Create a purchase requisition
If your organization requires indirect items (items that master planning doesn't require), 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.
Scenario
A human resources (HR) assistant occasionally needs to buy office supplies for the department. Because the HR assistant is a non-purchasing agent and doesn't have the authority to access the Purchase orders page, they can use the Purchase requisitions 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 requests and who receives the item on the purchase requisition line, even if that user doesn't actually create the purchase requisition. Several different requesters can be on the same purchase requisition. You would use the requester's settings (such as employment, department, and cost center) for the purchase requisition line, and in the workflow process, you can use the requester's information (such as spending limits and reporting relationships) to route the purchase requisition line through the review process.
Note
The legal entity or organization that the requester is employed in determines the rules and policies.
- 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 isn't 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 the workflow, the system sends it back to the preparer. Alternatively, if the purchase requisition needs to be recalled, the preparer can perform that action, but the requester can't.
- Approver - The approver is the user who must approve the purchase requisition. In some cases, more than one approver can be on a single line or a different approver can be on 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 displays 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 - You create the purchase requisition and purchase requisition line, but don't submit them for review. You can modify purchase requisitions and purchase requisition lines that have a status of Draft. A purchase requisition or purchase requisition line also has a status of Draft if you recall it but don't resubmit it 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 – You submit the purchase requisition lines for review. When the workflow process is complete for a purchase requisition line, the status of that line remains In review until you review all remaining purchase requisition lines.
- Rejected - The purchase requisition and all purchase requisition lines are rejected. You can resubmit rejected purchase requisitions and purchase requisition lines.
- Approved - A purchase requisition reaches the status of Approved when the final step in the workflow completes successfully. When the purchase requisition is approved, you can create the purchase order from purchase requisition lines.
- Canceled - The purchase requisition and all purchase requisition lines are canceled. Note: If you no longer require an item that's on a purchase requisition line, you must cancel the purchase requisition line if it's already approved. You can cancel only purchase requisition lines that are approved. If any purchase requisition lines are in review, the purchase requisition has a status of In review. In this case, you can recall the purchase requisition and delete the appropriate purchase requisition line.
- Closed - When you create the purchase order, the purchase requisition is Closed.
Purchase requisition list pages
In Supply Chain Management, you can perform the purchasing tasks in the Procurement and sourcing module.
Several list pages are available for you to 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.
By default, most users only have access to the purchase requisitions that they create, to those that someone creates for them, or to those that someone assigns 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:
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's processed, and view and manage budget data for the purchase requisition.
Procurement and sourcing > Purchase requisitions > All 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 the current user creates, including purchase requisitions that another user creates on behalf of someone else. Employees who create purchase requisitions for themselves and other employees use this page.
Procurement and sourcing > Purchase requisitions > Purchase requisitions prepared by me
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 the current user is assigned to.
Procurement and sourcing > Purchase requisitions > Purchase requisitions require my action > Purchase requisitions assigned to me
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 queues that the current user is assigned to.
Procurement and sourcing > Purchase requisitions > Purchase requisitions require my action > Purchase requisitions assigned to my queues
Purchase requisitions not recorded - This list page shows purchase requisitions with errors and warnings, such as for pre-encumbrance or budget processing.
Procurement and sourcing > Purchase requisitions > Purchase requisitions require my action > Purchase requisitions not recorded
Purchase requisitions requested for me - This list page is an extension of the All purchase requisitions list page. It filters the view to only display purchase requisitions that contain items that someone requests for the current user, including purchase requisitions that someone else creates for the current user.
Procurement and sourcing > Purchase requisitions > Purchase requisitions review > Purchase requisitions requested for me
Purchase requisitions for my direct reports - This list page is an extension of the All purchase requisitions list page. It filters the view to only display purchase requisitions that contain items that someone requests for users who directly report to the user who's currently signed in.
Procurement and sourcing > Purchase requisitions > Purchase requisitions review > Purchase requisitions for my direct reports
Purchase requisitions for all my reports - This list page is an extension of the All purchase requisitions list page. It filters the view to only display purchase requisitions that contain items that someone requests for users who report to the user who's currently signed in directly or indirectly.
Procurement and sourcing > Purchase requisitions > Purchase requisitions review > Purchase requisitions for all my reports
Release approved Purchase requisitions – The purchasing agent uses this list page to perform demand consolidation, if appropriate, and to create purchase orders for approved purchase requisition lines.
Procurement and sourcing > Purchase requisitions > Approved purchase requisition processing > Release approved Purchase requisitions
Purchase requisitions 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 for 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 you're assigned to. If you have the necessary permissions, you can also create a request for quotation directly from a purchase requisition.
Note
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 requisitions 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 approach allows you to go to the vendor's website and choose your items, and at the checkout, return to the Purchase requisitions page. This process 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 aren't listed in a catalog if your purchasing policies support this action.
- 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 you're assigned a purchase requisition and review it, 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 who isn't configured as a reviewer or approver on the workflow.
For example, you don't want the user to change something, but you need them to enter a comment.
When you use the Request change option, the workflow resumes where it left off. In contrast, when you reject a purchase requisition, it goes through the entire workflow again. Therefore, you shouldn't request changes that invalidate the approvals that previous approvers already provided; 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 the system automatically creates a purchase order from a purchase requisition when it's complete. The settings for the purchase order and demand consolidation rule control how the purchase orders generate when the purchase requisition is approved.
By default, you must create all purchase orders 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.
Demand consolidation
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, the system evaluates them against purchasing rules that you define. Then, the system automatically processes them into purchase orders or holds them for manual processing. Of the purchase requisitions that the system holds 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 then 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, but only if the purchase requisition is approved. It must also meet 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 don't meet the criteria for demand consolidation are 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. For example, you can modify the requisition lines if necessary by changing the vendor or delivery dates for line items.
After you add the requisition lines to the consolidation opportunity and make necessary changes, you can create a purchase order for the consolidated purchase requisition lines. To create a purchase order, you must manually process the purchase requisition lines that aren't eligible for demand consolidation or that aren't selected for a consolidation opportunity.
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 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.
The following video demonstrates 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 a purchase 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 reviews a purchase requisition.
To create justifications, go to Procurement and sourcing > Setup > Policies > Business justifications.