Nature of Purchase Request
Internal users communicate their needs to purchasing in a variety of ways including purchase requisitions from internal users, forecasts and customer orders, routine reordering systems, stock checks, and material requirements identified during new product development. Let’s take a closer look at these electronic documents that communicate internal customer requirements to purchasing.
The most common method of informing purchasing of material needs is through a purchase requisition. Users may also transmit their needs by phone, by word of mouth, or through a computer-generated method. Although there are a variety of purchase requisition formats, every requisition should contain the following:
- Description of required material or service;
- Quantity and date required;
- Estimated unit cost;
- Operating account to be charged;
- Date of requisition (this starts the tracking cycle);
- Date required;
- Authorized signature.
Although varieties of formats exist, at a minimum a purchase requisition should include a detailed description of the material or service, the quantity, required date, estimated cost, and authorization. This form of communication for a specific need is called a requisition.
A requisition is an electronic or paper form that provides some critical information about the need. A typical requisition will provide a description of the product (e.g., a valve), the material and color (brass, red valve), the quantity required (20 red brass valves), the intended purpose (20 red brass valves to be used in a maintenance project for equipment XYZ), and the required date for delivery (three weeks).
Sometimes a service is required. For instance, marketing may want to purchase an advertising campaign, R&D may need a clinical trial, or human resources may need to print a brochure. In this case, the user will complete a statement of work (SOW) that specifies the work that is to be completed, when it is needed, and what type of service provider is required.
A standard purchase requisition or SOW is used most often for routine, noncomplex items that are increasingly being transmitted through online requisitioning systems linking users with purchasing. An online requisition system is an internal system designed primarily to save time through efficient communication and tracking of material requests.
Users should use these systems only if they require purchasing involvement. It is possible that users have access to other systems that will allow them to purchase an item directly from a supplier, such as a corporate procurement card. In that case requisitions forwarded to purchasing are unnecessary.
There are wide differences across organizations in the quality and use of electronic purchase requisition systems. A system that simply requires users to submit to purchasing what they require for electronic transmission is similar to electronic mail. This type of system provides little added value except to speed the request to purchasing. Conversely, one system studied was so complex that users were afraid to use it. They bypassed online requisitioning and relied instead on the phone or intracompany mail.