Defining a Requisition in Procurement
What does 'requisition' mean? In procurement, a requisition is made when employees or departments from within a company require additional goods or services in order to maintain their business operations. These internal company requirements are communicated by submitting a purchase requisition form - typically to a purchasing department or project manager. For example, if Jane is a construction worker who notices that a building site is running low on steel beams...
- Jane adds steel beams to a purchase requisition form.
- Jane submits her requisition form to her project manager, Jill.
- Jill approves the requisition before placing steel beams on a purchase order form (often abbreviated as 'PO').
- Jill follows through with the purchase order process by sending the PO to a vendor to procure the steel beams.
- The steel beams arrive at the building site or at a warehouse, and a goods receiving procedure is followed to confirm and document the delivery.
*Sometimes, additional steps and/or protocols are included in this purchase requisition process. You may also be interested in reading about the use of purchase orders vs requisitions.
Components of a Requisition
A requisition specifies the items or services needed, providing comprehensive descriptions, quantities, and any pertinent specifications to ensure accuracy in procurement.
Budget and Approval Information
It often includes details regarding budget allocations, cost estimates, and approval requirements, enabling financial oversight and control.
Department and Requester Information
The requisition identifies the requesting department or individual, streamlining accountability and providing clarity on who is initiating the procurement need.
Requisition Process Flow:
The requisition process typically involves several steps, starting from the identification of the need to the final approval for purchase. It usually follows these stages:
Identification of Need
An individual or department recognizes the need for specific items or services required for operational purposes.
Documenting the Requisition
The identified need is formalized into a requisition document, detailing all necessary information and requirements.
Review and Approval
The requisition is then reviewed, verified, and approved by authorized personnel within the organization. This step ensures alignment with budgetary constraints and compliance with company protocols.
Forwarding to Procurement:
Once approved, the requisition is forwarded to the procurement department or relevant personnel responsible for executing the purchase process.
Importance of Requisitions in Procurement
Requisitions play a pivotal role in streamlining the procurement process by serving as a structured and formal request for necessary items or services. They aid in budget planning, inventory control, and ensure compliance with internal regulations. Moreover, requisitions serve as a foundational document, guiding the subsequent steps in the procurement journey.
What is a Purchase Requisition Form?
The definition of a purchase requisition form is:
An internal company document used by employees to communicate that goods or services are required, with details including time-frames, quantities, and order specifications.