Employing best practices in purchase requisitions will enable your business to streamline order and stock management, improve vendor-buyer relationship, operate more cheaply, prevent fraud and improve the speed at which your firm operates.
Best practices of purchase requisitions, if implemented correctly, will see you buying the right quality and quantity goods and services at the best possible price, at the most appropriate time from the most appropriate vendor. So how can this be achieved as efficiently as possible?
To assist you to this end, we have put together a list of the best practices of purchase requisitions in 2019.
1. Utilizing Your Digital Paper Trail
A report conducted by Paystream Advisors found that 54 percent of companies enter their invoice details manually. According to the report, small and medium-sized firms are the largest users of ineffective paper-based invoice receipts.
Eliminating manual, paper-based processes from your systems is not merely borne out of environmental concerns. By going digital with your purchase requisition process, you can effectively reduce or completely eliminate unauthorized purchases, deny permission to certain people unauthorized to make purchases, eliminate duplicate orders, prevent maverick spending and prevent fraud, to name a few.
A skilled procurement team should be able to reduce a company’s purchasing cost base by at least 8 to 12 percent; a substantial amount of money for most businesses. In fact, according to the Hackett Group Inc, “world-class” procurement departments can initially operate 20 percent more cheaply than average companies, even while having fewer employees.
2. Conduct A Spend Analysis
Putting into effect best practices of purchase requisitions will require you to do a full review of your current practices. Large product streams, overspending and poor distribution will become evident when you begin comparing the numbers against one another.
A good place to start would be by verifying your needs. All purchasing processes start with a need or demand, and this should be reflected in your review. If you don’t need or require the item, perhaps you are overspending already.
Then you will need to ask yourself some follow up questions, including but not limited to:
- Who currently initiates a purchase order and how?
- Is it emailed for signatures or done manually?
- How will you know when it is signed?
- What are the issues you have identified?
When it comes to reviewing your current practices, there is no better form of feedback than the feedback you can receive from your suppliers and other related stakeholders. If you explain to a stakeholder that you are thinking of implementing tools to simplify the requisition process and their response is to inquire how soon they can begin to use it, you know you are on the right track.
If this review seems too daunting a task, you can allow the software to do the work for you. A key benefit of purchase requisition software, such as those offered by Procureport, is that it allows you to polish your business expenditures through its spend analysis features.
3. Create A Purchasing Policy
The single most effective way to effectively implement the best practices for purchase requisitions is to draft up a purchasing policy from the outset.
Include in your policy, among others, the answers to the following questions:
- Who has the authority to purchase items for the company?
- What items can be purchased?
- What are the spending limitations?
- What are the approval limitations?
- Will smaller amounts require approval?
Having clearly stated rules and policies around purchasing is crucial. Include in this drafting exercise a vendor database where you maintain records of all the suppliers you have ever ordered from
4. Train Your Staff
Having put together a purchase policy that implements the changes required it would be wise to take the time to document this process not just so that other can follow it, but so that they can support and encourage its evolution over time.
To maximize the efficacy of your training use real-life examples from suppliers and stakeholders who have advised why they prefer the new tools and systems you have put in place. That way your team can understand exactly why the process has been developed in that way.
Mastering Best Practices for Purchase Requisitions with ProcurePort
ProcurePort’s state-of-the-art purchase requisition software is used all over the world by leading-edge firms, fully automating the requisition process for you to enable significant cost savings, ensure efficient purchase order management and prevent maverick spending.
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