automate the requisition workflow and allow to automatically collect and assign internal orders.
- Efficient fulfillment features to merge requisitions into a single PO, automate PO creation with complete fulfillment, and fulfill requestions from inventory items in stock.
- Tracking features to monitor orders and requisition statuses contribute to time savings and transparency.
Every feature within a quality solution must be dedicated to enhancing the organization's requisition automation and overall procurement process.
Create Streamlines Requisition Workflows with Tradogram
If you are looking for an all-in-one procurement solution for creating and optimizing automated requisition workflows, then you are in the right place. Tradogram is a robust software solution that will allow you to easily create and automate requisition workflows.
Besides, Traogram comes in handy with plenty of more features that allow the automation of different aspects of procurement, gaining 100% visibility and control over the processes.
To learn more about how Tradogram can help your procurement department thrive, request a free demo, and our team will gladly assist and answer your questions.
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