A requisition, in a business context, refers to a formal request or demand for something to be supplied or completed. Often used in purchasing and inventory processes, a requisition serves as an authorization to procure the goods or services that are needed. The requisition process usually involves multiple steps to ensure proper tracking, accountability, and adherence to an organization’s policies and budget constraints.
Types of Requisitions:
- Purchase Requisition: This is a common type of requisition in businesses. It’s a document or electronic form used to request the purchasing of specific goods, materials, or services. Once approved, the purchasing department will typically issue a purchase order to a supplier to provide the requested items.
- Job Requisition: Used in human resources, a job requisition refers to a formal request to hire a new employee. It will typically detail the job’s responsibilities, qualifications, salary range, and other relevant information. The requisition must usually be approved by various levels of management before the recruitment process can begin.
- Capital Expenditure Requisition: Used when a department wants to make a significant purchase or investment, usually involving fixed assets like equipment or property. This requisition often requires a higher level of approval due to the substantial financial commitment involved.
Example of a Requisition
Let’s look at a more detailed example involving a purchase requisition in a corporate setting:
Scenario: XYZ Corporation’s IT department requires five new high-performance laptops for its newly hired software developers.
Step 1: Identification of Need The IT manager identifies a need for new laptops and checks the specifications required for the software developers.
Step 2: Completing the Purchase Requisition Form The IT manager fills out a purchase requisition form. The form includes:
- Date: August 10, 2023
- Department: Information Technology
- Requested By: John Doe (IT Manager)
- Item Description: High-performance laptops
- Quantity: 5
- Estimated Cost: $1,500 per laptop, Total: $7,500
- Justification: Laptops required for new software developers starting on September 1, 2023.
- Preferred Supplier (if any): TechWorld Inc.
- Date Needed By: August 30, 2023
Step 3: Approval Process The completed requisition form is sent to the department responsible for approvals, usually the purchasing or finance department. In some companies, there may be multiple levels of approval, especially for high-value items.
Step 4: Verification Upon receipt of the requisition, the purchasing department reviews the details, ensuring the justification is sound and checking if the budget allows for the expenditure. They might also check if the preferred supplier offers the best deal or if other suppliers should be considered.
Step 5: Purchase Order Once the requisition is approved, the purchasing department issues a purchase order to the chosen supplier, in this case, TechWorld Inc. The purchase order provides details of the laptops required, the agreed price, delivery date, and other terms and conditions.
Step 6: Receiving the Goods TechWorld Inc. delivers the laptops on the agreed date. The IT department checks the delivered goods against the purchase order to ensure accuracy.
Step 7: Payment Upon confirmation that the goods are received and are in good condition, the finance department processes payment to TechWorld Inc.
This example demonstrates the process of how a requisition serves as an integral part of an organization’s procurement system, ensuring proper authorization, documentation, and verification for purchases.