Purchase requisition process: from need to purchase order

Purchase requisition flowchart: catalog check, budget, quote thresholds, sole source justification, approval limits, new vendor setup and PO.

Purchase requisition process: from need to purchase orderRequesterApproverPurchasingDEFINE THE NEEDSOURCE ITAPPROVEVENDOR AND POYesNoNoYesNoYesNoNoUnder $10,000$10,000 to $100,000Over $100,000YesNoUp to $5,000$5,000 to $50,000Over $50,000YesNoNoYesNoYesYesYesNeed to buy goods orservicesFor staff and buyers. Takes apurchase from need through budget,quotes, sole source and approvals toan issued purchase order.Common practice. Dollar thresholdsare examples to replace with yourown. Buyers spending US federalawards follow 2 CFR 200.320, andfederal agencies follow the FAR.Describe what you need,how many and by whenWrite a spec a vendor could quotefrom: item, quantity, delivery dateand delivery address. Don't name abrand unless only that brand willwork.Estimate the total costCount the whole purchase: shipping,installation, training and every yearof a multi-year agreement.Don't split one need into smallerorders to stay under a threshold.Is budget availableon the account?Budget confirmedAsk the budget owner forfundsThe budget owner may move moneybetween lines or name a differentaccount.Did they find thefunds?Defer or cancel the purchaseIs it on a catalog or existingcontract?Check punch-out catalogs, blanketorders, cooperative contracts andpreferred vendors first. Their pricesare already negotiated.Order from the catalog orcontractContract purchases usually skipquotes. Put the contract number onthe requisition.Check whether competitionis possibleCan only onesupplier meet theneed?Write a sole sourcejustificationCommon accepted reasons: only onesource exists, an emergency thatcan't wait for quotes, compatibilitywith equipment you already own, orparts only the maker supplies.Preference for a vendor isn't areason. Show that the price isreasonable too.Does purchasingaccept thejustification?Get competing quotesinsteadPlan the quotes by totalvalueWhat is the estimated total?Example tiers. Under US federal rulesthe micro-purchase threshold is$15,000 and the simplifiedacquisition threshold is $350,000,with exceptions. Many organizationsset lower tiers.Get one quote or a publishedpriceUnder 2 CFR 200.320, amicro-purchase can be awardedwithout quotes if the price isreasonable. Compare with a recentpurchase or a list price.Get at least three writtenquotesAsk qualified vendors for quotes onthe same spec. Federal rules ask forquotes from an adequate number ofqualified sources.Run a formal bid or requestfor proposalsPurchasing advertises thesolicitation, receives sealed bids orproposals, and scores them on thecriteria it published.Did you receiveenough responses?Choose the best-value offerUsually the lowest price that meetsthe spec, unless your request saidother factors count, such as deliverytime or support. Write down why youchose it.Document who you askedand why responses wereshortIf competition proved inadequateafter you asked, many policies treatit like a sole source. Get purchasing'ssign-off.Submit the requisition forapprovalAttach every quote, the bid results orthe sole source justification. Someuniversities require all bids andquotes to be attached to therequisition.What is the requisition total?Example approval limits. Use yourown approval matrix. The requestershould not approve their ownpurchase.Department managerapprovesDirector approvesExecutive or CFO approvesIs the requisitionapproved?Send it to purchasingReturn it to the requesterwith the reasonCan the requesterfix it?Requisition cancelledIs the vendoralready set up?Vendor activeSet up the new vendorCollect a W-9 for a US vendor,insurance certificates if they willwork on site, and bank detailsconfirmed by calling a number youalready trust.Issue the purchase order tothe vendorThe PO states item, quantity, price,delivery and payment terms. Tell thevendor not to ship or invoice withoutthe PO number.Purchase order issued.Receive goods against it

Define the need

  1. Need to buy goods or servicesRequester

    For staff and buyers. Takes a purchase from need through budget, quotes, sole source and approvals to an issued purchase order.

    Common practice. Dollar thresholds are examples to replace with your own. Buyers spending US federal awards follow 2 CFR 200.320, and federal agencies follow the FAR.

  2. Describe what you need, how many and by whenRequester

    Write a spec a vendor could quote from: item, quantity, delivery date and delivery address. Don't name a brand unless only that brand will work.

