Purchase Order Requisitions in Blue Link ERP

Purchase orders and the purchasing process is a key component of any wholesale distribution business. Where a sales order is an order from your customer to buy goods from your company, a purchase order is a request from your company to purchase products from your suppliers to then sell to your customers. For wholesale distributors, purchase orders are a part of everyday life.

However, depending on your business operations, the creation of a purchase order can be triggered by different scenarios. For example, you may issue purchase orders to maintain a certain stock level in your warehouse based on inventory min and max levels, or you may issue a purchase order only after receiving a sales order from your customer. Whatever the process, purchase orders allow you to buy product to then sell to your customers (the backbone of your business). Pretty simple right? Where there is sometimes confusion, is around the topic of purchase order requisitions. Below we take a closer look at the difference.

What is a Purchase Order Requisition?

A purchase order requisition is a formal request made by the department or employee requiring the goods or services. It's important to note that a requisition is just a request that must be approved internally by management. Once approved, the requisition is then used to generate an actual purchase order, which is then sent to the supplier.

For example, food distributors may have different department heads for each area of the warehouse. When the assigned picker in the frozen goods section notices a shortage of a specific frozen product, they or their manager, depending on their software access permissions, can submit a purchase order requisition for the required frozen goods.

The warehouse manager, who oversees all departments, has the authority to accept or decline any requisitions for various reasons. It is highly likely that the warehouse manager is responsible for a budget and making informed data-driven decisions to prioritize which products should be given priority.

Purchase Order Requisitions

Not every company will need to create purchase order requisitions, and some companies may only require this type of document for certain types of products or purchases. Implementing the creation of purchase order requisitions (or a PO REQ) as part of your purchasing process can be a means to prevent fraud, or for control and tracking purposes when buying product over a specific value. The creation of a PO REQ is a request from an employee to make a purchase on behalf of the company. It is a formal process that allows an employee to create a purchase order request, send the request to a manager or department head for review and approval before it gets turned into an official purchase order, which is a legally binding document. The manager or department head has the authority to make any necessary adjustments to the PO REQ or deny the request. Only once the appropriate managers/department approves a purchase order requisition, can it be turned into a purchase order and sent to the supplier.

Creating a Purchase Order Requisition

In Blue Link, security permissions dictate who can create a purchase order, who can create a purchase order requisition and who can authorize submitted requisitions. When creating a PO REQ in Blue Link the first step is to choose the vendor you wish to purchase from and then add product to the order. This allows a business to assign an employee the groundwork for creating an order - the task of finding out information about a product and pricing but not creating a purchase order. If necessary, the employee can create multiple PO REQs for the same product from different vendors which allows the person with authority to choose which product and vendor they want to purchase from after reviewing all the options. When an employee submits a PO REQ, the systems records the date, time and employee ID. An employee can also set a status for the PO REQ – for example, important, submitted, on hold etc.

Blue Link Demo Video: Purchase Order Entry, Receipt and Requisition

Authorizing a Purchase Order Requisition

When authorizing a PO REQ, the person with the right permissions in Blue Link has the option to authorize only specific items and quantities in the PO REQ or all the products. Once someone authorizes a PO REQ, the system records the date, time and employee ID and updates the status. The authorizing person can then choose to take action and create a PO from the PO REQ screen. Automatic workflows in Blue Link ERP also notify the appropriate people when someone authorizes a PO REQ. Since you can create a purchase order from a PO REQ, this allows the authorizing person to add quantities from a PO REQ to an existing open purchase order (if you’re buying multiple items from the same vendor for example).