Create a purchase requisition
If your organization requires indirect items (items that are not required by master planning), you can submit purchase requisitions for those items. You can also use purchase requisitions for direct materials.
Purchase requisitions are internal documents, whereas purchase orders are the equivalent of external documents that the Purchasing department submits to vendors.
You can select items from procurement catalogs that contain only items that are relevant for purchase requisitions.
A Human Resources (HR) assistant occasionally needs to buy office supplies for her department. Because the HR assistant is a non-purchasing agent and does not have the authority to access the Purchase orders page, they can use the Purchase requisition page to make purchase requisitions and receive permission to buy the items that they need.
The purchase requisition process can vary from business to business and typically involves three main roles:
Requester - The user who requested and who will receive the item on the purchase requisition line, even if that user does not actually create the purchase requisition. Several different requesters can be on the same purchase requisition. The requester's settings (such as employment, department, and cost center) are used for the purchase requisition line and, in the workflow process, the requester's information (such as spending limits and reporting relationships) can be used to route the purchase requisition line through the review process.
Rules and policies are determined by the legal entity or organization that the requester is employed within.
Preparer - The user who creates and submits the purchase requisition. Depending on how the system is set up, users can create purchase requisitions on behalf of other users. In that situation, the requester is not the same user who creates and submits the purchase requisition. The preparer is the on-point person for the requisition. For example, if a purchase requisition is rejected in workflow, it will be sent back to the preparer; or, if it needs to be recalled, the preparer can perform that action, but the requester cannot.
Approver - The approver is the user who must approve the purchase requisition. In some cases, there could be more than one approver for a single line or a different approver for each line on a purchase requisition. Additionally, a Reviewer might have a task in the workflow.
Purchase requisition statuses
Depending on the progress of a purchase requisition, it can have different statuses. The purchase requisition status is displayed on the purchase requisition header on the Purchase requisitions page and on the various purchase requisition list pages.
Purchase requisitions can have the following statuses:
- Draft - The purchase requisition and purchase requisition line have been created, but they haven't been submitted for review. Purchase requisitions and purchase requisition lines that have a status of Draft can be modified. A purchase requisition or purchase requisition line also has a status of Draft if it has been recalled but hasn't been resubmitted for review. You can submit or recall a purchase requisition at the document level. However, you can't submit or recall a single purchase requisition line.
- In review - The purchase requisition lines have been submitted for review. When the workflow process is completed for a purchase requisition line, the status of that line remains In review until all remaining purchase requisition lines have been reviewed.
- Rejected - The purchase requisition and all purchase requisition lines have been rejected. Purchase requisitions and purchase requisition lines that have been rejected can be resubmitted.
- Approved - A purchase requisition reaches the status of Approved when the final step in the workflow is successfully completed. When the purchase requisition is approved, the purchase order can be created from purchase requisition lines.
- Canceled - The purchase requisition and all purchase requisition lines have been canceled. Note: If you no longer require an item that is on a purchase requisition line, you must cancel the purchase requisition line if it has already been approved. Only purchase requisition lines that have been approved can be canceled. If any purchase requisition lines are in review, the purchase requisition will have a status of In review. In this case, you can recall the purchase requisition and delete the appropriate purchase requisition line.
- Closed - When the purchase order is created, the purchase requisition is Closed.
Purchase requisition list pages
In Supply Chain Management, the purchasing tasks are performed in the Procurement and sourcing module.
Several list pages are available that you can use to view and manage purchase requisitions. Some users have the security privilege to access all purchase requisitions, while other users can only view some purchase requisitions.
By default, the purchasing agent and purchasing manager roles allow the user to view all purchase requisitions.
Most users by default only have access to the purchase requisitions that they created, to those that are created for them, or to those that are assigned to them for review. Managers also have access to the purchase requisitions of users who report to them.
