The Purchase Requisition Form in the procurement process plays an important role. It is a means whereby an employee of a company can request materials or equipment. Once the employee of the company has completed the Purchase Requisition and it has been authorised, they can then take it to the purchasing department for a Purchase Order to be created.
For Internal Use Only
The Purchase Requisition Order is only for internal use within an organisation. It is in effect a method of ensuring that supplies and spending are carefully controlled. The purchase requisition is a formal way of issuing notice that material is required. Usually someone has to authorise a requisition so there is a clear indication of who wanted the item and who said that it could be purchased. This is important in terms of being an audit trail. If for example goods were repeatedly being ordered that were not actually needed, then the Purchase Requisition Orders could be checked to ascertain who had actually said that it was ok to make the purchase. This safeguards the company from any rogue orders and is a good way of ensuring that only necessary items are ordered.
Electronic Requisition Forms
Some organizations utilize technology to manage requisitions and the requisition form is electronic and is simply a way of improving efficiency, with the form being completed online and then sent off to the relevant person in the purchasing department.
Clear Directions To Purchasing Department
Although the use of Purchase Requisitions may seem slightly bureaucratic, they are very useful, not just in terms of the audit trail, with accountability for orders being shown, but they also provide the purchasing department with very clear instructions about what is required, what the budget is, when it should be delivered together with possible sources of supply.
Often the Requisition will contain details of any cost codes that are required for budgeting purposes; so if an item is to be charged to a particular area of the budget then the purchasing department will be told which cost code to charge the items to, so it helps keep budgets up to date. Since this information will not be contained on the Purchase Order, it is a way of ensuring that the books are balanced and there are no over spends.
The Requisition should also contain details of the time scale for delivery, so if something is urgent, then this should be noted on the Requisition- it should not be assumed that the purchasing department will know that something is urgent, it is up to the person who is completing the form to make arrangements for the order to be treated as such.
Vital To Purchase Orders
Many organizations will not create a Purchase Order until they have actually had a Requisition Order; this is standard practice and ensures that everyone understands the processes involved. So the Purchase Requisition Order may be a humble, internal document, but in its own way it is actually quite important.
Quality, Cost and Delivery, which is usually abbreviated to QCD is nothing new and has been around as the foundations of performance management for some time. QCD is usually used to measure business activity which can be further distilled into Key Performance Indicators (KPI’s).
Utilizing QCD is a good starting point when it comes to developing business measures. However when thinking about QCD, care should be taken to ensure that it is not just generically about 3 measures more the focus on the particular performance being reviewed and how QCD can be applied.
Quality:
Quality is typically used to measure performance in terms of when things are not right the first time. This measure can be placed at various positions in the supply chain such as for example
• The number of customer returns
• Manufacturing scrap
• Supplier rejects (i.e. goods not accepted due to quality issues)
Costs:
Costs can be critical to any company, so it is vital that they are kept to a minimum. However, costs are about more than simply how much an individual screw cost. You should also look at the cost and value of stock levels, the cost of transporting stock, the cost of storing the stock and so on. Ensure that any hidden costs, such as administration costs, heating and lighting and so on are all taken into account. Each and every cost must be identified and then accounted for.
Delivery:
The delivery standards are often referred to as Delivery Schedule Adherence, (DSA) this can refer to both how often suppliers adhere to the delivery schedule and how well you supply to your customer.
Delivery can be measured quite scientifically. You need to look at your overall DSA i.e. how many times your suppliers meet your schedule and then you measure each individual supplier against this. So if your overall DSA is 89%, then you would measure each individual supplier against the ranking of 89% and see who performs better and who performs worst.
The Benefits of QCD
QCD can bring a lot of benefits to an organisation simply because it is a very straightforward and relatively easy method of actively measuring processes but it is also applicable to processes that are simple or extremely complex. So it can be used in any part of the supply chain and for any business process.
It also serves as an excellent starting point for ensuring that some really functional and useful Key Performance Indicators can be established and the use of QCD should not be seen in isolation but rather as the starting point for the establishment of Key Performance Indicators