STEP-BY-STEP Guide
1. Selecting a Vendor
When creating a new Purchase Requisition (PR), start by selecting a recommended vendor from the list or add a new one. Ensure you provide accurate vendor details, including:
- Name
- Address
- Contact person
- Phone number
This helps facilitate smooth communication and vendor management throughout the procurement process.
2. Requester Information
Provide details about the requester, including:
- Requester's name
- Department
These details ensure the requisition is traceable and enables efficient follow-up if required. It's important to keep this information up to date for seamless communication during the approval and procurement stages.
3. Listing Items and Services
The requisition form is designed to categorize items or services by their expenditure type, offering the following categories:
CAPEX (Capital Expenditure):
Capital Expenditure refers to long-term investments made by a business in acquiring, upgrading, or maintaining physical assets such as buildings, machinery, and equipment. These are typically large purchases that have a useful life beyond the current financial year and are intended to improve or increase the company’s operational capacity.
- Examples: Purchase of new machinery, upgrades to facilities, acquisition of new buildings or land.
OPEX (Operational Expenditure):
Operational Expenditure refers to the day-to-day costs incurred by a business to maintain its operations. These expenses are typically recurring and cover things like utilities, rent, salaries, and the purchase of office supplies. OPEX focuses on keeping the business running smoothly rather than expanding or upgrading its capabilities.
- Examples: Office rent, utilities (electricity, water), salaries, office supplies, and marketing expenses.
Finished Products for Sale:
This category refers to the purchase of goods that are ready for sale without any further processing or modification. These products are typically resold to customers as part of the business's core revenue-generating activities. Companies that act as distributors or retailers will often categorize these purchases here.
- Examples: Pre-packaged consumer goods, electronics for retail, finished food products.
Materials for Manufacturing:
Materials for Manufacturing refers to raw materials or components that a company purchases to create finished products. These materials are processed or transformed during the manufacturing process, resulting in products that will be sold or used as part of other processes.
- Examples: Steel, plastic, fabric, and other raw materials used in the production of goods.
Materials for Projects:
Materials for Projects include goods or resources specifically purchased for use in unique, time-bound projects. This may apply to industries such as construction, engineering, or specialized services. These materials are usually consumed during the course of a project and are not part of regular operational activities.
- Examples: Construction materials for a building project, IT hardware for a one-off deployment, or specialized equipment for a research project.
For items previously purchased, simply select them from the drop-down menu. The system automatically fills in the last purchase price in the estimated unit price box. If it's a new item, enter the details manually, including:
- Quantity
- Estimated unit price
- Total estimated cost
Tax details and the total price (with tax) should be included where applicable to ensure accuracy.
Budgeting Insights
A critical feature of the PR process is the Budgeting Insights. This feature automatically displays key budget information, such as:
- Total budget allocated
- Amount already used
- Remaining budget for the selected expenditure category
This ensures that any new PR submissions are aligned with the budgetary constraints and prevents overspending. The visual insight offers transparency and helps ensure that the procurement process remains within the financial parameters set by the organization.
4. Justification for Purchase
Clearly document the reason for the purchase, which could be for restocking, project-specific needs, or other reasons. This section helps the approvers understand the necessity of the purchase. Attach any relevant supporting documents, terms, conditions, or specific requirements to aid in the decision-making process.
5. Delivery Details
Accurate delivery details are crucial to ensure on-time receipt of goods or services. Provide:
- Delivery address
- Expected delivery date
This allows the procurement and logistics teams to plan accordingly and minimize any potential delays.
After filling out all sections, review the details thoroughly for accuracy, then submit the PR for approval. This ensures that the process is streamlined, transparent, and well-documented, all while adhering to both the operational needs and budgetary constraints of the organization.