  3. Estimate the total costRequester

    Count the whole purchase: shipping, installation, training and every year of a multi-year agreement.

    Don't split one need into smaller orders to stay under a threshold.

  4. Is budget available on the account?Requester
  5. Budget confirmedRequester

    Then go to step 9, Is it on a catalog or existing contract?

  6. Ask the budget owner for fundsApprover

    The budget owner may move money between lines or name a different account.

  7. Did they find the funds?Approver
  8. Defer or cancel the purchaseApprover

Source it

  1. Is it on a catalog or existing contract?Requester

    Check punch-out catalogs, blanket orders, cooperative contracts and preferred vendors first. Their prices are already negotiated.

  2. Order from the catalog or contractRequester

    Contract purchases usually skip quotes. Put the contract number on the requisition.

    Then go to step 24, Submit the requisition for approval

  3. Check whether competition is possibleRequester
  4. Can only one supplier meet the need?Requester
  5. Write a sole source justificationRequester

    Common accepted reasons: only one source exists, an emergency that can't wait for quotes, compatibility with equipment you already own, or parts only the maker supplies.

    Preference for a vendor isn't a reason. Show that the price is reasonable too.

  6. Does purchasing accept the justification?Purchasing
  7. Get competing quotes insteadRequester

    Then go to step 17, What is the estimated total?

  8. Plan the quotes by total valueRequester
  9. What is the estimated total?Requester

    Example tiers. Under US federal rules the micro-purchase threshold is $15,000 and the simplified acquisition threshold is $350,000, with exceptions. Many organizations set lower tiers.

  10. Get one quote or a published priceRequester

    Under 2 CFR 200.320, a micro-purchase can be awarded without quotes if the price is reasonable. Compare with a recent purchase or a list price.

    Then go to step 21, Did you receive enough responses?

  11. Get at least three written quotesRequester

    Ask qualified vendors for quotes on the same spec. Federal rules ask for quotes from an adequate number of qualified sources.

    Then go to step 21, Did you receive enough responses?

  12. Run a formal bid or request for proposalsPurchasing

    Purchasing advertises the solicitation, receives sealed bids or proposals, and scores them on the criteria it published.

  13. Did you receive enough responses?Requester
  14. Choose the best-value offerRequester

    Usually the lowest price that meets the spec, unless your request said other factors count, such as delivery time or support. Write down why you chose it.

    Then go to step 24, Submit the requisition for approval

  15. Document who you asked and why responses were shortRequester

    If competition proved inadequate after you asked, many policies treat it like a sole source. Get purchasing's sign-off.

Approve

  1. Submit the requisition for approvalRequester

    Attach every quote, the bid results or the sole source justification. Some universities require all bids and quotes to be attached to the requisition.

  2. What is the requisition total?Requester

    Example approval limits. Use your own approval matrix. The requester should not approve their own purchase.

  3. Department manager approvesApprover

    Then go to step 29, Is the requisition approved?

  4. Director approvesApprover

    Then go to step 29, Is the requisition approved?

  5. Executive or CFO approvesApprover
  6. Is the requisition approved?Approver
  7. Send it to purchasingPurchasing

    Then go to step 34, Is the vendor already set up?

  8. Return it to the requester with the reasonRequester
  9. Can the requester fix it?Requester
  10. Requisition cancelledRequester

Vendor and PO

  1. Is the vendor already set up?Purchasing
  2. Vendor activePurchasing

    Then go to step 37, Issue the purchase order to the vendor

  3. Set up the new vendorPurchasing

    Collect a W-9 for a US vendor, insurance certificates if they will work on site, and bank details confirmed by calling a number you already trust.

  4. Issue the purchase order to the vendorPurchasing

    The PO states item, quantity, price, delivery and payment terms. Tell the vendor not to ship or invoice without the PO number.

  5. Purchase order issued. Receive goods against itPurchasing

Outcomes

Defer or cancel the purchase

You get here from step 7, Did they find the funds? (No).

Requisition cancelled

You get here from step 32, Can the requester fix it? (No).

Purchase order issued. Receive goods against it

You get here from step 37, Issue the purchase order to the vendor.