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Purchase Order Flow – Generate Requisition

Requisitions can fall in three general categories: planned, budgeted and preapproved, or unexpected and needs approval. The process to generate and process a requisition is guided by company policies that establish types of goods and services that need to be preapproved, the roles of who can generate requisitions, and the monetary value that must be approved before processing.

Requisitions can also originate from other requirements such as those found in maintenance, repair, operations (MRO) orders or services that have a formal or informal requisition process. MRO orders start as a requisition and progress through sourcing, pricing, and authorization.

Requisitions for planning capital equipment is a more detailed process and typically requires in-depth analysis, including return on investment.

For this course, the focus is primarily on requisitioning raw materials (and subassemblies) and MRO type goods and planned replenishment in a production or manufacturing environment.

Planned Replenishment

In a manufacturing environment, the source for dependent demand such as raw materials or subassemblies originates in the generation of requirements for production and distribution inventories from material requirements planning (MRP) systems or kanban. Planned replenishment for independent demand may use order point or periodic review order techniques.

The purchase order management process for planned replenishment begins with the maintenance of database elements necessary for effective and accurate purchase order release and control. Several key files must be continuously maintained such as the item master, the supplier master record, and the price master. In addition, to these static database files are variable database files such as open requisitions, open purchase order, and purchasing history. These files need to be 100% accurate and up-to-date.

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