Harness the true power of procurement requisitions

Procurement requisitions are very important documents generated to capture essential details of every potential purchase in an organisation.

These documents are generally designed to capture details relating to who requires an item, what is required, when it is required, where it is required and why it is deemed necessary.

Requisitions will typically outline the product description, the required quantity, and the estimated price of the items or services to be procured.

At a minimum procurement requisitions are required to capture essential transaction details such as the item cost and the justification for the procurement requirement.

Requisitions will serve as an internal authorisation tool before a purchase order is issued to prospective vendors.

Purchase requisitions are therefore designed to offer a structured approach to procurement with a view to assist in financial planning and management.

• A dispassionate look into StanChart’s Zimbabwe exit
• Govt committed to support local manufacturing industry
• Govt committed to support local manufacturing industry
• 'Women must be accountable in business'

Such transaction details will allow supply chain personnel to spot overspending early and ensure purchases stay within financial approvals.

This will create a work environment primed for collective responsibility.

Procurement challenges often start with small, missed approvals, unclear spend visibility, and overstated requirements which often quickly add up to lost time and higher operational cost of doing business.

Procurement requisitions therefore represent a key element in controlling expenditure, optimising procurement process flows and promoting collaboration between different user departments.

The structured approach of administering the procurement requisition process gives supply chain professionals the opportunity to establish ways and means of minimising rogue spending patterns, ultimately leading to better cost control, improved process efficiency and enhanced visibility into organisational expenditures.

A well-oiled requisition process is the heart and soul of effective supply chain management. It will prepare supply chain leaders to deal with curveballs and assist organisations to stay along the main course.

Requisitions will also force user departments to capture not only what is required for use in their departments but to explain the business context driving that departmental requirement.

The purchase requisition process flows enable supply chain professionals to interrogate user department requirements and their specifications or their scope of work. 

A purchase requisition system improves budget control by requiring approvals before any financial commitment to a purchase.

It must also be noted that at the point at which the requisition is generated, there is no financial commitment to procure the item until the requisition is approved by the relevant authorities.

Requisitions will assist in assigning the correct chart of authority; ensuring budget limits are adhered to while tracking every request in real time.

The great value derived from the use of requisitions emanates from the identification and prevention of unauthorised expenditures before financial resources are committed.

This will continuously improve the regulation of purchases with a view to deliver optimised total value.

A structured purchase requisition system will assist in the consolidation of procurement requests and assist in the creation of bulk purchases which will in turn create the potential for volume discounts.

Supply chain leaders will find it easy to combine similar requests across departments and negotiate for favourable bulk purchasing terms and conditions.

The centralisation of all user department procurement requirements through purchase requisitions creates a single source of truth for what the organisation intends to procure.

The standardisation of procurement requisitions across departments will reduce ad-hoc and unplanned procurement transactions, assisting in the streamlining of operational activities.

A centralised requisition system gives supply chain professionals the opportunity to spot procurement patterns with an eye to avoid recurring requests that are submitted at short notice. 

The real value of requisitions emanates from what they really meant to prevent. They are mainly considered as a financial checkpoint that initiates preliminary evaluation of whether a product or service is necessary prior to expenditure authorisation.

They are specifically meant to prevent duplicate purchases, unauthorised purchases, and unexpected expenditures that may create unnecessary purchases resulting in budget variances which will significantly strain financial and material resources.

They establish expenditure control points necessary to ensure procurement requests are subjected to proper approval and verification processes.

Written and signed documents will therefore create a culture of responsible spending. Whenever user departments are fully aware that their procurement requests will be reviewed and documented by authorities, there is a tendency to become more careful in the way they expend financial resources. 

Failure to implement a robust requisition system can also subtly affect departmental relational dynamics in less obvious ways.

The procurement purchase requisition systems also promote the segregation of duties by separating the responsibilities of requesting, approving, and completion of the purchase process.

Different individuals must be allocated the responsibility for requesting, approving and processing procurement requisitions.

The segregation of duties and responsibilities will minimise the risk of fraud or errors as each step is independently verified and validated by separate individuals.

 The procurement requisition system will be governed by predefined workflows, which ensures that every procurement request is routed through the right budget owners, cost centres, and vendor check points before final approval.

They will also prevent redundant or overlapping purchases, helping supply chain leaders to sidestep an array of problems associated with budget overruns.

A robust procurement requisition process flow adds layers of transparency and clarity, offering central control over all business pending, making it easy to manage what goes out, when, by who, and to whom.

Requisitions serve as spending control points, filtering unnecessary or impulsive spending patterns by user departments.

Businesses that can develop a procurement requisition system will be able to create a clear approval pathway with clearly defined protocols to reduce the risk of fraud.

The importance of a procurement requisition lies in the control, transparency, and accountability it brings to the purchasing process flow.

When paired with procurement best practices and digital tools, it enhances financial control and streamlines the purchasing process, enabling business organisations to exercise proper due diligence, verifying the necessity and the prevention of overspending.

During requisition reconciliation processes, the finance department will be required to compare the information on requisitions with corresponding supplier invoices.

Such documents will assist in the verification of whether the ordered items were received in good order, while also checking for any discrepancies or errors, and ensuring that payments made are aligned with approved budgets.

Procurement requisitions will assist supply chain professionals to gain a full understanding of organisational spending patterns. Such clear view visibility will assist organisations in better product forecasting, budget planning and strategic sourcing decisions.

Procurement requisitions that are reduced to writing will enable procurement departments to avoid potential conflicts when user departments end up claiming that they never requested for certain products or when there is a dispute over specifications.

They will assist top management to delegate spending without losing visibility and control, ensuring every procurement transaction is bonafide, duly approved and within budgetary expectations.

They will also come handy when they facilitate an exchange of information between supply chain partners and ensuring that both parties are on the same page regarding the specification requirements and other related terms and conditions.

The requisitions system can also be integrated to connect with other business systems such as ERP systems, accounting software system as well as supplier networks.

Beyond financial oversight, purchase requisitions could be useful when conducting internal and external audit process flows with a view to meet regulatory and compliance requirements.

They will facilitate the establishment of clear accountability trails to ensure that procurement decisions are strictly aligned to organisational policies and procedures.

The adoption and maintenance of a standardised requisition system will allow organisations to follow regulatory requirements, reducing risks emanating from non compliance with internal policies or external regulations.

Built-in approval layers and audit trails make every transaction traceable, potentially preventing any misuse of organisational financial resources.

During internal and external audits, every transaction can be traced back to an accountable decision-maker, reducing the possibility of back-and forth inquiries where findings require remedial action and curing.

• Nyika is a supply chain practitioner based in Harare. — charlesnyika70@gmail.com