Understanding Requisitions: Here’s What the Key Components Entail

Whether you’re running a corner store or working for a major corporation, it’s incredibly important to be efficient (we know you know, but there’s always room for reminders). What does this mean? Well, in most businesses it means paying attention to a system of checks and balances, delegating responsibilities and following the right steps to complete your objective as quickly and accurately as possible.

This is especially true in the procurement process. If done properly, procurement can provide your company with all the materials needed to generate revenue without placing any strain on the bottom line. Here’s everything you need to when you’re ready to acquire new products or materials.

Deciding What You Need

The first step in the process is deciding whether you need new supplies and materials in the first place. If you’ve just hired a new data entry clerk but don’t have a ready workstation for them, you’re obviously going to need a desk, a chair and a functioning computer. Once you know what you need, you’ve got to find out what to get, what you can afford, where to get it and how soon you need it. Use discretion when deciding what is appropriate; you don’t need that nifty desk with the built-in refrigerator or an office massage chair, but you need to make sure your employees are happy and the products you purchase are worth buying. Choose products that make sense for the job without going overboard or compromising on quality. Think carefully about what you really need—it’s easy to splurge but it’s really very hard to get that money back.

Getting the Boss to Sign Off

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Getting your boss to sign off on your requisition forms is probably the least laborious task in the process, but it’s a critical part of the workflow. At this stage, whoever is in charge will either give you the “ok” to stick with the plan, suggest changes or tell you to abandon it altogether. Demonstrate that you’ve done your homework and are balancing cost with necessity and you boss will trust your discretion with similar purchases in the future. Once the John Hancock is on the dotted line, copies of the order will be sent to the supplier, the supervisor and the accounting department setting everything into motion.

Filling Out the Order Form

The next step is getting someone to fill out the purchase order or procurement requisition form to put the plan of getting those supplies into action. While it may sound simple, without this form, there’s no way to trace the item or account for it in the budget—a potential problem if the auditor comes calling. Failure to fill these out properly, if at all, is often a symptom of company mismanagement. While many vary in layout, most forms require the following information:

• Vendor: Here’s where you enter the name and correspondence of the supplier.
• Description: This often refers to the name of the item, usually including make and model.
• Quantity: How many of these items do you need? Enter that information here.
• Item number: This refers to the inventory number of the item available. These may range from a handful of digits to a messy sequence of numbers and letters. Because of this, this is an area where mistakes are most common.
• Cost per unit: If you’re ordering several of the same item, this figure tells you how much one of them would cost. Electronic versions sometimes have features in this category that convert currency in the case of international orders.
• Shipping method: This describes how the item is to arrive at your warehouse or office, whether by surface (truck or ship) or air.
• Shipping terms: This area indicates the conditions of payment for a shipped item. If your company is going to pay for the freight and assume risk on loss or damages during transport, you would write FOB (Free On Board) Shipping Point. Employees filling out orders have a myriad of terms at their disposal depending on the payment agreement, so make sure you’re clear about expectations.
• Delivery Date: You guessed it—that’s when your shipment is due to arrive.

Doing the Math

Photo Credit: Luis Llerena

Now that you’ve filled out all the necessary info, it’s time to add it up, include taxes and discounts (if any) and any other costs involved in purchasing the item. On eBusiness procurement forms and even template Excel spreadsheets, that work is already done for you. If you’re still using hard copy, better whip out that trusty calculator. This part of the form process has traditionally been a financial trouble spot where even a simple mistake in arithmetic could be detrimental to a company’s operations. Thankfully, procurement technology has made this final stage not only foolproof, but faster.

From decision to delivery, a smooth-running operation ensures every stage of the procurement process is followed to a tee. While technology has made the whole process much more efficient, what hasn’t changed is a strict adherence to all the key components. Dedication to a good procurement process will empower your employees to make smart, cost-effective decisions that will benefit your company’s bottom line in the long term.