A purchase requisition is an internal document that an employee or department submits to request approval to purchase goods or services. It is the first step in a formal procurement process and initiates the authorization chain before a purchase order is issued.
Understanding the Purchase Requisition
A purchase requisition (PR) is a control mechanism that ensures purchases are reviewed and approved before the company commits to spending money. The employee who needs the goods or services creates the requisition, which then routes through an approval workflow involving a department manager, finance team, or procurement team, depending on the company's policies and the value of the purchase.
In CPG operations, purchase requisitions are used to request materials, packaging, contract manufacturing runs, equipment, and services. They give the procurement team visibility into upcoming needs and allow finance to track spending against budgets before purchase orders are placed.
Core Components of a Purchase Requisition
A purchase requisition typically includes requester information (name, department, contact details), item description (goods or services needed with quantity and specifications), estimated cost (expected cost per unit and total for budget approval), requested delivery date, preferred supplier (optional suggestion that procurement may follow or override), business justification (brief explanation of why the purchase is necessary), and budget code or cost center (the account from which the purchase will be funded).
Purchase Requisitions in Practice
When an operations or supply chain team identifies a need, the relevant person creates a purchase requisition in the company's ERP or procurement system. The PR enters an approval workflow based on the value and category of the purchase. Once approved, the procurement team uses the requisition to issue a purchase order to the selected supplier.
If the PR is rejected, the requester is notified and can resubmit with modifications or seek alternative approvals.
Automated procurement systems route PRs electronically and maintain a full audit trail of who approved each request and when, which is important for financial controls and auditing.
Related Concepts
- Purchase Order is the external document sent to a supplier that results from an approved purchase requisition.
- Request for Quotation (RFQ) is often issued to suppliers as part of fulfilling an approved requisition.
- Three-Way Match is a verification process that links the purchase requisition, purchase order, and goods receipt.
- Approved Vendor List (AVL) is the list of suppliers procurement can use to fulfill approved requisitions.
- Procurement is the function that processes and fulfills purchase requisitions.
