The purchase requisition is the document that turns a need in someone’s head into a financial commitment for the business. Which is why it must answer four questions before it leaves the department: what? how much? when? and why?
1 From a need to a requisition
The need
Stock run down, a project, a replacement
The check
Is there an alternative already in the store?
The request
A requisition with specification, quantity and date
Approval
Financial authority according to value
Step two is the cheapest in the whole cycle and the most often skipped
| Requisition field | Why it matters |
|---|---|
| Item description and code | Prevents buying an incompatible substitute |
| Quantity and unit of measure | Confusing a carton with a piece multiplies the order many times over |
| Date required | Decides whether we buy at normal or expedited prices |
| Cost centre | Charges the expense to the right place |
| Reason for the request | Allows the need itself to be discussed, not just the item |
| Approver | Evidences that the commitment was authorised |
Unit of measure: a silent, costly error
A request for “100 cartons” against a system unit of “piece” delivers 100 pieces instead of 2,400. Or the reverse, and the store fills with two years of stock. The unit of measure is fixed once in the item master, never left to whoever types the request.
2 Types of specification
| Type | How it is written | Its strength | Its weakness |
|---|---|---|---|
| By brand | “Brand X, model Y” | Fast and precise | Kills competition and raises the price |
| By technical characteristics | Dimensions, materials, capacities | Allows equivalent alternatives | Takes expertise to write |
| By performance | “Lifts 2 tonnes to 6 metres” | Opens the door to better solutions | Needs clear acceptance criteria |
| By reference standard | Compliant with a recognised standard | Objective and provable | A standard may not exist for the item |
“Or equivalent”
If you must name a brand for clarity, always follow it with “or equivalent” and state the criteria of equivalence: which characteristics must an alternative match to be accepted? Without that you have awarded the order before you asked for a single quotation.
3 A specification written around a supplier
Three quotations were sought for a device, and the specification required: an exact length in millimetres, a particular casing colour, operating software named by brand, and a supplier with 15 years of experience “in this exact model”.
| Offers received | 3 |
| Offers technically compliant | 1 |
| Savings from competition | 0 |
Result: a procedurally clean process with no competition in it at all. And the clearest indicator is this: how many offers passed the technical evaluation? If the answer is always one, the specification is the problem, not the market.
4 Consolidating demand
- Scattered buying is expensive: ten small requests cost ten transactions and forfeit volume discounts.
- A framework agreement: a price agreed for a year, drawn down with release orders.
- An annual purchasing plan gathers departmental needs in advance and turns them into one negotiation.
- Expedited buying carries a premium, so measure its share of total orders; a rising share means weak planning, not bad luck.
- A minimum order threshold prevents issuing a purchase order worth less than the cost of issuing it.
Lesson summary
- A requisition answers what, how much, when and why, and is approved with authority.
- The unit of measure lives in the item master, not in the mind of whoever raises the request.
- There are four types of specification, and the most dangerous is a brand with no “or equivalent”.
- The number of technically compliant offers reveals whether competition is real.
- Consolidating demand lowers the price and the transaction cost together.
- The share of expedited buying measures planning quality, not market conditions.
5 Test your understanding
Three quick questions
Pick the answer you believe is correct and you will see the result immediately.
1. In every competition only one offer passes the technical evaluation. The most likely conclusion:
The same outcome recurring in every competition points to a systematic flaw in how the specification is written.
2. “100 cartons” was requested while the system unit for the item is “piece”. The expected result:
A mismatched unit multiplies or divides the quantity, and it is among the quietest and costliest errors.
3. A department raises ten small requests a month for the same item. The best fix:
A framework agreement consolidates buying power and cuts the number of transactions at the same time.