The following list describes the purchase requisition list pages that are available in Supply Chain Management:
- Procurement and sourcing > Purchase requisitions > All purchase requisitions - Use this list page to view all purchase requisitions. You can add a request for quote, view the summary total amount for all lines on a selected purchase requisition, compare versions of the purchase requisition as it is processed, and view and manage budget data for the purchase requisition.
- Procurement and sourcing > Purchase requisitions > Purchase requisitions prepared by me - This list page is similar to the All purchase requisitions list page, except that it filters the view to only display purchase requisitions that are created by the current user. This also includes purchase requisitions that are created for another user on behalf of someone else. This is the main list page that is used by employees who create purchase requisitions for themselves and other employees.
- Procurement and sourcing > Purchase requisitions > Purchase requisitions require my action > Purchase requisitions assigned to me - This list page is an extension of the All purchase requisitions list page that filters the view to only display purchase requisitions that are assigned to the current user.
- Procurement and sourcing > Purchase requisitions > Purchase requisitions require my action > Purchase requisitions assigned to my queues - This list page is an extension of the All purchase requisitions list page that filters the view to only display purchase requisitions that are assigned to any queues that the current user is assigned to.
- Procurement and sourcing > Purchase requisitions > Purchase requisitions require my action > Purchase requisitions not recorded - The list page shows purchase requisitions with errors and warnings, such as for pre-encumbrance or budget processing.
- Procurement and sourcing > Purchase requisitions > Purchase requisitions review > Purchase requisitions requested for me - This list page is an extension of the All purchase requisitions list page that filters the view to only display purchase requisitions that contain items that are requested for the current user. This includes purchase requisitions that are created for the current user by someone else.
- Procurement and sourcing > Purchase requisitions > Purchase requisitions review > Purchase requisitions for my direct reports - This list page is an extension of the All purchase requisitions list page that filters the view to only display purchase requisitions that contain items that are requested for users who directly report to the user who is currently logged on.
- Procurement and sourcing > Purchase requisitions > Purchase requisitions review > Purchase requisitions for all my reports - This list page is an extension of the All purchase requisitions list page that filters the view to only display purchase requisitions that contain items that are requested for users who report to the user who is currently logged on either directly or indirectly.
- Procurement and sourcing > Purchase requisitions > Approved purchase requisition processing > Release approved Purchase requisitions - This list page is used by the purchasing agent to perform demand consolidation, if appropriate, and to create purchase orders for approved purchase requisition lines.
Purchase requisition page
The Purchase requisitions page in Procurement and sourcing > Purchase requisitions > All purchase requisitions is where you can create or modify a purchase requisition and then submit the purchase requisition for review. You can create purchase requisitions for multiple users, in multiple legal entities, or organizations.
On the Purchase requisitions page, you can copy an existing purchase requisition and purchase requisition lines to create a new purchase requisition. Also, you can approve, reject, or complete purchase requisitions that are assigned to you. If you have the necessary permissions, you can also create a request for quotation directly from a purchase requisition.
You can complete the purchase requisition if a review task is in the purchase requisition workflow and when you have an approval task that you can approve, reject, delegate, or request a change for.
You can also enter purchase requisitions on behalf of another user if you have permissions to request products for another worker.
Go to Procurement and sourcing > Purchase requisitions > All purchase requisitions to create a purchase requisition.
When adding a new line on the Purchase requisition page, you can select an item or category, or you can use the Add products button to add items from the category list.
Instead of adding a line or category, you can select items from an external catalog. This allows you to go to the vendor's website and choose your items and, at the checkout, return to the Purchase requisition page. This is called vendor PunchOut or eProcurement.
By using purchase requisitions, you can do the following tasks:
- Request items and services from a procurement catalog. You can also request items and services that are not listed in a catalog if this action is supported by your purchasing policies.
- Request items or services on behalf of someone else, or in a legal entity or operating unit other than the one in which you hold a primary position.
- Suggest a vendor from whom to order an item or service.
- Distribute an amount on a purchase requisition line to multiple financial accounts and dimensions.
- Perform budget checking on the purchase requisition if your organization uses budget checking.
