Purchase Request and Approval Process Management

Section 1:

Introduction(Purchase Request and Approval Process Management)

Section 2: Overview

An efficient purchase request and approval process is vital for an organization. In the whole process, lots of stakeholders are involved. Working with all stakeholders in a systematic way, with financials and purchases involved, requires a transparent and efficient system.

Section 3: What is a Purchase Request?

A purchase request, also known as a purchase requisition, is a formal document or electronic form used by individuals or departments within an organization to initiate the process of procuring goods or services. It serves as a request for approval to acquire specific items necessary for the organization’s operations.

Key components of a purchase request:
Requestor information: The name, department, and contact details of the person or department making the request.

Item details: A detailed description of the items or services being requested, including specifications, quantity, quality requirements, and any other relevant details.

Budget allocation: The estimated or approved budget amount for the purchase.
Justification: A clear and concise explanation of why the purchase is necessary, outlining the specific needs, objectives, or problems it will address. Supporting documents: Any additional documentation or references that support the purchase request, such as quotes, product specifications, or comparative analysis. The purchase request acts as a formal channel for individuals or departments to communicate their requirements to the appropriate authority or department responsible for approving and managing procurement processes. It serves as a starting point for initiating the procurement process and ensures that purchases are authorized, tracked, and aligned with organizational policies and budgetary constraints.

Section 4: Importance of a Streamlined Process

Benefits of an efficient purchase request and approval process: Cost control and budget management Standardization and compliance Transparency and accountability Reduction in maverick spending Improved vendor relationships

Section 5: Steps in the Purchase Request and Approval Process

Step 1: Purchase Request Submission Requestor completes the purchase request form Includes all necessary information and justifications Submits the request to the appropriate authority or department

Section 6: Steps in the Purchase Request and Approval Process (contd.)

Step 2: Review and Verification The request is reviewed by the designated approver Ensures accuracy, completeness, and adherence to policies Verifies budget availability and alignment with organizational objectives

Section 7: Steps in the Purchase Request and Approval Process (contd.)

Step 3: Approval Process Approval hierarchy and authority levels Different levels of approvals based on purchase value Electronic or manual approval workflows Consideration of alternative suppliers or cost-saving options

Section 8: Steps in the Purchase Request and Approval Process (contd.)

Step 4: Procurement Execution Upon approval, the procurement team initiates the purchasing process Obtain quotes, negotiate terms, issue purchase orders, etc. Coordinate with vendors, track deliveries, and manage invoices

Section 9: Steps in the Purchase Request and Approval Process (contd.)

Step 5: Communication and Documentation Notify the requestor about the status of their purchase request Maintain proper records and documentation Communicate any changes or delays to the requestor

Section 10: Monitoring and Continuous Improvement Importance of monitoring the process Key performance indicators (KPIs) to measure effectiveness:

Average approval time Percentage of requests approved within budget Number of purchase requests rejected or returned Customer satisfaction surveys

Section 11:

Best Practices for Effective Management Standardize request forms and templates Implement clear approval workflows Leverage technology and automation Provide training and guidelines for requestors and approvers Regularly review and update policies and procedures