Every organization needs to buy supplies and equipment on a regular basis. Whether office supplies or storage containers for the warehouse, we need to give employees what they need to keep business moving.
The tedious part of acquiring these incidental supplies is keeping a record of how, why, from where, and who wanted the item to begin with. When spending can easily get out of control, the proper monitoring of these purchases protects the organization from fraud and audit demands. It also ensures the efficiency of purchasing organization-wide. Keeping purchasing records in a centralized system has long been a practice in all but the smallest organizations, but recently technology has made the job so much easier. Let’s look at how to get fast and easy approvals with “e-Sourcing” or purchase requisition software.
Purchase Requisition Basics
Every purchase requires a long series of steps to complete.
- Identify the need for an item
- Create the requisition document to ask for the item
- Internal approvals from supervisors
- Second review by purchasing department
- Approval of the item’s purchase
- Create a purchase order (PO) that is sent to a supplier
- Acceptance by the supplier, resulting in a binding contract of provision and payment
- Delivery and assessment of item quality
- Evaluation to confirm invoice, PO, and purchase request all match
- Closure of the PO
This process is carried out for everything from the smallest paper clip to a fleet of forklifts. If any mistakes are made, another 2-3 steps get added to the list for returns. The purchase requisition document is the key piece to initiating the whole accounting process and proving the legitimacy of purchase to the finance team. It also contains details for supply levels such as how often materials run low, the quantity normally required, the preferred vendor, and more. POs can’t get filled until the purchase requisition document goes on the books.
In the old days, this was all done on paper. Even today, a few small- and medium-sized organizations persist in using old-fashioned protocols like wet-ink signatures for authorizations. The downside is that the old ways cause time lag, limit accessibility, and slow down an already tedious process. Nowadays, we have the benefit of purchase requisition software to generate the first piece in the sourcing process. Everything else follows with automated business process management (BPM). The main benefit of this kind of e-Sourcing solution is that it frees you from the burdens of paper. The work of your organization can get out of the office and out into the world via the cloud. Businesses can generate purchases from virtually any location. With cloud-hosted authorization solutions, a contract can be initiated from a smartphone or tablet and delivered from headquarters while an on-site meeting is still going on. Essentially the buyer-seller interaction is enhanced through speed and organization.
Changing the Game with Purchase Requisition Software
With fast approvals, purchasing becomes a smooth and straightforward process that changes the game.
In this case study of a leading pharmacy implementing e-Sourcing solutions from ProcurePort, the impact of improved efficiency is clear. Using a combination of purchase requisition software, supplier management, and integration services for transparency across platforms, the pharmacy benefits manager (PBM) improved the economics and efficiency of prescription purchases. By deploying an e-Sourcing platform, the pharmacy was able to successfully source thousands of SKUs from various suppliers and generate up to 50% annual cost savings in each sourced category on their books.
For a leading market services company, another case study of leveraging purchase requisition software shows savings in printing costs ranging from 12% to 18% in the procurement supply chain.
Whether it’s massive savings during the initial implementation process or the ability to leverage integration and realize small improvements across the board, the savings do add up. Is your organization taking advantage of purchase requisition process software? Does it play nice with your other systems for optimization the finance department can see?
To find out more about strategic sourcing through technology and how it can improve your business model, download our free whitepaper on strategic sourcing from ProcurePort today.