- Submit the purchase requisition for review and approval.
Request changes to a purchase requisition
When a purchase requisition is assigned to and reviewed by you, you might need to request changes from the preparer of the purchase requisition before approving it.
For example, the business justification might require more detail for you to approve the purchase requisition, or the requested delivery date is too early and will cause a budget overrun in the current month.
Also, you can use the Request change action to send the purchase requisition to someone other than the preparer when you must obtain input from someone that is not configured as a reviewer or approver on the workflow.
For example, you do not want the user to change something, but you just need the user to type in a comment.
When you use the Request change option, the workflow will resume where it left off. In contrast, when you reject a purchase requisition, it will go through the entire workflow again. Therefore, you should not request changes that invalidate the approvals that were already provided by prior approvers; in that case, a reject action is the better option.
Convert purchase requisitions to purchase orders
You can define purchasing policies to create rules that determine whether a purchase order is created automatically from a purchase requisition when it is completed. The settings for the purchase order and demand consolidation rule control how the purchase orders are generated when the purchase requisition is approved.
By default, all purchase orders must be created manually from the Release approved purchase requisitions list page unless a defined policy rule outlines different actions.
When a purchase requisition reaches the status of Approved, you can create the purchase order(s) automatically, with or without using a batch job, or manually.
Requisition consolidation can help you reduce procurement costs and influence your negotiating power with your vendors. By grouping demand for goods and services, you can achieve better pricing, lower shipping and handling costs, and reduce overhead costs.
When purchase requisitions are approved, they are evaluated against purchasing rules that you define and are either automatically processed into purchase orders or held for manual processing. Of the purchase requisitions that are held for manual processing, a select few could be eligible for requisition consolidation.
To consolidate purchase requisition lines, follow these steps:
- Evaluate the purchase requisition lines and group them into consolidation opportunities.
- Update purchase requisition line items with changes to the vendor, price, requested date, or quote data.
- Create purchase orders for the consolidated requisition line items.
Requisition consolidation overview
Purchase requisition lines are eligible for the consolidation opportunity, only if the purchase requisition is approved and meets the purchase order creation and demand consolidation rule criteria for manual processing and demand consolidation.
A consolidation opportunity is a set of purchase requisition lines that are grouped together so that the purchasing professional can negotiate the best deal with vendors.
Approved purchase requisitions that do not meet the criteria for demand consolidation are either automatically or manually processed into purchase orders, based on the rule settings.
When you want to consolidate purchase requisition lines, you need to create a consolidation opportunity and add lines from the list of Release approved purchase requisitions. You can modify the requisition lines if necessary, for instance, by changing the vendor or delivery dates for line items.
After you add the requisition lines to the consolidation opportunity and make any necessary changes, you can create a purchase order for the consolidated purchase requisition lines. Purchase requisition lines that are not eligible for demand consolidation or that are not selected for a consolidation opportunity must be processed manually to create a purchase order.
To consolidate approved purchase requisition line items, follow these steps:
- Review approved requisition line items that are eligible for consolidation.
- Select the line items that you want to add to a consolidation opportunity.
- Create a new consolidation opportunity or add requisition line items to an existing requisition consolidation opportunity.
- Apply any changes that you want to make to your requisition line items and remove requisition line items that you no longer want to include in the consolidation opportunity.
- Create purchase orders for consolidated requisition lines or for a selected requisition consolidation opportunity.
Watch this demonstration to see how to create a purchase requisition in Supply Chain Management.
Set up business justification codes
If you have the correct permissions, you can define business justification reason codes to classify and track certain types of purchases.
For example, you can create codes to signify that a purchase is made for a new hire, a scheduled replacement, equipment failure, a marketing event, or other defined reason.
Because business justification codes appear on purchase requisitions, the reason for a purchase is immediately visible to anyone who is reviewing a purchase requisition.
Go to Procurement and sourcing > Setup > Policies > Business justifications to create justifications.